Judgment :- JANARTHANAM, J. The assessee, Fenner (India) Ltd., Madurai, is a domestic company carrying on business in the manufacture and sale of V-belts, oil seals, O-rings, rubber moulded products, etc. The assessee, it appears, set up an industrial undertaking in a backward area. It claimed deduction of 20 per cent. of net profits allowable under section 80HH of the Income-tax Act, 1961 (Act No. 43 of 1961) (for short "the I.T. Act"), in respect of (i) profit on sale of scrap; (ii) interest earned by the industrial undertaking; and (iii) cash assistance received from the Government, on account of exports made by the assessee. The Income-tax Officer disallowed the relief in respect of those items under section 80HH of the Income-tax Act. On appeal, the Commissioner (Appeals) upheld the assessee's claim for deduction in regard to the profit on sale of scrap and interest earned by the industrial undertaking, but disallowed such relief, in respect of the third item, namely, cash assistance received from the Government on account of exports made by the assessee. On further appeal by the Revenue, the Tribunal, following its order for earlier year, reversed the order of the Commissioner (Appeals) in respect of the first two items, namely, profit on sale of scrap and interest earned by the industrial undertaking and allowed the Revenue's appeal. On the basis of the above facts, the question of law, as below, was referred for the opinion of this court, "Whether, on the basis of the facts and in the circumstances of the case, the Tribunal is correct in holding that the assessee is not entitled to relief under section 80HH of the Income-tax Act in respect of (a) profit on sale of scrap, and (b) interest earned by the industrial undertaking ?" Arguments of Mr. K. Vaitheeswaran, learned counsel representing Messrs. Subbaraya Aiyar, Padmanabhan and Ramamani, learned counsel appearing for the assessee, and of Mr. R. Sivaraman, learned counsel representing Mr. C. V. Rajan, learned junior standing counsel appearing for the Revenue, were heard. There is no denial of the fact that the industrial undertaking had been established in a backward area. Yet another fact, about which there is no dispute, is that the said industrial undertaking manufactures V-belts, oil seals, O-rings and rubber moulded products. C. V. Rajan, learned junior standing counsel appearing for the Revenue, were heard. There is no denial of the fact that the industrial undertaking had been established in a backward area. Yet another fact, about which there is no dispute, is that the said industrial undertaking manufactures V-belts, oil seals, O-rings and rubber moulded products. One another fact, about which there is no dispute is that in the process of manufacture of the products abovementioned, certain scrap also resulted. The resultant product of scrap materials, it is said, had also a market. The scrap materials were also sold. The scrap materials so sold were also reflected in the turnover of the industrial undertaking. The moot question that arises for consideration is as to whether the assessee is entitled to deduction of an amount equal to twenty per cent. on the profits earned out of the sale of scrap materials under section 80HH of the Income-tax Act. Sub-section (1) of section 80HH, relevant for the present purpose, reads as under, "Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent. thereof". No dispute is raised by the Revenue, as respects the conditions required to be fulfilled under sub-section (2) thereof for availing of the deduction in an amount equal to twenty per cent., as contemplated by sub-section (1). What is now disputed by the Revenue is that profit on the sale of scrap materials can, by no stretch of imagination, be stated to have been derived from the industrial undertaking and if at all, such profits may be attributable to an industrial undertaking. This sort of a submission is further elucidated by stating that profits on sales of the manufactured products by the industrial undertaking such as V-belts, oil seals, O-rings and rubber moulded products alone can be stated to be gains or profits derived from the industrial undertaking, in respect of which a deduction in an amount equal to twenty per cent. This sort of a submission is further elucidated by stating that profits on sales of the manufactured products by the industrial undertaking such as V-belts, oil seals, O-rings and rubber moulded products alone can be stated to be gains or profits derived from the industrial undertaking, in respect of which a deduction in an amount equal to twenty per cent. is permissible and not in respect of the profits from the sale of scrap materials, which could, if at all, be stated to be attributable to an industrial undertaking. To such sort of a submission, we are unable to affix our seal of approval, on the facts and in the circumstances of the caseNo doubt it is true, section 80HH is meant to give a tax rebate to certain categories of assessees and one, who wants to claim such a relief, must strictly satisfy the requirements prescribed therein. He must establish that his profits and gains were derived from his industrial undertaking or the business of hotel. Axiomatic a proposition of law it is that it is not sufficient if a commercial connection is established between the profits earned and the industrial undertaking and the law requires that such profits must have been derived from the industrial undertaking. The industrial undertaking itself must be the source of that profit. The business of the industrial undertaking must strictly yield that profit. It must be the direct source of profit and not a means to earn any other profit. As already stated, in the industrial undertaking in the manufacture of V-belts, oil seals, O-rings and rubber moulded products, certain scrap materials resulted, which has a saleable value. To say that the scrap materials had no direct link or nexus with the industrial undertaking cannot at all be expected to commend acceptance, especially, on the facts and in the circumstances of the case. For the sake of emphasis, we may say that the scrap materials come within the manufacturing process of the industrial undertaking in the manufacture of certain products such as V-belts, oil seals, O-rings and certain rubber moulded products, etc. In this view of the matter, we are of the view that profits and gains from the sale of scrap materials are eligible to deduction in an amount equal to twenty per cent. In this view of the matter, we are of the view that profits and gains from the sale of scrap materials are eligible to deduction in an amount equal to twenty per cent. under section 80HH, inasmuch as such gains or profits are derived from the industrial undertaking and includible in the gross total income of the assessee and the question relatable to the profit on the sale of scrap is thus answered in favour of the assesseeThe other part of the question is relatable to the interest earned by the industrial undertaking. This sort of a question arose for consideration in the case of CIT v. Pandian Chemicals Ltd. The question relatable to the interest raised therein figured as question No. 3 and it runs as under (page 500), "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest on deposit with the Tamil Nadu Electricity Board should be treated as income derived from an industrial undertaking for the purpose of relief under section 80HH ?" The question so raised had been discussed at pages 502-507 therein by a Division Bench of this court, which ultimately held that the Appellate Tribunal has committed an error of law in holding that the interest earned on the deposit with the Tamil Nadu Electricity Board by the assessee should be treated as income derived from industrial undertaking for the purpose of the relief under section 80HH of the Income-tax Act. This decision, being that of a Division Bench of this court, is binding on us and in this view of the matter, there is no other go for us, except to conclude that the interest earned by the industrial undertaking cannot at all be eligible to be included in the gross total income for claiming deduction of an amount equal to twenty per cent. in the process of computation of the profits and gains of the said industrial undertaking and this part of the question is, therefore, answered against the assessee. The tax case (reference) is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case.