Spring Merchandisers Pravate Ltd., Mathura V. I.T.O.-3(2), Mathura

ITA 110/AGR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62841 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KM ANURADHA
• Assessee Lawyers: M M AGARWAL
• Keywords: Business income; Business expenditure
• Section: 80HHC; 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 110/AGRA/2011 ASSTT. YEAR : 2006-07 SPRING MERCHANDISERS PRIVATE LTD., VS. INCOME-TAX OFFICER, 64/71, DAMPIER NAGAR, MATHURA. 3(2), MATHURA. (PAN : AAACS 5240 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.M. AGARWAL, C.A. RESPONDENT BY : KM. ANURADHA, JR. D.R. DATE OF HEARING : 28.08.2012 DATE OF PRONOUNCEMENT OF ORDER : 31.08.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-I, AGRA DATED 24.01.2011 FOR THE ASSESSMENT YEAR 2006- 07 ON THE FOLLOWING GROUNDS : 1. BECAUSE, ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN DENYING THE SET OFF OF INTEREST EARNED ON FDR (WHICH WERE M ADE TO PROVIDE MARGIN MONEY AGAINST LETTER OF CREDIT ISSUED BY THE BANK) AGAINST THE INTEREST PAID ON BANK BORROWINGS WHILE CALCULATING QUANTUM OF DEDUCTION ADMISSIBLE UNDER SECTION 80IB OF THE ACT. 2. BECAUSE, WHILE HOLDING SO, LEARNED CIT(APPEALS) ERRED IN HOLDING THAT DEDUCTION OF INTEREST EARNED ON FDR CA NNOT BE ALLOWED AGAINST THE INTEREST PAID ON OVERDRAFT FACILITY IN VIEW OF UNDISPUTED FACT THAT FDRS WERE MADE OUT OF CASH CREDIT ACCOUNT AND THUS HAD DIRECT NEXUS WITH THE INTEREST PAID TO BANK. ITA NO. 110/AGRAS/2011 2 3. BECAUSE LEARNED CIT(APPEALS) HAS ERRED IN NOT P ROPERLY APPRECIATING THAT THE CONTENTION OF APPELLANT WAS N OT TO THE EFFECT THAT INTEREST ON FDR WAS INCOME DERIVED FROM MANUFACTURI NG ACTIVITY AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE AC T, BUT WAS TO THE EFFECT THAT AS INTEREST EARNED HAD DIRECT NEXUS WIT H THE INTEREST PAID, ONLY NET INTEREST, IF POSITIVE, COULD HAVE BEEN CONSIDERED FOR DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF THE ACT. 2. THE FACTS OF THE CASE RELATING TO THESE GROUNDS ARE THAT IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS SHOWN INTEREST ON FDR AT RS.9.91. 743/- UNDER THE HEAD OTHER INCOME CREDITED IN THE PROFIT & LOSS A/C. REG ARDING THIS INTEREST EARNED ON FDR, IT WAS EXPLAINED BY THE ASSESSEE DURING THE AS SESSMENT PROCEEDING THAT THE FDRS WERE PURCHASED OUT OF COMPANY'S BANK ACCOUNT M AINTAINED FOR THE PURPOSES OF MARGIN MONEY AGAINST LETTER OF CREDIT. ALL THESE FDRS WERE PREPARED OUT OF CC ACCOUNT OF THE COMPANY WITH PUNJAB NATIONAL BANK. A S SOON AS THE PAYMENT IS REALIZED, THE SAME GOT CREDITED TO CC ACCOUNT ALONG WITH INTEREST ALL THE FDRS WERE MADE FOR THE LEGITIMATE NEED OF BUSINESS UNDER COMPULSION. DURING THE APPEAL PROCEEDINGS BEFORE LD. CIT(A), THE LD. AR FU RTHER EXPLAINED IN WRITTEN SUBMISSION THAT THE ASSESSEE PROCURES RAW MATERIAL IN THE COURSE OF BUSINESS FROM DIFFERENT PART OF THE WORLD. THE OVERSEAS PARTIES, IN MOST OF TIMES, REQUIRE A LETTER OF CREDIT TO BE ISSUED BY THE BANKER OF THE ASSESSE E UNDERTAKING THE PAYMENT OF BILL OF RAW MATERIAL. IT IS FURTHER EXPLAINED BY HIM THA T FOR THE SAID PURPOSE, ARRANGEMENTS WERE MADE WITH THE BANKERS WHO ISSUES SUCH LETTER OF CREDITS FROM ITA NO. 110/AGRAS/2011 3 TIME TO TIME WITHIN OVERALL 'NON FUNDED' LIMIT WHIC H IS SANCTIONED TO THE ASSESSEE. AS PER THE TERMS OF THE SANCTION, THE ASSESSEE HAS TO PROVIDE 10% CASH MARGIN IN THE FORM OF FDR TO SECURE THE INTEREST OF THE BANK. AFTER CONSIDERING THE NATURE OF INTEREST EARNED AN FDR EXPLAINED BY THE ASSESSEE DU RING THE ASSESSMENT PROCEEDINGS, THE AO HAS NOT ALLOWED DEDUCTION U/S 8 0IB ON THIS INCOME AFTER FOLLOWING THE ASSESSMENT ORDER PASSED IN THE CASE O F ASSESSEE ITSELF FOR A.Y 05~06. IN THE ASSESSMENT ORDER FOR AY 05-06, IT WAS HELD B Y THE AO THAT THE INTEREST ON FDR IS NOT AN INCOME DERIVED FROM MANUFACTURING ACT IVITIES AND AS SUCH THIS INCOME IS NOT ALLOWABLE FOR DEDUCTION UNDER THE SEC TION 801B. THE AO IN THE ORDER FOR AY 05-06 HAS DISALLOWED DEDUCTION U/S 80IB ON T HE INTEREST EARNED ON FDR AFTER RELYING ON THE FOLLOWING CASE LAWS :- 1. NAHAR SPINNING MILLS LTD. VS CIT(2006) 155 TAXMA N 562(P & H) 2. CIT VS THE MADRAS MOTORS LTD. /M.M. FORGINGS LTD . (2002) 257 ITR 60(MAD) 3. CIT VS. PARAS OIL EXTRACTION LTD. (1998) 230 ITR 266 (MP) 4. NORTH EAST GASES (P) LTD VS. CIT (1996)220 ITR 3 72(GAU) 5. CIT VS. NSC SHOES (2002) 258 ITR 749(MAD) . 2.1 AGAINST THE ABOVE DECISION OF THE AO, A DETAIL ED WRITTEN SUBMISSION WAS FILED BY THE LD. AR ON 22.11.2010. THE ARGUMENTS PU T FORWARD BY THE LD. AR AGAINST THE DISALLOWANCE OF DEDUCTION U/S 80 IB DIS PUTING THE DECISION OF PREDECESSOR OF LD. CIT(A)-I, AGRA AND ALSO CERTAIN CASE LAWS CITED BY HIM IN SUPPORT OF HIS ARGUMENTS ARE REPRODUCED AS UNDER:- ITA NO. 110/AGRAS/2011 4 'EVEN OTHERWISE, THERE THE ASSERTION MADE BY LD. CI T(A) THAT INTEREST EARNED ON FDR IS LIABLE TO BE TREATED AS ' INCOME FROM OTHER SOURCES IS WITHOUT ANY BASIS AND CONTRARY TO VARIO US AUTHORITATIVE DECISIONS WHICH IN FACT WERE NOTED BY C1T(A) HERSEL F IN PARAGRAPH 3.3 OF THE APPELLATE ORDER, BUT SHE HAS WITHOUT CITING ANY CONTRARY DECISION OF ANY HIGHER COURT JUMPED TO THE CONTRARY CONCLUSION. THE LAW IS FAIRLY SETTLED AND THERE SHOULD NOT BE ANY N EED TO MENTION ANY AUTHORITY TO SUBMIT THAT THE WISDOM OF HIGHER COURT SHOULD ALWAYS BE ALLOWED TO PREVAIL OVER BETTER WISDOM. THREE DECISI ONS OF DIFFERENT BENCHES OF HON'BLE TRIBUNAL WERE CITED BEFORE LEARN ED CIT(APPEALS) WHERE NETTING OF INTEREST WAS DIRECTED TO BE ALLOW ED. IN SUCH SITUATION, HOLDING TO THE CONTRARY WITHOUT THE SUPP ORT OF OVERRULING JUDGMENT OF HIGHER COURT DEFIED LOGIC AND JUDICIAL DISCIPLINE, THUS, THE ORDER DATED 25.8.2009 PASSED BY TD. CIT(A) FOR ASSE SSMENT YEAR 2005- 06 CANNOT BE READ AS PRECEDENCE TO BE FOLLOWED FOR THE YEAR UNDER CONSIDERATION ON THE ISSUE. IT WOULD BE RATHER APPO SITE TO FOLLOW THE DECISIONS REFERRED THEREIN AND ALLOW THE CLAIM OF T HE APPELLANT. THE RATIO DECIDENDI IN THE CITED DECISIONS ARE EXTRACTE D IN THE ORDER OF CIT(A), BUT ARE BEING REPRODUCED HEREUNDER FOR THE SAKE OF CONTINUITY.' 2.3 IN SUPPORT OF HIS ARGUMENT THE LD, AR HAS RELIE D ON FOLLOWING CASE LAWS, WHICH WERE PUT BEFORE LD. PREDECESSOR ALSO:- 1. SANCHITA MARINE PRODUCTS LTD, VS DCIT(2007) 15 S OT 280 2. DCIT VS HIMACHAL EXICOM COMMUNICATION LTD. (2007 ) 15 SOT 715 3. EMMVEE SOLAR SYSTEMS (P) LTD. VS ACIT (2008) 5 D TR (BANG) (TRIB) 410 4. DC1T VS SUDHIR GENSET LTD. (2009) 17 DTR (DEL) ( TRIB) 496 5. DDIT (IT) MUMBAI VS. SAMSUNG ENGINEERING CO. LTD . (IN ITA NO. 3006/MUM/05 AND OTHERS) DECIDED ON 10.11.2010. 2.4 THE LD. CIT(A), CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO CONFIRMED THE ADDITION AND D ISMISSED THE APPEAL OF THE ITA NO. 110/AGRAS/2011 5 ASSESSEE ON THE ISSUE OF DEDUCTION U/S. 80IB AS WEL L AS REJECTED THE ALTERNATE CONTENTION OF THE ASSESSEE. HIS FINDINGS IN THE IMP UGNED ORDER IN PARAS 5.4 TO 5.15 ARE REPRODUCED AS UNDER :- 5.4. I HAVE CONSIDERED ALL THE CASE LAWS CITED BY LD. AR. IN CASE OF SANCHITA MARINE PRODUCTS LTD. (SUPRA) , THE HONBLE MUMBAI BENCH OF ITAT HAS HELD AFTER CONSIDERING ALL THE FA CT OF THE CASE THAT THE INTEREST EARNED FROM THE BANK DEPOSIT WERE BUSI NESS INCOME BECAUSE DEPOSIT ON WHICH INTEREST WAS EARNED WERE P LACED FOR BONAFIDE BUSINESS REASON, IN CASE OF DCLT VS. HIMAC HAL EXICOM COMMUNICATION LTD. (SUPRA)., THE HON'BLE DELHI BENC H OF ITAT HAS CLEARLY HELD THAT INTEREST INCOME CANNOT BE SAID TO HAVE BEEN DERIVED FROM INDUSTRIAL UNDERTAKING SO AS TO MAKE IT ELIGIB LE FOR DEDUCTION U/S 80LB OF THE ACT. HOWEVER, IT HAS ALSO BEEN HELD BY THE HON'BLE TRIBUNAL THAT THE AO IS REQUIRED TO EXCLUDE ANY INT EREST EXPENDITURE, IF ANY, RELATABLE TO SUCH INTEREST FROM THE P & L A/C OF THE INDUSTRIAL UNDERTAKING AND THEN NETTING OF INTEREST EXPENDITUR E HAS TO BE ALLOWED AND THE NET INTEREST INCOME SO ARRIVED IS TO BE BRO UGHT TO TAX AS INCOME FROM OTHER SOURCES. IN THIS DECISION HON'BLE ITAT. DELHI CLEARLY HERD THAT ONLY THOSE INTEREST EXPENDITURE HAS TO BE EXCL UDED FROM THE P & L A/C OF THE INDUSTRIAL UNDERTAKING, WHICH ARE RELATA BLE TO EARNING OF INTEREST ON FDR AND THEN THIS EXPENDITURE IS TO BE NETTED FROM THE INTEREST EARNED ON FDR TO COMPUTE THE NET INTEREST INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. IN THE CASE OF DC IT VS. SUDHIR GENSET LTD. (SUPRA), THE HON'BLE DELHI TRIBUNAL HAS HELD THAT INTEREST DERIVED BY THE ASSESSEE AT FIXED DEPOSIT KEPT AS MA RGIN MONEY WITH BANK IS BUSINESS INCOME AND ASSESSEE WOULD BE ENTIT LED TO THE INCLUSION OF THE SAME FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 801B. IN CASE OF SAMSUNG ENGINEERING CO. LTD. (SUPR A) , THE HON'BLE MUMBAI ITAT HAS HELD THAT INTEREST EARNED ON FIXED DEPOSIT TOWARDS OBTAINING THE LETTER OF CREDIT AND OTHER GUARANTEES HAS TO BE ASSESSED AS BUSINESS INCOME. 5.5.. AFTER RELYING ON THE ABOVE CASE LAWS, THE LD. AR HAS FURTHER EMPHASIZED THAT FDRS WERE MADE FROM CASH CREDIT ACC OUNT AND WERE ALSO CREDITED THEREIN ON MATURITY AND, THEREFORE, T HERE WAS DIRECT NEXUS BETWEEN INTEREST EARNED AND INTEREST PAID. TO SUBST ANTIATE HIS CLAIM, HE HAS GIVEN, FIGURES FROM BALANCE SHEET OF THE APPELL ANT SHOWING THAT ITA NO. 110/AGRAS/2011 6 RS.22.15 CRORE WAS LIABILITY TOWARDS LC AGAINST IMP ORT ON 31.03.2006 & RS.14.38 CRORE WAS ON 31.03.2005. INTEREST PAID T O THE BANK ON CASH CREDIT ACCOUNT AMOUNTED TO RS.16,54,907/- AS DEBITE D IN THE P & L A/C AND ON THE OTHER HAND THE INTEREST RECEIVED ON FDR IS MUCH LOWER I.E. RS.9,91,743/-. ON THE BASIS OF THESE FACTS AND FIGU RES, THE LD. AR ARGUED THAT THE CLAIM OF THE APPELLANT FOR DEDUCTIO N U/S 80IB IS WELL FOUNDED AND DESERVES ACCEPTANCE NOTWITHSTANDING TH E CONTRARY FINDINGS OF THE LD. CIT(A) RECORDED FOR AY 05-06 AN D THE RESERVATION EXPRESSED BY THE AO. 5.6 IN ADDITION TO THE ABOVE SUBMISSION, THE LD. AR HAS ALSO PUT FORWARD A ALTERNATIVE ARGUMENT RELYING ON THE DECIS ION OF HON'BLE DELHI TRIBUNAL IN CASE OF HIMACHAL EXICOM COMMUNICA TION LTD. (SUPRA). HIS ALTERNATIVE ARGUMENT IS REPRODUCED AS UNDER:- 'THOUGH THERE IS INDIRECT REFERENCE TO AN ALTERNATE CLAIM OF THE APPELLANT IN EARLIER PART OF SUBMISSION, YET THE SA ME NEEDS TO BE PUT IN STRAIGHT MANNER. ASSUMING THAT THE ASSERTION OF LEA RNED CIT (APPEALS) IN THE APPELLATE ORDER PASSED FOR ASSESSMENT YEAR 2 005-06 IS CORRECT AND INTEREST EARNED BY THE ASSESSEE IS LIABLE TO BE TREATED AS INCOME FROM OTHER SOURCES (EVEN THOUGH SAME HAS NOT BEEN A SSESSED IN SUCH MANNER) THEN ALSO IN TERMS OF SECTION 57 OF THE ACT , THE AMOUNT INCURRED TO EARN SUCH INCOME IS LIABLE TO BE DEDUCT ED FROM SUCH INCOME. IN VIEW OF SUCH MATTER THE INTEREST PAID TO BANK ON CASH CREDIT ACCOUNT WOULD BE ELIGIBLE FOR DEDUCTION AGAINST INC OME OF INTEREST EARNED ON FDR. IN THE RESULT, THERE WOULD BE NO NET INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. INTEREST ALLOWABLE AGAINST BUSINESS INCOME WOULD BE CORRESPO NDING LOW AND RESULTANTLY ENHANCED BUSINESS AND THE ULTIMATE BUSI NESS INCOME AND ADMISSIBLE DEDUCTION UNDER SECTION 80IB WOULD BE SA ME AS CLAIMED BY THE APPELLANT. SUCH A VIEW IS SUPPORTED BY THE DECI SION OF HON'BJE TRIBUNAL IN THE CASE OF HIMANCHAL EXICOM (SUPRA). I N FACT, IF SUCH A VIEW IS TAKEN, THERE WOULD BE HIGHER DEDUCTION ADMI SSIBLE TO THE APPELLANT UNDER SECTION 80IB FOR THE SIMPLE REASON THAT INTEREST EARNED ON FDR IS AT MUCH LOWER RATE AS COMPARED TO INTEREST PAID TO THE BANK. IF INTEREST ON FOR IS ASSESSED AS INCOME FROM OTHER SOURCES, THERE WOULD BE LOSS UNDER THIS HEAD, ENHANCED BUSIN ESS INCOME AND ENHANCED DEDUCTION UNDER SECTION 80IB AND SUCH ENHA NCED BUSINESS INCOME WOULD BE LIABLE TO' BE SET OFF AGAINST LOSS UNDER HEAD INCOME FROM OTHER SOURCES. THUS, THIS THEORY WOULD PLACE THE APPELLANT IN ITA NO. 110/AGRAS/2011 7 MORE ADVANTAGEOUS POSITION. THE APPELLANT WOULD HOW EVER, LIKE TO PRESS THIS LINE OF SUBMISSION ONLY IN THE EVENT OF NON-ACCEPTANCE OF ITS MAIN ARGUMENT.' 5.7. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF TH E LD. AR AND ALSO GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE AP PEAL ORDER OF MY LD. PREDECESSOR FOR THE AY 2005-06. HERE THE ISSUE IS NOT WHETHER ANY INTEREST ON FOR IS TO BE ASSESSED UNDER THE HEAD 'I NCOME FROM OTHER SOURCE' OR UNDER THE HEAD 'INCOME FROM BUSINESS'. T HE ISSUE TO BE DECIDED IS WHETHER THIS PARTICULAR INCOME IS ELIGIB LE FOR COMPUTING THE DEDUCTION U/S 80IB OR NOT AFTER FINDING THAT WHETHE R THIS PARTICULAR INCOME OF INTEREST ON FDR IS DERIVED FROM THE BUSIN ESS OF INDUSTRIAL UNDERTAKING BEING RUN BY THE APPELLANT COMPANY OR N OT. ALL THE CASE LAWS CITED BY LD. AR EXCEPT IN THE CASE OF HIMACHAL EXICOM COMMUNICATION LTD & SUDHIR GENSET LTD (SUPRA), THOU GH IT HAS BEEN HELD THAT INTEREST INCOME ON FDR IS TO BE TAXED UND ER THE HEAD INCOME FROM BUSINESS, NONE OF THE CASE LAWS HAVE DEALT WIT H THE ISSUE RELATING TO DEDUCTION U/S 80IB AND THEREFORE, THESE CASE LAW S ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. IN CASE OF HIMACHAL E XICOM COMMUNICATION LTD. ( SUPRA), THE HON'BLE DELHI BENC H OF ITAT HAS CLEARLY HELD THAT INTEREST INCOME CANNOT BE SAID TO HAVE BEEN DERIVED FROM INDUSTRIAL UNDERTAKING AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 801B. THOUGH IN CASE OF DCIT VS. SUDHIR GENSET LTD. (SUPRA), IT HAS BEEN HELD BY THE HON'BLE DELHI TRIBUNAL THAT INTERE ST DERIVED BY THE ASSESSEE ON FIXED DEPOSIT KEPT AS MARGIN MONEY WITH BANK COULD ONLY BE HELD AS BUSINESS INCOME AND ASSESSEE WOULD BE EN TITLED TO INCLUSION OF THE SAME FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB, IT IS RESPECTFULLY SUBMITTED THAT SUCH VIEW MAY NOT HOLD GOOD AFTER THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF L IBERTY INDIA VS. CIT, 317 ITR 218 IN WHICH THE HON'BLE APEX COURT HA S ANALYZED IN DETAILS THE WORD 'DERIVED FROM' VIS-A VIS THE WORD ATTRIBUTABLE TO. THE RELEVANT PORTION OF TILE' DECISION OF THE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) IS REPRODUCED AS UNDE R : '13. BEFORE ANALYZING SECTION 8O-IB, AS, A PREFATOR Y NOTE, IT NEEDS TO BE MENTIONED THAT THE 1961 ACT BROADLY PROVIDES FOR TWO TYPES OF TAX INCENTIVES, NAMELY, INVESTMENT LINKED INVESTMENT AN D PROFIT LINKED INCENTIVES. CHAPTER VI-A WHICH PROVIDES FOR INCENTI VES IN THE FORM OF TAX DEDUCTIONS ESSENTIALLY BELONG TO THE CATEGORY O F PROFIT LINKED ITA NO. 110/AGRAS/2011 8 INCENTIVES'. THEREFORE, WHEN SECTION 80-IA/80IB REF ERS TO PROFITS DERIVED FROM ELIGIBLE BUSINESS, IT IS NOT THE OWNER SHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES. WHAT ATTRACTS THE IN CENTIVES UNDER SECTION 80-IA/80IB IS THE GENERATION OF PROFITS (OP ERATIONAL PROFITS). FOR EXAMPLE, AN ASSESSEE COMPANY LOCATED IN MUMBAI MAY HAVE A BUSINESS OF BUILDING HOUSING PROJECTS OR A SHIP IN NAVA SHEVA. OWNERSHIP OF A SHIP PER SE WILL NOT ATTRACT SECTION 80IB(6). IT IS THE PROFITS ARISING FROM THE BUSINESS OF A SHIP WHICH A TTRACTS SUB-SECTION (6). IN OTHER WORDS, DEDUCTION UNDER SUB-SECTION ( 6) AT THE SPECIFIED RATE HAS LINKAGE TO THE PROFITS DERIVED FROM THE SH IPPING OPERATIONS. THIS IS WHAT WE MEAN IN DRAWING THE DISTINCTION BET WEEN PROFIT LINKED TAX INCENTIVES AND INVESTMENT INKED TAX INCENTIVES. IT IS FOR THIS REASON THAT PARLIAMENT HAS CONFINED DEDUCTION TO PROFITS D ERIVED FROM ELIGIBLE BUSINESSES MENTIONED IN SUB-SECTIONS (3) T O (11A) [AS THEY STOOD AT THE RELEVANT TIME]. ONE MORE ASPECT NEEDS TO BE HIGHLIGHTED. EACH OF THE ELIGIBLE BUSINESS IN SUB-SECTIONS (3) T O (11A) CONSTITUTES A STAND-ALONE ITEM IN THE MATTER OF COMPUTATION OF PR OFITS. THAT IS THE REASON WHY THE CONCEPT OF 'SEGMENT REPORTING' STAND S INTRODUCED IN THE INDIAN ACCOUNTING STANDARDS (IAS) BY THE INSTIT UTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI). 14. ANALYSING CHAPTER VI-A, WE FIND THAT SECTIONS 8 0-IB/80-IA ARE THE CODE BY THEMSELVES AS THEY CONTAIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THEREFORE, WE NEED TO EXAMIN E WHAT THESE PROVISIONS PRESCRIBE FOR 'COMPUTATION OF PROFITS OF THE ELIGIBLE BUSINESS'. IT IS EVIDENT THAT SECTION 80-IB PROVIDE S FOR ALLOWING OF DEDUCTION IN RESPECT OF PROFITS AND GAINS DERIVED F ROM THE ELIGIBLE BUSINESS. THE WORDS DERIVED FROM IS NARROWER IN C ONNOTATION AS COMPARED TO THE WORDS ATTRIBUTABLE TO. IN OTHER W ORDS, BY USING THE EXPRESSION DERIVED FROM'. PARLIAMENT INTENDED TO C OVER SOURCES NOT BEYOND THE FIRST DEGREE. 15. CONTINUING OUR ANALYSIS OF SECTIONS 80-FIA/80IB IT MAY BE MENTIONED THAT SUB-SECTION (13) OF SECTION 80-IB PR OVIDES FOR APPLICABILITY OF THE PROVISIONS OF SUB-SECTION (5) AND SUB-SECTIONS (7) TO (12) OF SECTION 80-IA, SO FAR AS MAY BE APPLICAB LE TO THE ELIGIBLE ITA NO. 110/AGRAS/2011 9 BUSINESS UNDER SECTION 8O-IB. THEREFORE, AT THE OUT SET, WE STATED THAT ONE NEEDS TO READ SECTIONS 80-I, 80-IA AND 80-IB AS HAVING A COMMON SCHEME. ON PERUSAL OF SUB-SECTION(5) OF SECTION 80- IA, IT IS NOTICED THAT IT PROVIDES, FOR MANNER OF COMPUTATION OF PROF ITS OF AN ELIGIBLE BUSINESS. ACCORDINGLY, SUCH PROFITS ARE TO BE COMPU TED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF T HE ASSESSEE. THEREFORE, THE DEVICES ADOPTED TO REDUCE OR INFLATE THE PROFITS OF ELIGIBLE BUSINESS HAS GOT TO BE REJECTED IN VIEW OF THE OVERRIDING PROVISIONS OF SUBSECTION (5) OF SECTION 80-IA, WHIC H ARE ALSO REQUIRED TO BE READ INTO SECTION 80-IB.[SEE SECTION 80-IB(13 )]. WE MAY REITERATE THAT SECTIONS 80I, 80-IA AND 80-1B HAVE A COMMON SCHEME AND IF SO READ IT IS CLEAR THAT THE SAID SECTIONS P ROVIDE FOR INCENTIVES IN THE FORM OF DEDUCTION (S), WHICH ARE LINKED TO PROF ITS AND NOT TO INVESTMENT. ON ANALYSIS OF SECTIONS 80-IA AND 80-IB IT BECOMES CLEAR THAT ANY INDUSTRIAL UNDERTAKING, WHICH BECOMES ELIG IBLE. ON SATISFYING SUB-SECTION(2), WOULD BE ENTITLED TO DEDUCTION UNDE R SUB-SECTION (1) ONLY TO THE EXTENT OF PROFITS DERIVED FROM SUCH IND USTRIAL UNDERTAKING AFTER SPECIFIED DATES (S). HENCE, APART FROM ELIGIBILITY, SUB-SECTION (1) PURPORTS TO RESTRICT THE QUANTUM OF DEDUCTION TO A SPECIFIED PERCENTAGE OF PROFITS. THIS IS THE IMPORTANCE OF TH E WORDS 'DERIVED FROM INDUSTRIAL UNDERTAKING' AS AGAINST 'PROFITS AT TRIBUTABLE TO INDUSTRIAL UNDERTAKING. 5.8 IN THE ABOVE DECISION, THE HON'BLE APEX COURT H AS CLEARLY HELD THAT SECTION 80IB PROVIDE FOR INCENTIVES IN FORM OF DEDUCTION WHICH ARE LINKED TO PROFIT AND NOT TO INVESTMENT. THEREFO RE IF ANY PROFIT IS GAINED BY CARRYING OUT THE ACTIVITIES OF INDUSTRIAL UNDERTAKING, SUCH PROFIT WOULD BE ELIGIBLE FOR DEDUCTROL1 U/S 80IB AN D IF ANY INCOME IS EARNED BY WAY OF INVESTMENT, SUCH INCOME WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S 80IB WHILE DECIDING THIS CASE OF LIBE RTY INDIA, THE APEX COURT HAS ALSO CITED HIS OWN DECISION IN CASE OF CI T VS. STERLING FOODS 237 ITR 579 (SC). 5.9 ON THE SIMILAR FACT OF EARNING OF INTEREST ON F DR PURCHASED AGAINST THE LETTER OF CREDIT, THE HON'BLE MADRAS HI GH COURT IN CASE OF CIT VS MADRAS MOTOR LTD./MM FORGINGS LTD. 257 ITR 6 0 (MAD) HAS HELD THAT THE INTEREST WHICH IS EARNED BY THE ASSES SEE FROM THE BANK DEPOSIT WOULD NOT HAVE A DIRECT NEXUS WITH THE INDU STRIAL UNDERTAKING OF THE ASSESSEE AND WOULD ONLY BE INCIDENTAL INCOME THERETO AND UNDERTAKING SUELI INTEREST HAS TO BE IGNORED FROM T HE ALLOWABLE PROFITS ITA NO. 110/AGRAS/2011 10 U/S 80HH. IN SECTION 80HH ALSO ONLY THAT PROFIT AND GAINS IS TO BE TAKEN WHICH IS DERIVED FROM TILE INDUSTRIAL UNDERTA KING, THEREFORE, THE AO HAS RIGHTLY FOLLOWED THE RATIO OF C1T VS MADRAS MOTOR LTD. / MM FORGINGS LID (SUPRA) WHILE DISALLOWING THE DEDUCTIO N U/S 80IB ON THE INTEREST EARNED BY THE APPELLANT ON FDR ,RELEVANT P ORTION OF THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN CASE O F CIT VS MADRAS MOTOR LTD. (SUPRA) IS GIVEN AS UNDER:- INTEREST RECEIPTS 3.1.1. THE INTEREST RECEIPTS ARE ALSO OF TWO DESCRI PTIONS. FIRSTLY, INTEREST RECEIVED ON ACCOUNT OF THE DEPOSIT MADE BY THE ASSESSEE- COMPANY WITH THE BANKS FOR OBTAINING LETTERS OF CRE DIT AND SECONDLY, INTEREST EARNED BY THE ASSESSEE-COMPANY ON THE DEPO SIT OF MARGIN MONEY FOR LETTERS OF CREDITS. 3.1.2 MRS. CHITRA VENKATARAMAN, LEARNED SENIOR STAN DING COUNSEL FOR THE DEPARTMENT, VERY HEAVILY CRITICISED THE DEDUCTI ON GRANTED TO THE ASSESSEE COMPANY ON ACCOUNT OF THIS INTEREST RECEIP TS. SHE POINTS OUT THAT THE WORDS USED IN SECTION 80HH ARE :- WHERE TILE GROSS TOTAL INCOME OF THE ASSESSEE INCL UDES ANY PROFITS AND GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING .. TO WHICH THIS SECTION APPLIES, THERE SHALL, IN ACCORDANCE WI TH THE SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAI NS OF AN AMOUNT EQUAL TO TWENTY PER CENT THEREOF. THE LEARNED COUNSEL INVITES OUR ATTENTION THAT THE EMPHASIZED WORDS WOULD SUGGEST THAT THE DEDUCTIBLE INCOME MUST HAVE BEEN 'DERIVED' FROM THE INDUSTRIAL UNDERTAKING. THE LEARNED COUNSE L CLAIMS THAT THE WORDS 'DERIVED FROM THE INDUSTRIAL UNDERTAKING' WOU LD SUGGEST THAT THE SAID INCOME MUST BE SOLELY RELATABLE TO THE IND USTRIAL UNDERTAKING AND THE INTEREST EARNED BY THE ASSESSEE ON ITS DEPO SITS THOUGH FOR GETTING LETTERS OF CREDIT FROM ITS BANK CANNOT BE H ELD TO BE THE PROFITS AND GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING A ND WOULD OBVIOUSLY BE THE INCOME FROM OTHER SOURCES. ITA NO. 110/AGRAS/2011 11 3.1.3. THE LEARNED COUNSEL BUTTRESSES HER CONTENTIO N ON THE BASIS OF THE DECISION IN CIT V. STERLING FOODS (1999) 237 IT R 579 (SC). IN THAT CASE, THE APEX COURT WHILE NEGATING THE CLAIM OF LF1E ASSESSEE HAS HELD THAT THERE MUST BE FOR THE APPLICATION OF THE WORDS 'DERIVED FROM' A DIRECT NEXUS BETWEEN THE PROFITS AND GAINS AND THE INDUSTRIAL UNDERTAKING. THE LEARNED COUNSEL FURTHER POINTED OU T THAT THE APEX COURT IN THAT CASE ALSO CONSIDERED THE DECISION CAM BAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT (1978) 113 ITR 84 (SC) WHERE IT WAS HELD THAT THE EXPRESSION 'ATTRIBUTABLE' WAS USE D WHEN THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. 3.1.4 IN CAMBAY ELECTRIC SUPPLY COMPANY'S CASE, CIT ED SUPRA, THE APEX COURT WAS CONSIDERING THE TWO CONFLICTING DECI SIONS OF TILE HIGH COURT IN CASE OF THE SAME ASSESSEE. WHILE THE EARLI ER DECISION OF THE HIGH COURT WAS THAT TO OBTAIN THE BENEFIT OF SECTIO N 80HH THE ASSESSEE HLAD TO ESTABLISH THAT THE PROFITS AND GAINS WERE D ERIVED FROM ITS INDUSTRIAL UNDERTAKING AND IT WAS JUST NOT SUFFICIE NT THAT THE COMMERCIAL CONNECTION WAS ESTABLISHED BETWEEN THE P ROFITS EARNED AND THE INDUSTRIAL UNDERTAKING. IT WAS HELD BY THE DIVISION BENCH FURTHER THAT: 'THE INDUSTRIAL UNDERTAKING ITSELF HAD TO BE THE SO URCE OF THE PROFIT. THE BUSINESS OF THE INDUSTRIAL UNDERTAKING HAD DIRE CTLY TO YIELD THAT PROFIT. ' THE HIGH COURT SUBSEQUENTLY HAD TAKEN A CONTRARY VI EW BASING ITSELF ON THE AMENDMENT TO SECTION 28. REALISING THIS CONT RARY STAND TAKEN BY THE HIGH COURT, THE APEX COURT SET ASIDE THE SUB SEQUENT CONTRARY JUDGMENT. THE APEX COURT THEN WENT ON FIND IN PARA 11 IN THE FOLLOWING WORDS: 'THE USE OF THE WORDS' 'DERIVED FROM' IN ITEM 11-AA (2) SUGGESTS THAT THE ORIGINAL SOURCE OF THE PRODUCT HAS TO HE FOUND. THUS, AS A MATTER OF PLAIN ENGLISH, WHEN IT IS SAID THAT ONE WORD IS DER IVED FROM ANOTHER, OFTEN IN ANOTHER LANGUAGE, WHAT IS MEANT IS THAT TH E SOURCE OF THAT WORD IS ANOTHER WORD, OFTEN IN ANOTHER LANGUAGE. AS AN ILLUSTRATION, THE WORD 'DEMOCRACY' IS DERIVED FROM THE GREEK WORD DEMOS THE PEOPLE, AND MOST DICTIONARIES WILL SO STATE. THAT I S THE ORDINARY ITA NO. 110/AGRAS/2011 12 MEANING OF THE WORDS 'DERIVED FROM' AND THERE IS NO REASON TO DEPART FROM THAT ORDINARY MEANING HERE. THE APEX COURT FURTHER OBSERVED IN PARA 12 AS FOLL OWS : 'THERE MUST BE, FOR THE APPLICATION OF THE WORDS 'D ERIVED FROM', A DIRECT NEXUS BETWEEN THE PROFITS AND GAINS AND TH E INDUSTRIAL UNDERTAKING.' AS REGARDS THE FACTS OF THE CASE CONCERNED, THE APE X COURT HELD IN THAT CASE THE NEXUS WAS NOT DIRECT BUT ONLY INCIDENTAL. THERE THE APEX COURT WAS CONSIDERING THE CASE OF AN ASSESSEE WHO W AS ENGAGED IN PROCESSING PRAWNS AND OTHER SEAFOOD WHICH IS EXPORT ED AND IN THAT IT ALSO EARNED SOME IMPORT ENTITLEMENTS GRANTED BY THE CENTRAL GOVERNMENT UNDER THE EXPORT PROMOTION SCHEME. SUCH IMPORT ENTITLEMENTS COULD BE USED BY THE ASSESSEE ITSELF O R COULD ALSO BE SOLD TO OTHERS. THE ASSESSEE HAD SOLD THE IMPORT ENTITLE MENTS WHICH IT HAD EARNED TO OTHERS AND THE TOTAL INCOME FOR THE ASSES SMENT INCLUDED THE SALE PROCEEDS OF SUCH IMPORT ENTITLEMENTS IN RESPEC T OF WHICH RELIEF WAS GRANTED UNDER SECTION 80HH OF THE INCOME TAX AC T. THE HIGH COURT HAD HELD IN FAVOUR OF THE ASSESSEE. HOWEVER, THE SUPREME COURT FOUND THAT SUCH SALE OF THE IMPORT ENTITLEMENT COUL D NOT BE SAID TO BE AN INCOME DIRECTLY ATTRIBUTABLE TO THE INDUSTRIAL U NDERTAKING. THE SUPREME COURT OBSERVED : 'THE INDUSTRIAL UNDERTAKING EXPORTS PROCESSED SEA FOOD. BY REASON OF SUCH EXPORT, THE EXPORT PROMOTION SCHEME APPLIES. T HEREUNDER, THE ASSESSEE IS ENTITLED TO IMPORT ENTITLEMENTS; WHICH IT CAN SELL. THE SALE CONSIDERATION THEREFROM CANNOT, IN OUR VIEW, BE HEL D TO CONSTITUTE A PROFIT AND GAIN DERIVED FROM THE ASSESSEE'S INDUSTR IAL UNDERTAKING. THE LEARNED COUNSEL, THEREFORE, VERY VEHEMENTLY ARG UED THAT THE LETTERS OF CREDIT HAD TO BE OPENED IF THE ASSESSEE WANTED T HAT FACILITY AND THE ASSESSEE HAD DEPOSITED CERTAIN AMOUNT AS MARGIN MON EY AND THE ASSESSEE WAS EARNING INTEREST THEREUPON. LEARNED CO UNSEL POINTED OUT THAT FOR ANY OTHER BUSINESS, THE SAID LETTERS OF CR EDIT COULD HAVE BEEN OPENED AND FOR OPENING SUCH LETTERS OF CREDIT THE A SSESSEE HAD TO DEPOSIT THE MARGIN MONEY WITH THEIR BANKERS AND IT WOULD EARN INTEREST THEREUPON. MERELY BECAUSE THE LETTERS OF C REDIT WERE FOR THE PURPOSE OF BUSINESS OF FORGINGS, IT COULD NOT BE SA ID THAT THE INTEREST ITA NO. 110/AGRAS/2011 13 EARNED WAS DIRECTLY ATTRIBUTABLE TO THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE LEARNED COUNSEL CONTENDS THAT SUCH IN TEREST WOULD BE ONLY INCIDENTAL TO THE ASSESSEE'S BUSINESS ACTIVITY OF MANUFACTURE OF FORGINGS AND EXPORT THEREOF. 3.1.5. THE LEARNED COUNSEL ALSO INVITED OUR ATTENTI ON TO THE DIVISION BENCH DECISION OF THIS COURT IN CIT V. PENDIAN CHEM ICALS LTD. (1998) 233 ITR 497 (MAD). IN THAT CASE, THE ASSESSEE HAD M ADE DEPOSITS WITH TAMIL NADU ELECTRICITY BOARD AND WAS EARNING INTERE ST THEREUPON. IT WAS NO DOUBT TRUE THAT FOR GETTING POWER CONNECTION , EVERY INDUSTRIAL UNDERTAKING HAD TO MAKE THE DEPOSITS WITH THE ELECT RICITY BOARD HOWEVER, IT WAS HELD BY THE DIVISION BENCH THAT THE INTEREST DERIVED FROM SUCH DEPOSITS COULD NOT BE SAID TO HAVE BEEN D ERIVED FROM INDUSTRIAL UNDERTAKING. THE COURT FURTHER HELD THAT THE IMMEDIATE AND EFFECTIVE SOURCE OF THE INTEREST WAS THE DEPOSIT AN D NOT THE INDUSTRIAL UNDERTAKING. RELYING UPON THE NUMBER OF OTHER DECIS IONS, THE COURT OBSERVED AS FOLLOWS: ''THE WORD DERIVED IS NOT A TERM OF ART AND ITS U SE IN THE DEFINITION INDEED DEMANDS AN ENQUIRY INTO THE GENEALOGY OF THE PRODUCT, BUT THE ENQUIRY SHOULD STOP AS SOON AS THE EFFECTIVE SOURCE IS DISCOVERED AND THE PROFIT OR GAIN CAN BE SAID TO HAVE BEEN 'DERIVE D' FROM AN ACTIVITY CARRIED ON BY A PERSON, IT THE SAID ACTIVITY IS THE IMMEDIATE AND EFFECTIVE SOURCE OF THE SAID PROFIT OR GAIN .... TH ERE MUST BE A DIRECT NEXUS BETWEEN THE ACTIVITY AND TILE EARNING OF THE PROFIT OR GAIN AND TILE INCOME, PROFIT OR GAIN CANNOT BE SAID TO HAVE BEEN DERIVED FROM ANY ACTIVITY MERELY BY REASON OF THE FACT THAT THE SAID ACTIVITY MAY HAVE HELPED TO EARN THE SAID INCOME OR PROFIT IN AN INDIRECT OR REMOTE MANNER. WE AGREE WITH THIS DECISION, WHICH IS BINDING ON US . THE AFOREMENTIONED DECISION HAS ONLY BEEN FURTHER STREN GTHENED THE SUBSEQUENT DECISION OF THE APEX COURT WE ARE, THERE FORE, OF FILE CLEAR OPINION THAT THE INTEREST WHICH IS EARNED BY THE AS SESSEE FROM THE BANK DEPOSITS WOULD NOT HAVE A DIRECT NEXUS WITH THE IND USTRIAL UNDERTAKING OF THE ASSESSEE AND WOULD ONLY BE INCIDENTAL INCOME THERETO AND, THEREFORE, SUCH INTEREST HAS TO BE IGNORED FROM THE ALLOWABLE PROFITS UNDER SECTION 80HH. WE ANSWER THE REFERENCE ON THIS COUNT AGAINST THE ASSESSEE. ITA NO. 110/AGRAS/2011 14 5.10 THE ABOVE DECISION IN CASE OF MADRAS MOTORS (S UPRA) WAS FOLLOWED BY THE PUNJAB AND HARYANA HIGH COURT IN CA SE OF NAHAR SPINNING MILLS LTD. VS. CIT HOLDING THAT NO DEDUCTI ON UNDER SECTION 80IA IS TO BE ,ALLOWED FOR INTEREST INCOME DERIVED FROM THE BUSINESS. THE FOLLOWING THREE ISSUES WERE BEFORE THE HONBLE HIGH COURT.: '(V) WHETHER ON A CORRECT AND PROPER INTERPRETATION OF THE PROVISIONS OF SECTION 80IA OF THE ACT AND APPLICATION THEREOF TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS THE TRIBUNAL LEGALLY CORRECT IN HOLDING THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IA IN R ESPECT OF INTEREST INCOME DERIVED FROM ITS BUSINESS, MADE BY TILE APPE LLANT WAS NOT SUSTAINABLE? (VI) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL HAS MISDIRECTED ITSELF IN LAW AND AS WELL AS ON FACTS IN HOLDING THAT THE APPELLANT WAS NOT ENTITLED TO DEDU CTION UNDER SECTION 80IA OF THE ACT CLAIMED BY THE ASSESSEE? (VII) WHETHER THE FINDING RETURNED AND RECORDED BY THE TRIBUNAL WHILE HOLDING THAT APPELLANT WAS NOT ENTITLED TO DEDUCTIO N UNDER SECTION 80FA BY WRONGLY APPLYING THE EARLIER DECISION GIVEN IN C.O. NO. 130/CHD/1993 FOR ASSESSMENT YEAR 1990-91 WHICH WAS IN RESPECT OF SECTION 80IA OF THE ACT?' IN RESPECT OF THE ABOVE THREE ISSUES, THE HON'BLE H IGH COURT HELD AS UNDER: 'AS FAR AS QUESTION NOS. 6(V) TO (VII) ARE CONCERNE D REGARDING THE CLAIM FOR DEDUCTION UNDER SECTION 80IA OF THE ACT A RE CONCERNED, WE ARE OF THE VIEW THAT THE TRIBUNAL IS RIGHT IN REJEC TING THE CLAIM OF THE APPELLANT. IN THIS REGARD A BARE PERUSAL OF THE PRO VISIONS OF SECTION 80IA SHOWS THAT THE INCOME SHOULD DERIVED FROM THE INDUSTRIAL ACTIVITY. SIMILAR VIEW HAS BEEN EXPRESSED BY MADRAS HIGH COURT IN CIT V. MADRAS MOTORS LTD./M.M. FORGINGS LTD., MADHY A PRADESH HIGH COURT IN CIT V. PARAS OIL EXTRACTION LTD , GAU HATI HIGH COURT IN NORTH EAST GASES (P) LTD. V. CIT AND MADRAS HIGH COURT IN CIT V. ITA NO. 110/AGRAS/2011 15 N.S.C. SHOES. THUS, THESE QUESTIONS CANNOT BE HELD TO BE SUBSTANTIAL QUESTIONS OF LAW. SO. WE DECLINE TO ENTERTAIN THESE QUESTIONS. 5.11 FOLLOWING THE DECISION OF HONBLE APEX COURT I N CASE OF LIBERTY INDIA VS. CIT, MADRAS HIGH COURT IN THE CASE OF CIT VS. MADRAS MOTORS AND BY PUNJAB AND HARYANA HIGH COURT IN CAS E OF NAHAR SPINNING MILLS LTD. VS CIT, I AM OF THE VIEW THAT N O DEDUCTION U/S 80IB IS ALLOWABLE ON THE INTEREST EARNED ON FDR BEC AUSE SUCH INTEREST INCOME IS NOT DERIVED FROM THE BUSINESS OF THE INDU STRIAL UNDERTAKING OF THE APPELLANT BECAUSE IT DOES NOT HAVE ANY DIREC T NEXUS WITH THE MANUFACTURING ACTIVITIES OF THE INDUSTRIAL UNDERTAK ING OF THE APPELLANT AND CALL BE ONLY CONSIDERED AS AN INCIDENTAL INCOME OR INVESTMENT BASED INCOME AS HELD BY TILE APEX COURT. TAXATION O F THIS INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCE 'OR UNDER THE HEAD 'INCOME FROM BUSINESS OR PROFESSION' WOULD NOT HAVE ANY BEARING ON THE COMPUTATION OF DEDUCTION U/S 80IB. 5.12 NOW, I COME TO THE ALTERNATIVE ARGUMENT OF THE APPELLANT THAT IF INTEREST ON FDR IS TAXED SEPARATELY UNDER THE HEAD 'INCOME FROM OTHER SOURCE', INCOME UNDER THIS HEAD HAS TO BE CAL CULATED BY PROVIDING DEDUCTION U/S 57 FOR THE AMOUNT OF INTERE ST EXPENDITURE DEBITED BY THE APPELLANT COMPANY IN THE P & L A/C. IN HIS VIEW, IF INTEREST ON FDR IS ASSESSED AS INCOME FROM OTHER SO URCES BY NETTING WITH INTEREST EXPENDITURE, THERE WOULD BE, LOSS UND ER THIS HEAD AND HENCE BUSINESS INCOME WOULD BE ENHANCED AND, THEREF ORE, DEDUCTION U/S 80IB WOULD BE ENHANCED AND SUCH ENHANCED BUSINE SS INCOME WOULD BE ALLOWABLE TO BE SET OFF AGAINST LOSS UNDER THE HEAD INCOME FROM OTHER SOURCE. IT IS FURTHER STATED THAT HE WOU LD LIKE TO PRESS THIS LINE OF SUBMISSION ONLY IN THE EVENT OF NON ACCEPTA NCE OF THE MAIN ARGUMENT. I HAVE ALREADY REJECTED THE MAIN ARGUMENT OF THE APPELLANT THAT INTEREST EARNED ON FDR IS ALLOWABLE FOR DEDUCT ION U/S 80IB BY HOLDING THAT THIS INCOME IS NOT DERIVED FROM THE BU SINESS OF INDUSTRIAL UNDERTAKING OF THE APPELLANT AND HENCE DEDUCTION U/ S 80IB IS NOT ALLOWABLE. THEREFORE, I HAVE ALSO DEALT WITH THE AL TERNATIVE ARGUMENT OF THE APPELLANT. 5.13. FOR NETTING OF THE INTEREST INCOME .UNDER TH E HEAD OTHER SOURCE, THE APPELLANT HAS RELIED ON THE DECISION OF HON'BLE DELHI TRIBUNAL IN CASE OF HIMACHAL EXICOM COMMUNICATION LTD (SUPRA). I HAVE ALREADY DISCUSSED THIS CASE LAW IN PARA NO. 5.4. IN THIS CA SE, THE HON'BLE ITA NO. 110/AGRAS/2011 16 TRIBUNAL HAS HELD THAT ONLY THOSE INTEREST EXPENDIT URE WOULD BE EXCLUDED FROM THE P & L A/C OF THE INDUSTRIAL UNDER TAKING, WHICH IS FOUND RELATABLE TO THE INCOME EARNED BY WAY OF INTE REST ON FDR. AS PER THE FACT OF H1IS CASE, THE APPELLANT IS PURCHAS ING FDR TO SECURE THE INTEREST OF THE BANK BECAUSE BANK WANTS TO ENSU RE REALIZATION OF ITS FUND IN CASE OF ANY OF DEFAULT. FOR MAKING FDR, NO FUND IS BEING BORROWED BY THE APPELLANT FROM THE BANK. THE APPELL ANT IS IN THE BUSINESS OF MANUFACTURING AND TRADING OF FERROUS & NON FERROUS METAL FOR WHICH HE IS MAKING IMPORT FROM VARIOUS OUTSIDE COUNTRIES AND FOR THE PURPOSE OF ITS IMPORT, THE FUND ARE BEING BORRO WED BY THE APPELLANT COMPANY FOR OBTAINING LETTER OF CREDIT FR OM THE BANK. THEREFORE, WHATEVER FUND THE APPELLANT COMPANY IS B ORROWING IS FOR THE PURPOSE OF ITS BUSINESS OF INDUSTRIAL UNDERTAKI NG AND NOT FOR THE PURPOSE OF MAKING FDR. THEREFORE, INTEREST EXPENDIT URE ON SUCH BORROWED FUND IS TO BE DEBITED IN THE P & L A/C OF INDUSTRIAL UNDERTAKING AND CANNOT BE NETTED WITH THE INTEREST EARNED ON FDR. 5.14 UNDER SECTION 57 ONLY THAT EXPENDITURE HAS TO BE DEDUCTED AGAINST THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES', WHICH ARE LAID DOWN OR EXPENDED WHOLLY AND EXCLUSIVELY FO R THE PURPOSE OF MAKING OR EARNING OF SUCH INCOME. IN THE PRESENT CA SE, THERE IS NO DIRECT NEXUS BETWEEN THE FUND BORROWED BY THE APPEL LANT AND INVESTMENT MADE IN THE FDR AND THEREFORE, IT CANNOT BE SAID THAT INTEREST EXPENDITURE ON THE BORROWED FUND ARE EXPEN DED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF INTEREST ON FDRS. IT HAS BEEN EXPLAINED BY THE LD. AR THAT APPELLANT WAS UNDER TH E COMPULSION FROM THE BANK TO PURCHASE FDR TO OBTAIN LETTER OF C REDIT. SUCH CONDITION MIGHT HAVE BEEN PUT BY THE BANK TO ENSURE SAFETY OF RECOVERY IN CASE OF ANY DEFAULT AND, THEREFORE, PUR CHASING OF FDR BY THE APPELLANT MAY BE INCIDENTAL TO ITS BORROWING OF FUND FROM THE BANK BUT NO DIRECT NEXUS CAN BE ESTABLISHED BETWEEN THE BORROWING OF FUNDS FOR THE PURPOSE OF IMPORT OF MATERIAL RELATING TO I TS BUSINESS OF INDUSTRIAL UNDERTAKING AND PURCHASING OF FDRS. THER EFORE, NO DEDUCTION FOR THE INTEREST EXPENDITURE ON BORROWED FUND DEBITED BY THE APPELLANT IN P &. L A/C CAN BE PROVIDED FROM IT S INTEREST INCOME ON FDRS. INTEREST INCOME ON FDR IS INCIDENTAL TO IT S BUSINESS FOR WHICH THE APPELLANT COMPANY HAS NOT INCURRED ANY EX PENDITURE AND, THEREFORE, THIS INTEREST INCOME ON FDR SHOULD BE TA XED AT ITS GROSS AMOUNT. ITA NO. 110/AGRAS/2011 17 5.15 IN THE ASSESSMENT ORDER, THE AO HAS NOT HELD W HETHER THIS INTEREST INCOME IS TO BE TAXED UNDER THE HEAD 'INCOME FROM O THER SOURCE' OR UNDER THE HEAD 'BUSINESS INCOME'. IN BOTH THE SITUA TION, WHETHER IT IS TAXED UNDER THE HEAD 'INCOME FROM OTHER SOURCE' OR UNDER THE 'HEAD 'BUSINESS INCOME', NO DEDUCTION U/S 80LB WOULD BE A LLOWED ON THIS INTEREST INCOME BECAUSE THIS INTEREST INCOME IS NOT DERIVED FROM THE BUSINESS OF INDUSTRIAL UNDERTAKING AND ALSO THIS IN TEREST INCOME IS TO BE TAXED ON GROSS VALUE, THEREFORE, THE AO HAS RIGH TLY DISALLOWED DEDUCTION U/S 80IB AT RS.2,97,5231/- AND MADE THE A DDITION OF THIS AMOUNT IN THE INCOME OF THE APPELLANT COMPANY. IN V IEW OF MY ABOVE DECISION GROUND NOS,3 & 4 ARE DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FDR WAS PREPARED OUT OF CC ACCOUNT AND REFERRED TO PB-17, IN WHICH SCHEDULE-H OF OTHER INCOME HAS DISCLOSED INTEREST ON FDR AT RS.9,91.743/- AND SCHEDULE-I AS BANK INTEREST PAID IN A SUM OF RS.16,54,907/-. HE HAS ADMITTED THAT IN PRECEDING A SSESSMENT YEAR 2005-06, THE TRIBUNAL CONFIRMED THE ORDER OF THE LD. CIT(A) REJE CTING BOTH THE CONTENTIONS OF THE ASSESSEE FOR DEDUCTION U/S. 80IB ON INTEREST ON FDR AS WELL AS ALTERNATE CONTENTION OF NETTING OF INTEREST. THE COPY OF THE ORDER OF TH E TRIBUNAL IN ITA NO. 470/AGRA/2009, A.Y. 2005-06 DATED 25.02.2011, IS FI LED IN PAPER AT PAGE NO. 34 TO 39. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ADMITT ED THAT THE ASSESSEE DID NOT PREFER ANY APPEAL BEFORE THE HONBLE HIGH COURT AGAINST TH E ABOVE ORDER AND AS SUCH, THE ORDER OF THE TRIBUNAL DATED 25.02.2011 HAS BECOME F INAL BETWEEN THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED TH AT ON THE ISSUE OF NETTING, THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AC G ASSOCIATED CAPSULES (P) ITA NO. 110/AGRAS/2011 18 LTD. VS. CIT, 67 DTR (SC) 205 IS APPLICABLE ON ALTE RNATE CONTENTION, IN WHICH IT WAS HELD IN OTHER WORDS, NINETY PER CENT OF NOT THE GROSS R ENT OR GROSS INTEREST BUT ONLY THE NET INTEREST OR NET RENT, WHI CH HAS BEEN INCLUDED IN THE PROFITS OF BUSINESS OF THE ASSESSEE AS COMPU TED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, IS T O BE DEDUCTED UNDER CL. (1) OF EXPLN. (BAA) TO S. 80HHC FOR DETERMINING THE PROFITS OF THE BUSINESS. 4. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ALL THE GROUNDS ARE COVERED BY O RDER OF ITAT, AGRA BENCH IN THE CASE OF SAME ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2005-06 AND THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES. THEREFORE, T HE APPEAL OF THE ASSESSEE MAY BE DISMISSED. THE LD. DR SUBMITTED THAT THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. (SUPRA) I S DISTINGUISHABLE ON FACTS BECAUSE IN THE CASE OF THE ASSESSEE INTEREST ON FDR S WAS TREATED AS INCOME FROM OTHER SOURCES, WHICH CANNOT BE GIVEN SET OFF OR NET TING AGAINST THE BUSINESS EXPENDITURE UNDER A DIFFERENT HEAD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE AUTHORITIES BELOW HAVE SPECIFICALLY NOTED IN THE IM PUGNED ORDER THAT AFTER CONSIDERING THE NATURE OF THE ISSUE, IT WAS FOUND T HAT IN THE SIMILAR FACTS AND CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE U/S. 80IB ON INTEREST ON FDR WAS ITA NO. 110/AGRAS/2011 19 DISALLOWED IN PRECEDING ASSESSMENT YEAR 2005-06. IT WAS ALSO NOTED THAT NO NEW FACTS HAVE BEEN BROUGHT ON RECORD IN THE ASSESSMENT YEAR UNDER APPEAL AS COMPARED TO THE EARLIER YEAR. EVEN BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE DID NOT BRING ANY NEW FACTS TO OUR NOTICE. ITAT, AGRA BENCH IN THE CA SE OF SAME ASSESSEE IN PRECEDING ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 25.02.2011 (SUPRA) REJECTED THE CLAIM OF ASSESSEE FOR DEDUCTION U/S. 80IB OF TH E IT ACT ON INTEREST INCOME ON FDR AS WELL AS ALTERNATE CONTENTION OF THE ASSESSEE WAS ALSO REJECTED. THE FINDINGS OF THE TRIBUNAL IN PARA 7 TO 13 ARE REPRODUCED AS U NDER :- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS PA SSED BY THE REVENUE AUTHORITIES. THE ONLY ISSUE INVOLVED IN THE PRESEN T APPEAL IS WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION OF INTEREST ON FDRS. MADE FROM THE BANK FOR PROCURING OVERDRAFT, LETTER OF CREDIT FROM THE BANK UNDER SECTION 80IB OR NOT. AFTER PERUSING THE ORDERS PAS SED BY THE REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RELIED UPON VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS THE HONBLE HIGH COURTS IN WHICH THE HONBLE HIGH COURT HAS CONSIDERED THE ISSUE IN DISPUTE AND DECIDED THE SAME AGAINST THE ASSESSEE BY HOLDING TH AT THE INTEREST ON AMOUNT DEPOSITED IN THE BANK DOES NOT QUALIFY FOR S PECIAL DEDUCTION UNDER SECTION 80IB OF THE ACT BECAUSE IT HAS NOT DE RIVED FROM THE INDUSTRIAL UNDERTAKING. THE HONBLE HIGH COURT HAS ALSO HELD THAT THE TERM DERIVED FROM IS NARROW THAN THE TERM AT TRIBUTED TO AND THAT THE AMOUNT WHICH DO NOT HAVE A DIRECT NEXUS WI TH THE INDUSTRIAL UNDERTAKING CANNOT BE REGARDED AS HAVING BEEN DERIV ED FROM THE INDUSTRIAL UNDERTAKING. THEREFORE, THE INTEREST RE CEIVED ON DEPOSITS CANNOT BE REGARDED AS INCOME DERIVED FROM INDUSTRIA L UNDERTAKING. THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE M ADRAS HIGH COURT IN THE CASE OF CIT VS. N.S.C. SHOES, 258 ITR 749 (M AD.). ITA NO. 110/AGRAS/2011 20 8. THE ISSUE IN DISPUTE HAS ALREADY BEEN ADJUDICATE D BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF NORTH EAS T GASES PVT. LTD. VS. CIT, 220 ITR 372 (GAUHATI) IN WHICH THE HONBLE HIGH COURT HAS HELD THAT INTEREST INCOME DID NOT COME WITHIN THE S COPE OF PROFIT AND GAIN OF BUSINESS BUT UNDER THE HEAD INCOME FROM O THER SOURCES. THEREFORE, ANY INCOME EARNED FROM FIXED DEPOSITS AN D INTEREST THEREON COULD NOT BE SAID TO BE PROFIT AND GAINS DERIVED FR OM AN INDUSTRIAL UNDERTAKING. 9. ON THE ISSUE IN DISPUTE, A VERY IMPORTANT DECISI ON HAS BEEN RENDERED BY THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF PANDIAN CHEMICALS LTD. VS. CIT REPORTED IN 262 ITR 278 (SC). THE HONBLE SUPREME COURT OF INDIA HAS ALSO ADJUDICATED AND DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE. 10. APART FROM THE AFORESAID DECISIONS RENDERED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS HONBLE HIGH COUR TS, NOW LATEST DECISION RENDERED BY THE HONBLE SUPREME COURT OF I NDIA IN THE CASE OF LIBERTY INDIA VS. CIT, 317 ITR 218 (SC) HAS ALSO ADJUDICATED THE ISSUE IN DISPUTE AND DECIDED THE SAME AGAINST THE A SSESSEE. 11. IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN ADJUDICATED BY THE APEX COURT AND DECIDED AGAINST THE ASSESSEE AND THE LD. FIRST APPELLATE AUTHORITY HAS ALSO DECIDED THE ISSUE IN D ISPUTE AGAINST THE ASSESSEE BY RESPECTFULLY FOLLOWING THE SAME. THERE FORE, NO INTERFERENCE IS CALLED FOR ON THE ISSUE IN DISPUTE AND HENCE WE HOLD THAT INTEREST INCOME ON FDRS. FROM BANK FOR PROCURI NG LETTER OF CREDIT BY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. THE CITATIONS CITED BY THE LD. COUNSEL FOR TH E ASSESSEE ARE VERY OLD, BUT KEEPING IN VIEW THE LATEST DECISION RENDER ED BY THE HONBLE SUPREME COURT OF INDIA REPORTED IN 317 ITR 218 (SC) , WE ARE UNABLE TO FOLLOW THE SAME. 12. AS REGARDS TO THE ALTERNATIVE REQUEST OF THE LD . COUNSEL FOR THE ASSESSEE REGARDING NETTING OF INTEREST RECEIVED IN RESPECT OF THE FDRS. AGAINST THE INTEREST PAID TO THE BANK, AFTER GOING THROUGH THE ORDERS PASSED BY THE REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED OPINION THAT THE ALTERNATIVE REQUEST OF THE ASSESSEE IS ALS O NOT ACCEPTABLE SINCE INTEREST ON FDRS. HAS BEEN TREATED AS INCOME FROM O THER SOURCES, WHEREAS INTEREST DEBITED TO THE PROFIT & LOSS ACCOU NT CONSTITUTES ITA NO. 110/AGRAS/2011 21 BUSINESS EXPENDITURE UNDER SECTION 36(1) & (2) OF T HE ACT. NETTING OF THE INCOME UNDER ONE HEAD OF INCOME AGAINST EXPENDI TURE UNDER THE DIFFERENT HEAD OF INCOME IS NOT POSSIBLE AS PER LAW . THEREFORE, THE ALTERNATE REQUEST OF THE ASSESSEE IS ALSO REJECTED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 5.1 SINCE, THERE IS NO CHANGE IN THE FACTS AND CIRC UMSTANCES OF THE CASE, THEREFORE, THE ISSUE IS COVERED AGAINST THE ASSESSE E BY ORDER OF ITAT, AGRA BENCH IN THE CASE OF THE SAME ASSESSEE FOR PRECEDING ASSE SSMENT YEAR 2005-06 (SUPRA). FURTHER, THE LD. COUNSEL FOR THE ASSESSEE ARGUED TH AT NETTING IS ALLOWED BY HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULE S (P). LTD. (SUPRA). THE LD. CIT(A) IN PARA 5.13 OF THE IMPUGNED ORDER REPRODUCE D ABOVE HAS GIVEN SPECIFIC FINDING THAT THE ASSESSEE WAS MAKING IMPORT FROM VA RIOUS COUNTRIES AND FUNDS WERE BORROWED FOR THE PURPOSE OF BUSINESS AND NOT FOR TH E PURPOSE OF MAKING FDR. THEREFORE, INTEREST EXPENDITURE ON SUCH BORROWED FU NDS IS TO BE DEBITED IN THE PROFIT AND LOSS ACCOUNT OF INDUSTRIAL UNDERTAKING A ND CANNOT BE NETTED WITH INTEREST EARNED ON FDRS. THE LD. CIT(A) FURTHER IN PARA 5.14 OF THE IMPUGNED ORDER REPRODUCED ABOVE HAS SPECIFICALLY HELD THAT U/S. 57 , ONLY EXPENDITURE HAS TO BE DEDUCTED AGAINST THE INCOME UNDER THE HEAD INCOME F ROM OTHER SOURCES, WHICH ARE LAID OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PUR POSE OF MAKING OR EARNING OF SUCH INCOME. IN THE CASE OF ASSESSEE, NO DIRECT NEX US WAS FOUND BETWEEN THE FUNDS BORROWED BY THE ASSESSEE AND INVESTMENT MADE IN THE FDR. IT WAS, THEREFORE, HELD ITA NO. 110/AGRAS/2011 22 THAT IT CANNOT BE SAID THAT INTEREST EXPENDITURE ON THE BORROWED FUNDS ARE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING O F INTEREST ON FDRS. THEREFORE, THE CLAIM OF THE ASSESSEE FOR NETTING WAS DISALLOWE D. THE TRIBUNAL ALSO IN PRECEDING ASSESSMENT YEAR 2005-06 REJECTED THE ALTE RNATE CLAIM OF ASSESSEE FOR NETTING OF INTEREST, WHICH WAS INTEREST ON FDR, HAS BEEN TREATED AS INCOME FROM OTHER SOURCES WHEREAS THE INTEREST DEBITED TO PROFI T AND LOSS ACCOUNT CONSTITUTES BUSINESS EXPENDITURE. THE ASSESSEE ITSELF IN THE BO OKS OF ACCOUNT AND PROFIT AND LOSS ACCOUNT ETC., AS NOTED ABOVE, SHOWED THE SAME INCOME UNDER THE HEAD OTHER INCOME (PB-17). THE NETTING OF INCOME UNDER ONE HE AD OF INCOME AGAINST EXPENDITURE UNDER THE DIFFERENT HEAD OF INCOME WAS NOT FOUND POSSIBLE AS PER LAW. THE FINDING OF FACT RECORDED BY THE LD. CIT(A) HAS BEEN APPROVED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAS BECOME FINAL BECA USE NO APPEAL IS PREFERRED AGAINST THIS ORDER BEFORE THE HONBLE HIGH COURT. T HEREFORE, THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS SUCH , CLAIM OF NETTING CANNOT BE ALLOWED IN FAVOUR OF THE ASSESSEE. IN THE CASE OF A CG ASSOCIATED CAPSULES (P) LTD. (SUPRA) THE ISSUE WAS WITH REGARD TO DEDUCTION U/S. 80HHC READ WITH EXPLANATION. THEREFORE, THE LD. DR RIGHTLY CONTENDED THAT THE FA CTS ARE CLEARLY DISTINGUISHABLE IN THIS CASE FROM THE FACTS OF THE CASE OF THE PRESENT ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LD. CIT(A) IN REJECTING ITA NO. 110/AGRAS/2011 23 THE CLAIM OF ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE HAS NO MERIT AND IS, ACCORDINGLY, DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY