Asiatic Colour chem Industries Ltd.,, Ahmedabad V. The Income tax Officer,Ward-1(2), Ahmedabad

ITA 2465/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9375 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-08-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 30-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: M K PATEL
• Keywords: Business income; Condonation of delay; Set aside
• Section: 143(3); 80HHC; 10B; 250; 201

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH C BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) ASIATIC COLOUR-CHEM IND. LTD. PLOT NO. 1503, PHASE-1, G.I.D.C., ESTATE, NARODA, AHMEDABAD, GUJARAT. VERSUS INCOME TAX OFFICER, WARD 1(2), ASHRAM ROAD, AHMEDABAD, GUJARAT. (APPELLANT) (RESPONDENT) PAN: AABCA 6297 R FOR THE APPELLANT: SHRI M K PATEL FOR THE RESPONDENT SHRI M C PANDIT ORDER PER H.L.KARWA, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, AHME DABAD DATED 07-05-2007 RELATING TO ASSESSMENT YEAR 2004-2005. IN THIS APP EAL THE ASSESSEE AS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL) V, A HMEDABAD, GROSSLY ERRED IN LAW AND FACTS OF THE CASE IN CONFI RMING THE DISALLOWANCE/ADDITION OF RS. 8,03,033/- MADE BY THE ASSESSING OFFICER BY EXCLUDING 90% OF THE GROSS INTEREST RECE IPTS OF RS. 8,46,217/- AND OTHER INCOME OF RS. 46,042/- FROM TH E PROFITS AND GAINS DERIVED BY THE APPELLANT ASSESSEE FROM THE EX PORT OF ARTICLES OR THINGS. 2. THE LEARNED COMMISSIONER OF INCOME TAX(A) V, AHMEDA BAD GROSSLY ERRED IN LAW AND FACTS OF THE CASE IN HOLDI NG THAT THE AFORESAID TWO ITEMS OF INCOME WHICH IS INTRINSICALL Y AND INSEPARABLY RELATED TO THE 100% EXPORT BUSINESS OF THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 10B OF THE INCOME TA X ACT. 2 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) 3. THE LEARNED COMMISSIONER OF INCOME TAX(A) V, AHMEDA BAD, GROSSLY ERRED IN LAW AND FACTS OF THE CASE IN NOT A PPRECIATING THE FACT THAT THE INTEREST INCOME OF RS. 8,46,218/- HAD BEEN EARNED ON THE LC MARGIN MONEY FOR LETTER OF CREDIT IN CONNECT ION WITH THE APPELLANTS EXPORT BUSINESS AND THEREFORE PARTAKES THE CHARACTER OF INCOME DERIVED FROM THE EXPORT BUSINESS WHICH IS EL IGIBLE FOR EXEMPTION U/S 10B OF THE INCOME TAX ACT. 4. THE LEARNED COMMISSIONER OF INCOME TAX(A) V, AHMEDA BAD, GROSSLY ERRED IN LAW AND FACTS OF THE CASE IN NOT A PPRECIATING THE FACT THAT THE AMOUNT OF RS. 8,46,218/- IS THE GROSS INTEREST RECEIVED AND THE EXPENDITURE ON PAYMENT OF INTEREST INCURRED BY THE APPELLANT HAS NOT BEEN NETTED AGAINST SUCH INTEREST RECEIPTS. 5. THE LEARNED COMMISSIONER OF INCOME TAX(A) V, AHMEDA BAD, GROSSLY ERRED IN LAW AND FACTS OF THE CASE IN CONFI RMING THE ADDITION/DISALLOWANCE OF RS. 8,03,033/- MADE BY THE ASSESSING OFFICER IN UTTER DISREGARD TO VARIOUS JUDICIAL PREC EDENTS CITED BY THE APPELLANT. 6. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CI T(A) MAY PLEASE BE MODIFIED AND THE DISALLOWANCE OF RS. 8,03,033/- MAY PLEASE BE DELETED. 7. YOUR APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AM END AND / OR WITHDREW ANY OF THE ABOVE GROUNDS OF APPEAL. 2. IT IS OBSERVED THAT THE APPEAL FILED BY THE ASSE SSEE IS LATE BY 294 DAYS. IN THIS REGARD, THE ASSESSEE HAS FILED AN APPLICATI ON FOR CONDONATION OF DELAY IN FILING THE APPEAL ALONGWITH AFFIDAVIT OF SHRI. M AHESH KASHIRAM AGARAWAL, CHAIRMAN AND MANAGING DIRECTOR OF ASSESSEE COMPANY DATED 27-06-2008. THE APPLICATION FILED BY THE ASSESSEE READS AS UNDE R: WITH UTMOST RESPECT AND HUMBLE SUBMISSION, THE APP ELLANT ABOVE NAMED CRAVES LEAVE TO PRESENT THIS U/S 253(5) OF T HE INCOME TAX ACT PRAYING FOR CONDONATION OF THE DELAY IN FILING THE APPEAL AGAINST THE APPELLANT ORDER U/S 250 OF THE INCOME TAX ACT PASSE D BY THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) V, A HMEDABAD IN APPEAL NO. CIT(A)-V/ITO WD.1(2)/254/2006-07 DATED 7 .05.2007 FOR A.Y. 2004-05. THE APPELLATE ORDER DATED 7.5.2007 ON THE APPEAL FI LED BY THE APPELLANT ABOVE NAMED AGAINST THE ASSESSMENT ORDER U/S 143(3) FOR A.Y. 2004-05 WAS SERVED ON THE APPELLANT ASSESSEE ON 12-07-2007 IN ACCORDANCE WITH PROVISIONS OF SECTION 253(2) OF THE INCOME TAX ACT, APPEAL 3 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) AGAINST THE SAID ORDER OF THE CIT(A) OUGHT TO HAVE BEEN FILED WITHIN 60 DAYS FROM THE RECEIPT OF THE ORDER APPEAL AGAINST. IN OTHER WORDS THE OUGHT TO HAVE BEEN FILED LATEST BY 9-9-2007. THE APPELLANT SUBMITS THAT FOR GENUINE REASONS, THE APPELLANT COULD NOT FILE THE APPEAL WITHIN THE STIPULATED TIME. WE ARE NOW SUBMITTING HEREWITH AN APPEAL MEMO IN FORM NO. 36 ALONGWITH TH E RELEVANT DOCUMENTS. THE APPEAL, THOUGH BELATED MAY KINDLY B E ACCEPTED AND ADMITTED CONDONING THE DELAY AS PER THE PROVISION O F SECTION 253(5) OF THE INCOME TAX ACT. THE APPELLANT SUBMITS THAT THE DELAY IN FILING THE APPEAL IS DUE TO THE FOLLOWING FACTORS. EARLIER, THE INCOME TAX MATTER OF THE APPELLANT COM PANY WAS HANDLED BY SHRI ASHOKKUMAR GUPTA CHARTERED ACCOUNTA NT. TOWARDS THE END OF JUNE 2007. THE ASSISTANT IN THE OFFICE OF THE APPELLANT COMPANY, ON RECEIPT OF THE ORDER OF THE C IT(A) WAS ADVISED TO HAND OVER THE DOCUMENTS TO THE CHARTERED ACCOUNTANT FOR FILING APPEAL TO THE ITAT. THE OFFI CE ASSISTANT HANDED OVER THE CONCERNED DOCUMENTS TO SHRI ASHOKKU MAR GUPTA, THE CHARTERED ACCOUNTANT WHO HAD BEEN EARLIE R HANDLING THE APPELLANTS INCOME TAX MATTERS, SHRI ASHOKKUMAR GUPTA, FOR WANT OF PROPER MANDATE AND AUTHORITY DID NOT TAKE A NY ACTION IN THE MATTER OF FILING THE APPEAL AND THE MATTER REMA INED UNATTENDED TO. LATER ON THE PRESENT INCOME TAX ADVISOR OF THE APPE LLANT COMPANY, WHILE TAKING STOCK OF THE APPEALS PENDING BEFORE T HE ITAT ENQUIRED ABOUT THE FILING OF APPEAL AGAINST THE ORDER OF THE CIT(A) DATED 7.5.2007 FOR A.Y. 2004-05. IT IS ONLY AT THIS POIN T OF TIME THAT THE OFFICE ASSISTANT INFORMED THAT THE RELEVANT DOCUMENTS HAD BEEN HANDLED OVER TO SHRI. ASHOKKUMAR GUPTA, THE PREVIOUS CHARTERED A CCOUNTANT AND THAT THE APPEAL REMAINED TO BE FILED BEFORE THE ITA T. THE APPELLANT SUBMITS THAT THE DELAY IN FILING THE PRESENT APPEAL IS ATTRIBUTABLE TO BONAFIDE GENUINE REASON MENTIONED A S ABOVE. THE DELAY IS NOT INTENTIONAL; THE DELAY IS ALSO NOT DUE TO INACTION, NEGLIGENCE OR CARELESSNESS ON THE PART OF THE APPEL LANT COMPANY. UNDER THE CIRCUMSTANCES, THE APPELLANT HUMBLY REQUE STED TO KINDLY ACCEPT AND ADMIT THE APPEAL CONDONING THE DELAY. 4 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) AND FOR THIS ACT OF KINDNESS THE APPELLANT SHALL EV ER REMAINED MUCH OBLIGED. THANKING YOU FOR, ASIATIC COLOUR CHEM IND. PVT. LTD. (SIGNED) DIRECTOR 3. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE APPLICATION, WE ARE OF THE VIEW THAT THE DELAY OCCURRED IN FILING T HE APPEAL IS DESERVES TO BE CONDONED. AT THE TIME OF HEARING, THE LD. DR COULD NOT CONTROVERT THE REASONS GIVEN BY THE ASSESSEE FOR CONDONATION OF DE LAY IN FILING THE APPEAL. EVEN OTHERWISE ALSO, IT IS WELL SETTLED LAW THAT TH E JURISDICTION TO CONDONE DELAY SHOULD BE EXERCISED LIBERALLY. MATTER RELATI NG TO CONDONATION OF DELAY SHOULD BE JUDGED BROADLY AND NOT IN A PEDANTIC MANN ER. THE HON'BLE SUPREME COURT IN THE CASE OF THE A COLLECTOR, LAND ACQUISITION VS. MST. KATIJI (1987) 167 ITR 471 HELD THAT DEALING WITH TH E CONDONATION OF DELAY A LIBERAL APPROACH IS NEEDED. THE HON'BLE SUPREME CO URT OBSERVED THAT ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. IN THE ABOVE CASE THE HON'BLE SUPREME COURT HAS ALSO OBSER VED THAT REFUSING TO CONDONATION OF DELAY CAN RESULT IN A MERITORIOUS MA TTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEA TED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS T HAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. IN TH E ABOVE CASE, THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT WHEN SUBSTANTIA L JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE C AUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON DELIBERATE DELAY. IT WILL ALSO RELEVANT TO STATE THAT IN THE SAME JUDGMENT THE HON'BLE SUPR EME COURT FURTHER 5 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) STATED THAT THERE IS NO PRESUMPTION THAT DELAY IS O CCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MA LA-FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FAC T, HE RUNS A SERIOUS RISK, THIS CONSTRAINED THE ABOVE DECISION OF THE HON'BLE SUPRE ME COURT AND ALSO THE SETTLED POSITION. WE ARE OF THE VIEW THAT IN THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE, DELAY DESERVES TO BE CONDONED. WE OR DER ACCORDINGLY. 4. AS REGARDS THE MERITS OF THE CASE THE MAIN ISSUE RELATES TO DISALLOWANCE OF CLAIM UNDER SECTION 10B OF THE IT ACT, 1961 ON I NTEREST INCOME OF RS. 8,46,217/- AND OTHER INCOME OF RS. 46,042/-. THE A SSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE, STATING THAT, THE INCOME EARNED IS NOT AT ALL FROM THE INDUSTRIAL/EXPORT ACTIVITY AND IS ONLY INCIDENTAL TO THE BUSINESS AND HENCE, THE DEDUCTION CANNOT BE GRANTED ON SUCH OTHER INCOME. 5. ON APPEAL, CIT(A) CONFIRMED THE DISALLOWANCE AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AFTER HEARING THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUN AL DATED 15-05-2009, PASSED IN ITA NO. 551/AHD/2009 IN ASSESSEES OWN CA SE RELATING TO ASSESSMENT YEAR 2005-2006. WHILE DECIDING A SIMILA R ISSUE IN FAVOUR OF THE ASSESSEE, THE TRIBUNAL HELD AS UNDER: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS EARNED INTEREST INCO ME OF RS.12,21,000/- AND OTHER INCOME OF RS.21,510/- AND CLAIMED DEDUCTI ON OF THE SAME U/S.10B OF THE ACT. THE ASSESSING OFFICER, AFTER A LLOWING 10% DEDUCTION ON ACCOUNT OF EXPENSES INCURRED FOR EARNI NG THE SAID INCOME, ADDED THE BALANCE AMOUNT OF RS.11,18,259/- TO THE TOTAL 6 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) INCOME OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS NOT DERIVED FROM THE INDUSTRIAL/EXPORT ACTIVITY AND IS ONLY INC IDENTAL TO THE BUSINESS OF THE ASSESSEE. IN APPEAL, THE LD. CIT (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER FOR THE SAME REA SON. WE FIND THAT THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSISTANT COMMISSIONER OF INCOME TAX VS. MOTOROLA INDIA ELECT RONICS (P) LTD. (2007) 112 TTJ 562 HELD IN PARAGRAPH NOS.8.2 TO 8. 6 TO QUOTE AS UNDER:- 8.2 COMING TO THE ASST. YR. 2001-02, WE FIND THAT THE ACT HAS UNDERGONE A CHANGE. THE S. 10B(1) AND (4) READS AS FOLLOWS : '10B (1) SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTI CLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIV E ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF T HE ASSESSEE. 10B(2) .... 10B (3) ..... 10B (4) FOR THE PURPOSES OF SUB-S. (1 ), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUT ER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF T HE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFT WARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY TH E UNDERTAKING.' 8.3 OTHER SUB-SECTIONS OF THIS SECTION ARE NOT RELE VANT FOR THE ISSUE IN DISPUTE. THE ABOVE SECTION SUPPORTS THE AR GUMENT OF THE LEARNED COUNSEL FOR ASSESSEE. THE SECTION HAS UNDER GONE A CHANGE. EARLIER, IT WAS AN EXEMPTION SECTION AND IN COME FROM THESE UNDERTAKINGS WHICH ARE COVERED BY THIS SECTIO N DID NOT FORM PART OF TOTAL INCOME. FROM THIS PARTICULAR YEA R, THOUGH THE SECTION APPEARS IN CHAPTER III, WHICH CLASSIFIES IN COMES WHICH DO NOT FORM PART OF TOTAL INCOME, A DEDUCTION FROM BUSINESS INCOME FROM THE UNDERTAKING IS GRANTED BY INCLUDING THE SPECIAL PROVISION. ANOTHER IMPORTANT FEATURE IN SUB-S. (4) IS THAT THE METHODOLOGY OF ARRIVING AT THE EXPORT PROFITS OF TH E BUSINESS OF THE UNDERTAKING IS GIVEN IN A FORMULA, AS IN THE CA SE OF S. 80HHC AND IT SHALL BE THE SAME PROPORTION AS THE EX PORT TURNOVER BEARS TO TOTAL TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE. THE WORD 'SHALL' HAS B EEN USED TO MAKE IT MANDATORY. ANOTHER IMPORTANT FEATURE IS THA T THE TERMINOLOGY USED IN SUB-S. (4) IS 'PROFITS OF THE B USINESS' OF THE 7 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) UNDERTAKING IN CONTRADISTINCTION TO THE WORDS 'PROF ITS AND GAINS DERIVED BY THE ASSESSEE' FROM A 100 PER CENT EXPORT ORIENTED UNDERTAKING. 8.4 IN S. 80 IA, THE TERM PROFITS AND GAINS FROM TH E BUSINESS HAS BEEN USED. SIMILAR TERMINOLOGY HAS BEEN USED IN MAN Y OTHER SECTIONS SUCH AS S. 80JJ OR 80JJA, ETC., WHEREAS UN DER S. 80I AND OTHER SECTIONS THE TERMINOLOGY USED IS 'PROFITS AND GAINS DERIVED FROM INDUSTRIAL UNDERTAKING'. THE TERM 'FROM THE BU SINESS OF' IS MUCH WIDER THAN THE TERM 'DERIVED FROM INDUSTRIAL U NDERTAKING'. KEEPING THIS DISTINCTION IN MIND, WE HAVE TO NECESS ARILY HOLD THAT THE ENTIRE PROFITS DERIVED FROM THE BUSINESS O F UNDERTAKING SHOULD BE TAKEN INTO CONSIDERATION, WHILE COMPUTING THE ELIGIBLE DEDUCTION UNDER S. 10B/10A OF THE ACT, BY APPLYING THE MANDATORY FORMULA. THE ISSUE BECOMES FURTHER CLEAR WHEN WE LOOK INTO THE PROVISIONS OF S. 80HHC WHICH ARE SIMI LAR, AS FAR AS THE EDUCATION (SIC) OF DEDUCTION IS CONCERNED. AS T HE LEGISLATURE WANTED TO SPECIFICALLY EXCLUDE RECEIPTS BY WAY OF B ROKERAGE, COMMISSION, RENT, CHARGES OR ANY OTHER RECEIPT OF S IMILAR NATURE, FROM 'THE PROFITS OF THE BUSINESS', IN S. 80HHC, IT HAS SPECIFICALLY INSERTED EXPLN. (BAA). IF THE LEGISLAT URE INTENDED TO EXCLUDE INTEREST FROM THE TERM 'PROFIT OF BUSINESS OF UNDERTAKINGS' UNDER S. 10A/10B, A SIMILAR PROVISION AS IN THE CASE OF EXPLN. (BAA) WOULD HAVE BEEN INSERTED. NO S UCH EXPLANATION HAS BEEN INTRODUCED IN S. 10A/10B. FOR READY REFERENCE, WE EXTRACT THE FOLLOWING FROM THE MEMORA NDUM EXPLAINING PROVISIONS OF FINANCE (NO. 2) ACT (BILL) , 1991 WHICH IS REPORTED IN (1991) 96 CTR (ST) 21 AT 201 : (1991 ) 190 ITR (ST) 89 AT 300 WITH REGARD TO S. 80HHC EXPLN. (BAA) WHERE IT IS STATED AS FOLLOWS : 'THE EXISTING FORMULA MAY ALSO GIVE A DISTORTED FIGURE OF EXPORT PROFITS WHEN RECEIPTS LI KE INTEREST, COMMISSION, ETC., WHICH DO NOT HAVE AN ELEMENT OF T URNOVER ARE INCLUDED IN THE P&L A/C. IT IS, THEREFORE, PROPOSED TO CLARIFY THAT PROFITS OF THE BUSINESS FOR THE PURPOSE OF S. 8 0HHC WILL NOT INCLUDE RECEIPTS BY WAY OF BROKERAGE, COMMISSION, I NTEREST, RENT, CHARGES OR ANY OTHER RECEIPT OF SIMILAR NATURE. AS SOME EXPENDITURE MIGHT BE INCURRED IN EARNING THESE INCO MES, WHICH IN THE GENERALITY OF CASES IS PART OF COMMON EXPENS ES, IT IS PROPOSED TO PROVIDE AD HOC 10 PER CENT DEDUCTION FR OM SUCH INCOMES TO ACCOUNT FOR THESE EXPENSES.' THE DECISIO NS RELIED UPON BY THE REVENUE I.E., THE CASE OF MEMON IMPEX ( P) LTD. (SUPRA) PERTAINS TO THE ASST. YR. 1985-86 AS THE LA W HAS UNDERGONE CHANGE. THIS VIEW IS IN CONFORMITY WITH T HE FOLLOWING 8 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) ORDERS OF THE TRIBUNAL : (I) ASSTT. CIT VS. MAXCARE LABORATORIES LTD. (2005) 92 TTJ (CTK) 179: (2005) 92 ITD 11 (CTK ); (II) ITO VS. KIRAN ENTERPRISES (2005) 92 TTJ (CHD) 104; (III) DLF POWER LIMITED VS. ITO (ITA NO. 1195/DEL/2002; A SST. YR. 1988-89, ORDER DT. 17TH FEB., 2006). 8.5 COMING TO THE DECISION OF AUTHORITY FOR ADVANC E RULING IN THE CASE OF SHAM TABREZ VANTI, IN RE (SUPRA), THAT INTEREST INCOME IS ASSESSABLE AS INCOME FROM OTHER SOURCES, THE SAME IS NOT BINDING ON THIS BENCH. IN ANY EVENT, THE JURISD ICTIONAL HIGH COURT HAS TAKEN A CONTRARY VIEW AND THE SAME IS BIN DING ON US. THE CASE OF K. S. SUBBIAH PILLAI & CO. (INDIA) (P) LTD. VS. CIT (2003) 179 CTR (MAD) 522: (2003) 260 ITR 304 (MAD) IS ON S. 80HHC AND DOES NOT APPLY TO THE CASE ON HAND AND, O N THE OTHER HAND, IT RECOGNIZED THE FACTS THAT INTEREST P AID AND CLAIMED AS DEDUCTION CAN BE PAID UNDER THE HEAD 'PROFITS AN D GAINS OF THE BUSINESS'. 8.6 THUS, IN VIEW OF THE ABOVE DISCUSSION, WE AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR ASSESSEE AND DIRECT THE AO TO RE-COMPUTE THE DEDUCTION UNDER SS. 10A AND 10 B OF THE ACT ON THE LINES INDICATED ABOVE FOR THE ASST. YR. 2001-02. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED IN T HE ASST. YR. 2001-02. 12. IN THE INSTANT CASE, THE UNDISPUTED FACTS ARE T HAT THE ASSESSEE EARNED INTEREST AND OTHER INCOME ON FIXED DEPOSIT W ITH SBI KEPT AS L/C MARGIN MONEY FOR OBTAINING L/C TO IMPORT RAW-MA TERIALS WHICH HAS A CLOSE OR LIVE-LINK WITH THE BUSINESS OF THE U NDERTAKING. THUS, THE INTEREST INCOME WAS EARNED BY THE ASSESSEE FROM DE POSITS KEPT WITH THE BANK AS MARGIN MONEY TO COMPLY WITH THE DIRECTIONS OF THE BANK TO OPEN L/CS. THUS, THE RECEIPT OF INTEREST ON MARGIN MONIES ARISES OUT OF BUSINESS TRANSACTION/OR BUSINESS ASSET OF THE INDU STRIAL UNDERTAKING. THEREFORE, THE SAME FORMS PART OF THE BUSINESS INC OME OF THE ASSESSEES UNDERTAKING. ON THE ABOVE FACTS, THE DE CISION OF BANGALORE BENCH IN THE CASE OF THE ASSISTANT COMMISSIONER OF INCOME TAX VS. MOTOROLA INDIA ELECTRONICS (P) LTD. SQUARELY APPLIE S TO THE CASE OF THE ASSESSEE. IN OUR CONSIDERED VIEW FOR DETERMINING T HE INCOME FROM EXPORT WHICH IS ELIGIBLE FOR DEDUCTION THE SPECIFI C FORMULA PRESCRIBED IN THE SECTION 10B OF THE INCOME TAX ACT, 1961 HAS TO BE MANDATRILY FOLLOWED AND NO OTHER INTERPRETATION OF THE SAME C AN BE GIVEN. THUS, THE PROFITS OF BUSINESS OF THE ASSESSEE BY APPLYING THE FORMULA OF EXPORT 9 ITA NO. 2465/AHD/2008 (ASSESSMENT YEAR 2004-05) TURNOVER TOTAL TURNOVER ONLY IS TO BE APPLIED FO R ARRIVING AT THE AMOUNT ELIGIBLE FOR DEDUCTION U/S.10B OF THE INCOME TAX ACT, 1961. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUT HORITIES AND DELETE THE DISALLOWANCE OF DEDUCTION OF RS.11,18,259/- U/ S.10B OF THE ACT ON THE INTEREST AND OTHER INCOME EARNED BY THE ASSESS EE. 7. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THE ASSESSMENT YEAR 2005- 06 AND THEREFORE RESPECTFULLY FOLLOWING THE ORDER O F THE TRIBUNAL(SUPRA), WE DELETE THE IMPUGNED DISALLOWANCE AND ALLOW THE APPE AL. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21-08 -2009. SD/- SD/- ( A.N. PAHUJA) (H.L. KARWA) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED: 21/08/2009 ANKIT* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.