Pandian Chemicals Ltd. vs Cit

The Supreme Court examined whether interest earned on deposits made with an Electricity Board for the supply of power to an industrial undertaking constitutes income 'derived from' that undertaking for the purpose of deduction under Section 80HH of the Income Tax Act, 1961. The appellant argued that since electricity is essential for the operation of the industry, the resulting interest income is inextricably linked to the business. The court addressed whether such passive interest income qualifies as profits and gains derived from the industrial activity itself.