M/s. Hetero Labs Limited, Hyderabad V. Dy, CIT, Central Circle-4, Hyderabad

ITA 729/HYD/2012

• Counselvise Citation: 72922514 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 11-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMSEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Opportunity of being heard
• Section: 80HHC; 80IB; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.729 & 730/HYD/2012 ASSESSMENT YEARS 2001-2002 & 2002-2003 M/S. HETERO LABS LIMITED HYDERABAD PAN AAACH5506R VS. THE DCIT, C.C. 4 HYDERABAD. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI S. RAMA RAO FOR RESPONDENT : SHRI P. SOMSEKHAR REDDY DATE OF HEARING : 10.10.2013 DATE OF PRONOUNCEMENT : 13.11.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A)-VII, HYDERABAD DATED 17.2.2012 FOR THE ASSESSMENT YEARS 2001-2002 AND 2002-2003. SINCE, CO MMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE APPEALS WERE CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THI S SINGLE CONSOLIDATED ORDER. FIRST, WE WILL TAKE UP ITA.NO.7 29/HYD/2012 FOR THE ASSESSMENT YEAR 2001-2002. ITA.NO.729/HYD/2012 A.Y. 2001-2002. 2. IN THIS APPEAL, GROUNDS NO. 1 AND 6 ARE GENERAL IN NATURE AND THEREFORE, IT NEED NOT BE ADJUDICATED. 3. GROUND NO.2 IS READS AS FOLLOWS : 2 2. THE LEARNED COMMISSIONER (APPEALS) ERRED IN TREATING THE INCOME FROM DEPB AS INCOME FROM OTHER SOURCES AND IN NOT CONSIDERING THE SAME FOR THE PURPOSE OF DEDUCTION U/S. 80IB. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE OUGHT TO HAVE CONSIDERED THE DEPB AS THE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE APPELLANT AND SHOULD HAVE CONSIDERED THE SAME FOR THE PURPOSE OF DEDUCTION U/S.80IB. WITHOUT PREJUDICE, THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT ONLY THE NET INCOME FROM DEPB CAN AT BEST BE CONSIDERED FOR REDUCTION FROM THE GROSS TOTAL INCOME FOR THE PURPOSE OF ARRIVING AT DEDUCTION UNDER SECTION 80IB OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE, IT HA S BEEN CLAIMED BEFORE CIT(A) BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS ARRIVED AT THE DEDUCTION U/S 80LB AT RS.1,77,02,428 WITHOUT CONSIDERING THE ENTIRE BUSIN ESS INCOME DERIVED BY THE INDUSTRIAL UNIT FOR THE PURPOSE OF S ECTION 80LB AND THE ELIGIBLE PROFITS FOR DEDUCTION U/S 80LB WAS ERR ONEOUSLY ARRIVED AT RS.5,90,08,092. ON THE FACTS OF THE CASE , THE ASSESSEE COMPANY IS SHOWN TO HAVE EARNED THE INCOME OF RS.38 ,33,489/- FROM THE SOURCES UNDER THE FOLLOWING HEADS, WHICH W ERE NOT CONSIDERED BY THE ASSESSING OFFICER IN COMPUTING TH E DEDUCTION U/S 801B, OBSERVING THAT THE SAID 'OTHER INCOMES' A RE NOT DERIVED DIRECTLY FROM THE BUSINESS OF ASSESSEE. (I) INTEREST ON MARGIN MONEY RS. 7,21,903 (II) DEPB LICENSE FEE RS.27,44,992 (III) INTEREST ON APSEB DEPOSIT RS. 28,183 (IV) INTEREST ON ICD RS. 3,36,986 (V) MISCELLANEOUS RECEIPTS RS. 1,425 TOTAL RS.38,33,489 5. THE ASSESSEE OBJECTED TO THE EXCLUSION OF THE ABOVE INCOMES FROM THE BUSINESS INCOME, FOR THE PURPOSE O F QUANTIFICATION OF DEDUCTION U/S 80LB AND WHILE FURN ISHING THE WRITTEN SUBMISSIONS BEFORE CIT(A), IT WAS CONTESTED THAT THE ASSESSING OFFICER IS NOT CORRECT IN EXCLUDING THE S UCH INCOMES FOR 3 THE PURPOSE OF COMPUTING THE DEDUCTION U/S 801B, WH ILE EXPLAINING THE NATURE AND SOURCE OF SUCH INCOMES AN D HOW THEY ARE RELATED TO THE MAIN BUSINESS OF THE ASSESSEE. 6. REGARDING THE 'DEPB LICENSE FEE', IT WAS SUBMI TTED BY THE ASSESSEE THAT THE IMPUGNED RECEIPT IS A BUSI NESS RECEIPT AND IS ELIGIBLE FOR WORKING OUT THE DEDUCTION U/S 8 01B. IN THIS REGARD, THE ASSESSEE RELIED UPON THE FOLLOWING CASE LAWS; (I) LIBERTY INDIA VS CIT (SC) 317 ITR 218 (II) TOPMAN EXPORT VS ITO - 125 TTJ 289 (S.B) 7. THE CIT(A) HELD THAT THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS CIT, REPORTED IN 317 I TR 218, HELD THAT, DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVERNMENT OR FROM SEC.75 OF CUSTOMS ACT, 1962. HENCE, INCENTIVES/PROFITS ARE NO T PROFITS DERIVED FROM THE ELIGIBLE BUSINESS U/S 80LB AND THE Y BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKI NG. THE CIT(A) FURTHER HELD THAT THE CASE LAW REFERRED BY THE LEAR NED A.R. OF THE ASSESSEE IS NOT IN FAVOUR OF THE ASSESSEE AND HENCE , THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THIS ISSUE. 8. ON APPEAL BEFORE US, THE LEARNED COUNSEL FOR TH E ASSESSEE, DURING THE COURSE OF HEARING, REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND THE LEARNED D.R. ON THE CONTRARY, RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE HEARD RIVAL SUBMISSIONS ON THE ISSUE AN D CAREFULLY PERUSED THE RECORD. AS REGARDS DEPB, THE APEX COURT IN THE CASE OF TOPMAN EXPORTS 342 ITR 49 AT PAGE 61 HA S HELD AS FOLLOWS : WE ARE THUS, OF THE CONSIDERED OPINION THAT WHILE THE FACE VALUE OF THE 14 DEPB WILL FALL UNDER CLAUSE (I IIB) OF SECTION 28 OF ACT. THE DIFFERENCE BETWEEN THE SALE VALUE AND THE FACE VALUE OF THE DEPB WILL FALL UNDER CLAU SE (IIID) 4 OF SECTION 28 OF THE ACT. IN CASE OF LIBERTY INDIA VS. CIT 317 ITR 218 HAS HELD THAT DEPB/DUTY DRAWBACK ARE INCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY TH E CENTRAL GOVERNMENT OR FROM SECTION 75 OF THE CUSTOM S ACT, 1962. INCENTIVE PROFITS ARE NOT PROFITS DERIVE D FROM ELIGIBLE BUSINESS UNDER SECTION 80-IB; THEY BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCENTIVES SUCH AS DEPB/DUTY DRAWBACK CANNOT BE CREDITED AGAINST THE COST OF MANUFACTURE OF GOODS DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THEY DO NOT FALL WITHIN THE EXPRESSION PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING UNDER SECTION 80IB. 10. IN VIEW OF THE DECISION OF THE SUPREME COURT, WE HOLD THAT SALE CONSIDERATION, OF DEPB LICENSE CANNO T BE CONSIDERED FOR COMPUTING RELIEF UNDER SECTION 80IB. ACCORDINGLY, WE DISMISS GROUND NO.2 OF THE ASSESSEE. 11. AS REGARDS GROUNDS NO. 3 AND 4, WHETHER INTERES T INCOME EARNED FROM MAKING DEPOSITS AS MARGIN MONEY SHOULD ALSO BE TAKEN INTO CONSIDERATION FOR DETERMINING TH E DEDUCTION UNDER SECTION 80IB. THE APEX COURT IN THE CASE OF L IBERTY INDIA V CIT 317 ITR 218 HAS HELD THAT THE INCOME SHOULD BE CONNECTED IN THE FIRST DEGREE WITH THE MANUFACTURING ACTIVITY . HOWEVER PROVIDING MARGIN MONEY FOR OBTAINING BANK GUARANTEE CANNOT BE CONSIDERED AS DIRECTLY CONNECTED WITH THE MANUFACTU RING ACTIVITY. HENCE, THE INTEREST INCOME FROM DEPOSITS MADE FOR O BTAINING GUARANTEE CANNOT BE CONSIDERED AS INCOME DERIVED FR OM THE UNDERTAKING AND HENCE HAS TO BE EXCLUDED WHILE COMP UTING THE DEDUCTION U/S 801B. HOWEVER, THE ALTERNATE SUBMISS ION OF THE ASSESSEE IN GROUND NO.3 THAT THE EXPENDITURE ATTRIB UTABLE TO THE INCOME TO BE EXCLUDED FOR COMPUTING DEDUCTION U/S 8 0LB SHOULD ALSO BE EXCLUDED AND HENCE ONLY THE NET INCOME SHOU LD BE EXCLUDED FROM THE PROFITS FOR DETERMINING THE DEDUC TION U/S 801B. THE APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P LTD V CIT (343 ITR 89) HAS HELD IN THE CONTEXT OF 8 0HHC ONLY THE NET INCOME SHOULD BE EXCLUDED UNDER EXPLANATION BAA TO THAT SECTION. THE RATIO WILL APPLY EQUALLY TO SEC 80LB A LSO. RESPECTFULLY 5 FOLLOWING THE RATIO OF THE APEX COURT IN THE CASE O F ACG ASSOCIATED CAPSULES P LTD V CIT, SUPRA, WE DIRECT T HE ASSESSING OFFICER TO EXCLUDE ONLY THE NET INTEREST INCOME SUB JECT TO THE ASSESSEE ESTABLISHING THE EXPENSES INCURRED IN EARN ING THE INTEREST INCOME. ACCORDINGLY, WE SET ASIDE THE ISSU E TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AS INDIC ATED ABOVE, AFTER GIVING A DUE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 12. WITH RESPECT TO GROUND NO.5, WHILE COMPUTING TH E RELIEF U/S 80HHC, THE ASSESSING OFFICER HAD REDUCED FROM THE PROFITS AND GAINS OF THE BUSINESS, THE DEDUCTION CO MPUTED U/S 80IB. IN THE ASSESSEE'S OWN CASE IN ITA NO 74 TO 76 /HYD/2007 DATED 30.3.2012 FOR THE AY 2002-03 TO 2004-05, THE CLAIM OF THE ASSESSEE WAS ALLOWED FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES P LTD V DC IT (332 ITR 42) WHEREIN IT HAS BEEN HELD THAT THE TRIBUNAL WAS NOT RIGHT IN HOLDING THAT SECTION 80-IA(9) OF THE ACT, MANDATES THAT THE AMOUNT OF PROFITS ALLOWED AS DEDUCTION UNDER SECTIO N 80-IA(1) OF THE ACT HAVE TO BE REDUCED FROM THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, WHILE COMPUTING DEDUCTION UNDER ANY OT HER PROVISIONS UNDER HEADING C IN CHAPTER VI-A OF THE A CT'. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE ASSE SSING OFFICER TO COMPUTE THE RELIEF U/S 80HHC WITHOUT DEDUCTING F ROM THE PROFITS AND GAINS OF THE BUSINESS THE RELIEF U/S 80 1B. 13. IN THE RESULT, ITA.NO.729/HYD/2012 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-2002 IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ITA.NO.730/HYD/2012 ASSESSMENT YEAR 2002-2003 14. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE- COMPANY HAS FILED ITS RETURN OF INCOME ON 18.6.2007 ADMITTING THE TOTAL INCOME OF RS.3,33,51,370/-. WHILE COMPUTI NG THE 6 TAXABLE INCOME AND FINALIZING THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE OTHER INCO MES, IN COMPUTING THE DEDUCTIONS U/S 80IB AND DEDUCTION U/S 80IB WAS REDUCED FROM ELIGIBLE PROFITS FOR THE PURPOSE OF DE DUCTION U/S 80HHC APART FROM THE DISALLOWANCE ON ACCOUNT OF EXP ENDITURE CLAIMED UNDER THE HEAD 'NEW DRUG LICENSE FEE' OF RS .2,00,000/-. WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE, IT HAS BEEN CLAIMED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS ARRIVED AT THE DEDUCTION U/S 80IB AT RS.L,37,56,511/- WITHOUT CONSIDERING THE ENTIRE BUSINESS INCOME DERIVED BY THE INDUSTRIA L UNIT FOR THE PURPOSE OF SECTION 80IB AND THE ELIGIBLE PROFITS FO R DEDUCTION U/S 80IB WAS ERRONEOUSLY ARRIVED AT RS.4,58,55,137/-. O N THE FACTS OF THE CASE, THE ASSESSEE COMPANY IS SHOWN TO HAVE EARNED THE INCOME OF RS.15,87,520/- FROM THE SOURCES OF INTERE ST AND FOREIGN EXCHANGE FLUCTUATIONS, WHICH WERE NOT CONSI DERED BY THE ASSESSING OFFICER IN COMPUTING THE DEDUCTION U/S 80 IB, OBSERVING THAT THE SAID 'INCOMES' ARE NOT DERIVED D IRECTLY FROM THE BUSINESS OF ASSESSEE. 15. THE ASSESSEE OBJECTED TO THE EXCLUSION OF TH E INTEREST INCOME AND FOREIGN EXCHANGE FLUCTUATIONS FROM THE B USINESS INCOME, FOR THE PURPOSE OF QUANTIFICATION OF DEDUCT ION U/S 80IB AND WHILE FURNISHING THE WRITTEN SUBMISSIONS, IT WA S CONTESTED BEFORE CIT(A) THAT THE ASSESSING OFFICER IS NOT COR RECT IN EXCLUDING THE SUCH INCOMES FOR THE PURPOSE OF COMPU TING THE DEDUCTION U/S 80IB. 16. IT HAS BEEN SUBMITTED BEFORE CIT(A) REGARDING T HE 'INTEREST INCOME', THAT THE INCOME IS ON THE DEPOSI TS MADE OUT OF CASH CREDIT ACCOUNT AND AS SUCH IT BECOMES BUSINESS INCOME. ALTERNATIVELY, IT WAS CLAIMED THAT WHILE CALCULATIN G THE ELIGIBLE PROFIT U/S 80IB, ONLY THE NET INTEREST INCOME SHOUL D BE TAKEN. 7 17. THE CIT(A) NOTED THAT THESE ISSUES HAVE COME FO R DISCUSSION IN THE APPEALS AGAINST THE ORIGINAL ASSE SSMENT ORDERS OF THE ASSESSEE'S OWN CASE, WHEREIN IT WAS DECIDED BY THE CIT(A)- III, HYDERABAD THAT THE INCOMES WHICH WERE NOT RELA TED TO THE BUSINESS OF THE UNDERTAKING CANNOT BE CONSIDERED FO R THE PURPOSE OF DEDUCTION U/S 80IB AND SUCH DECISION WAS SUPPORTED BY THE DECISIONS OF HON'BLE SUPREME COURT IN THE CA SE OF STERLING FOODS LTD VS CIT REPORTED IN 237 ITR 579 AND M/S PA NDIAN CHEMICALS LTD VS CIT REPORTED IN 262 ITR 278, WHERE IN IT WAS PRECISELY HELD THAT ONLY THE INCOMES HAVING DIRECT NEXUS WITH ELIGIBLE BUSINESS UNDERTAKING CAN BE CONSIDERED AS INCOME DERIVED FROM SUCH UNDERTAKING FOR COMPUTING THE DED UCTION U/S 80IB. HENCE, HE CONCURRED WITH THE DECISION OF CIT(A )-III, HYDERABAD ON THIS ISSUE. 18. REGARDING THE CLAIM OF NETTING OFF OTHER INCOME S INCLUDING THE INTEREST INCOME, THE CIT(A) HELD THAT THIS ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE HON'BLE ITAT, H YDERABAD IN ITA.NO.352/HYD/2007 DT.27.6.2008 AND HON'BLE ITAT I N-TURN RELIED UPON THE DECISION OF SPECIAL 8ENCH OF MUMBAI IN THE CASE OF LEBEN LABORATORIES LTD VS DCIT 294 ITR (AT) 1 AN D SPECIAL BENCH OF CHENNAI IN THE CASE OF ACIT VS ROGINI GARM ENTS 294 ITR (AT) 15. DEDUCTION U/S 80IB REDUCED FROM ELIGIBLE PROFITS FO R THE PURPOSE OF DEDUCTION U/S 80HHC 19. WHILE COMPUTING THE TAXABLE INCOME OF THE ASSE SSEE COMPANY FOR THE YEAR UNDER REFERENCE, THE ASSESSING OFFICER HAS REDUCED THE DEDUCTION ALLOWED U/S 80IB FOR THE PURP OSE OF COMPUTING THE ELIGIBLE PROFITS FOR THE PURPOSE OF D EDUCTION U/S 80HHC IN THIS CASE, THE AMOUNT OF PROFIT FROM BUSIN ESS WAS COMPUTED AT RS.4,58,55,137/- FROM WHICH THE AMOUNT OF DEDUCTION U/S 80IB I.E. RS.1,37,56,511/- WAS DEDUCT ED TO ARRIVE 8 AT THE ELIGIBLE PROFITS U/S 80HHC I.E. RS.52,69,596 /- ON WHICH THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION OF RS.2,37,327/- U/S 80HHC, FOR THE YEAR UNDER REFERENCE 20. THE ASSESSEE HAS RAISED OBJECTION FOR SUCH COMPUTATION BEFORE CIT(A). IT HAS BEEN STATED IN TH E ORDER OF CIT(A) THAT IN THE WRITTEN SUBMISSIONS BEFORE CIT(A ), THE ASSESSEE RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF M/S SCM CREATIONS VS ACIT REPORTED IN 304 ITR 31 9, WHEREIN IT HAS BEEN HELD THAT SEC.80IB & SEC.80HHC ARE INDE PENDENT AND THE DEDUCTION ALLOWED U/S 80IB CANNOT BE REDUCED FO R THE PURPOSE OF ARRIVING AT THE PROFIT ELIGIBLE FOR DEDU CTION U/S 80HHC. THE ASSESSEE ALSO CITED THE DECISIONS OF SPE CIAL BENCH (CONSISTING OF FIVE MEMBERS) AS REPORTED IN 25 DTR 73 INDICATING THAT THE SPECIAL BENCH HAS OBSERVED THAT THE DECISI ON OF THE MADRAS HIGH COURT CANNOT BE THE AUTHORITY FOR THE P ROPOSITION AS TO HOW THE PROVISIONS OF SEC.801B MADE APPLICABLE, HAS TO BE APPLIED. IN THIS REGARD, THE ASSESSEE'S SUBMISSION WAS THAT DECISION OF HON'BLE MADRAS HIGH COURT CAN BE REVERS ED ONLY THROUGH PROCEDURE OF LAW WHILE REFERRING TO THE DEC ISION OF SPECIAL BENCH. THE ASSESSEE FURTHER RELIED ON THE DECISION OF VISAKHAPATNAM BENCH OF ITAT IN THE CASE OF SRI PADM AVATHI SRINIVASA COTTON GINNING & PROCESSING FACTORY VS CI T (125 TTJ 411), IN REGARD TO THE SPECIFIC QUESTION AS TO WHET HER SPECIAL BENCH CAN CONSIDER THE ORDERS OF HON'BLE HIGH COURT AND IT WAS URGED TO FOLLOW THE DECISION OF MADRAS HIGH COURT A S REFERRED ABOVE, IN ABSENCE OF DECISION BY ANY OTHER HIGH COU RT. 21. THE CIT(A) REFERRED TO THE DECISION OF HON'BLE ITAT, HYDERABAD IN APPEAL BEARING NO. ITA/1246/HYD/05 DT.30.11.2007 IN CASE OF M/S HETERO DRUGS LTD FOR A Y 2001-02, WHEREIN THE ISSUE HAS BEEN DECIDED AGAINST ASSESSEE ON SIMILAR FACTS AND GROUND. IN THE SAID DECISION, THE HON'BLE ITAT HAS INTURN RELIED UPON THE DECISION OF SPECIAL BENCH AT CHENNAI IN 9 CASE OF ACIT VS ROGINI GARMENTS REPORTED IN 294 ITR (AT) 15 AND ITAT, MUMBAI IN THE CASE OF LEBEN LABORATORIES LTD VS DCIT REPORTED IN 294 ITR (AT) 1, WHILE DECIDING THE MATT ER IN FAVOUR OF THE REVENUE. FOLLOWING THE DECISION OF HON'BLE ITAT , HYDERABAD, THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFIC ER IN REDUCING THE DEDUCTION U/S 80IB FOR COMPUTING THE ELIGIBLE P ROFITS FOR THE PURPOSE OF DEDUCTION U/S 80HHC. 22. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED 5 GROUNDS. SINCE, GROUNDS 1 AND 5 ARE GE NERAL IN NATURE, IT NEED NOT BE SEPARATELY ADJUDICATED UPON. 23. GROUNDS NO. 2 AND 3 READS AS FOLLOWS : 2. THE CIT(A) IS NOT JUSTIFIED IN NOT CONSIDERING THE INTEREST INCOME AS INCOME FROM ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S.80IB. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE OUGHT TO HAVE HELD THAT THE INTEREST INCOME IS A COMPONENT OF THE PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS OF INDUSTRIAL UNDERTAKING OF THE APPELLANT SINCE THE SAME IS EARNED ON THE DEPOSITS MADE FROM THE FUNDS DRAWN FROM CASH CREDIT ACCOUNTS AND THEREBY, IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. 3. WITHOUT PREJUDICE TO THE CONTENTION, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT ONLY NET INTEREST COULD BE EXCLUDED FOR THE PURPOSE. 24. GROUNDS NO.2 AND 3 HAVE ALREADY DISCUSSED BY US AT PARA NO.11 HEREINABOVE. RESPECTFULLY FOLLOWING RATI O OF THE APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P LTD V CIT, SUPRA, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE ONLY THE NET INTEREST INCOME SUBJECT TO THE ASSESSEE ESTABLISHING THE EXP ENSES INCURRED IN EARNING THE INTEREST INCOME. ACCORDINGL Y, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO E XAMINE THE ISSUE AS INDICATED ABOVE, AFTER GIVING A DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10 25. GROUND NO.4 READS AS FOLLOWS : 4. THE COMMISSIONER (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REDUCING THE DEDUCTION ALLOWED U/S. 80IB FOR THE PURPOSE OF COMPUTING THE ELIGIBLE PROFITS FOR THE PURPOSE OF DEDUCTION U/S.80HHC. 26. GROUND NO.4 ALSO WE HAVE DISCUSSED BY US AT PAR A NO.12 HEREINABOVE. RESPECTFULLY FOLLOWING THE DECIS ION OF THE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULE S P LTD V DCIT (332 ITR 42) WHEREIN IT HAS BEEN HELD THAT THE TRIBUNAL WAS NOT RIGHT IN HOLDING THAT SECTION 80-IA(9) OF THE A CT, MANDATES THAT THE AMOUNT OF PROFITS ALLOWED AS DEDUCTION UND ER SECTION 80-IA(1) OF THE ACT HAVE TO BE REDUCED FROM THE PRO FITS OF THE BUSINESS OF THE UNDERTAKING, WHILE COMPUTING DEDUCTI ON UNDER ANY OTHER PROVISIONS UNDER HEADING C IN CHAPTER VI- A OF THE ACT'. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT TH E ASSESSING OFFICER TO COMPUTE THE RELIEF U/S 80HHC WITHOUT DED UCTING FROM THE PROFITS AND GAINS OF THE BUSINESS THE RELIEF U/ S 801B. 27. IN THE RESULT, ITA.NO.730/HYD/2012 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-2003 IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 28. TO SUM -UP, BOTH THE APPEALS ITA.NO.729 & 730/HYD/2012 OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2013. SD/- SD/- (B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 13 TH NOVEMBER, 2013. VBP/- 11 COPY TO 1. M/S. HETERO LABS LIMITED, 7-2-A2, HETERO CORPORA TE INDUSTRIAL ESTATES, SANATHNAGAR, HYDERABAD-500018. 2. THE DCIT, C.C.4, 8 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. 3. CIT(A)-VII, HYDERABAD 4. CIT(CENTRAL), HYDERABAD 5. D.R. B BENCH, ITAT HYDERABAD