The assessee being an enterprise of the Government of Orissa is engaged solely in the business of generation of power. The power so generated is sold exclusively to Grid Corporation of Orissa Ltd. (‘GRIDCO’). The assessee earned interest income from advances given to the employees during the course of its business. Also, late payment for electricity supplied was sought to be made up be GRIDCO by issuing bonds on which the assessee earned interest income. The assessee claimed deduction u/s. 80IA on both these interest incomes earned by it which claim was not granted by the lower authorities. On appeal to the High Court, it was held that:

Interest received from advances given to its employees are receipts in normal course of carrying out its business and ought to considered as income derived from its essential business activities. Similarly, the late payment form GRIDCO for the electricity supplies, is sought to be made by GRIDCO by issuing bonds on which the interest income earned by assessee also has a direct nexus with the essential business of the assessee which is generation of power and thus, ought to be included while computing profits derived from eligible business for the purpose of claiming deduction u/s. 80IA. (AY. 2002-03, 2003-04, 2007-08 to 2009-10)