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TMI Blog2015 (6) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and manufacturing and export of polished diamonds. Assessee filed its return of income for A.Y. 2006-07 on 28.12.2006 declaring its total income of Rs. 2,80,950/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 24.12.2009 and the total income was determined at Rs. 19,41,540/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 16.11.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee & Revenue are now in appeal before us. The grounds raised by the Assessee reads as under:- 1. On the facts and circumstances of the case as well as law on the subject, the ld. CIT(A) has erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . With respect to interest received from Electricity Department on the deposits placed with it, he was of the view that it had no direct relation with the business of the Assessee and therefore not eligible for deduction. He accordingly ignored the interest received from both the sources for the purpose of deduction u/s. 10B. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A). Ld. CIT(A) noted that identical issue arose in A.Y. 2005-06 in Assessee's own case and following the order of his predecessor, granted partial relief by deleting the addition of Rs. 17,60,586/- on account of interest income earned from banks but however confirmed the addition of Rs. 1,02,000/- on the interest earned on deposit with Electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f as per the following observation: "I have carefully considered the reasons given by Assessing Officer & also the submissions of the appellant. After carefully analyzing the facts of the case it is seen that so far as interest income on FDR is concerned, I find merit in the contention of appellant that as FDR is placed out of loan borrowed from the bank, the expenditure incurred on loan is required to be reduced from the interest on FDR as said amount is expended for earning the interest income. As interest paid is more than interest on FDR, deduction u/s.10B cannot be curtailed on this ground in view of the principle of netting. I also find that ratio of Honourable Gujarat High Court decision in the case of Jashvidhyaben C.Mehta V. CIT - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of ACIT vs. Motorola India Electronics Pvt. Ltd. 114 ITD 387 but was found not applicable to Assessee's case and the same was not considered by them. He further submitted that the aforesaid decision of Tribunal which was relied by Assessee, before A.O and ld. CIT(A) has been upheld by Hon'ble Karnataka High Court in ITA No. 428/A/2007 and 447/A/2007 order dated 11.12.2013. He therefore submitted that since the issue has been decided by the High Court and since the Hon'ble Tribunal while deciding the appeal of the Assessee for A.Y. 2007-08 was not having the benefit of the aforesaid decision, and in the absence of any contrary binding decision of jurisdictional High Court or Apex Court, the issue on interest on deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 237 ITR 579 (SC) and other decisions and after considering the amendment made by Finance Act, 2001 to sub-section (4) to Section 10B has held has under:- By Finance Act, 2001, with effect from 01.04.2001, the present Subsection (4) is substituted in the place of old Subsection (4). No doubt Subsection 10B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Subsection (4) explains what is the profit derived from export of articles as mentioned in Subsection (1)* The substituted Subsection (4) says that profits derived from export of articles or things or computer software shall be the accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the undertaking. There is a direct nexus between this income and the income of the business oi the undertaking. Though it does not par take the character of a profit and gains from the sale of an article, it is the income which is derived from the consideration realized by export of articles. In view of the definition of 'Income from Profits and Gains' incorporated in Subsection (4), the assessee is entitled to the benefit of exemption of the said amount as contemplated under Section 10B of the Act. Therefore, the Tribunal was justified in extending the benefit to the aforesaid amounts also. We do not find any merit in these appeals. Therefore, the first substantial question of law raised in ITA No.428/2007 is answer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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