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TMI Blog2016 (12) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The assessee earned interest of Rs. 10,90,028/- on fixed deposits and claimed as business income of the assessee while claiming deduction u/s.10A of the Act. However, the lower authorities treated the same as 'income from other sources' and not considered for granting deduction u/s.10A of the Act. Against this, the assessee is in appeal before the Tribunal. 3. The ld. AR, submitted that the assessee is a 100% export oriented unit and is eligible to avail the exemption u/s. 10A the Act as all the conditions prescribed therein are complied with. The assessee earned interest of Rs. 10,90,028.00 from the deposits placed with the Bank for various purposes, like, to meet the margin requirements while establishing LCs or for issue of Bank gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration realized by export of articles. Therefore, it is eligible for benefit u/s.10B of the Act and to support his view, he further relied on the judgment of the Tribunal, Mumbai Bench in the case of J.P.Morgan Services Pvt. Ltd. (2013). Further, the ld. AR submitted that the profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is clear that what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the subject undertaking which is directly attributable to and part6akes the character of being borne out of the said export activity. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered as part of the export business income of the assessee. According to him, only the income from export is entitled for deduction u/s.10A of the Act. He also relied on the decision of the co-ordinate Bench in the case of Changepond Technologies (P) Ltd.CIT reported in 22 SOT 220 (Chennai) and in the case of Orchid Chemicals & Pharmaceuticals Ltd. vs. JCIT (97 ITD 277)(Chennai), wherein it was observed as under : "In the context of expression 'derived from' or 'attributable to', the nature of the income is important and the nature of income has to be decided on the facts of each case. In the instant case, the assessee had earned the interest on margin money deposit made for obtaining letter of credit for purchase of raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets. The fact that income falling under a specific head may indirectly be covered by any other head will not make it taxable under the latter head. The interest income earned from deposits with the bank was not connected with profits and gains which were derived from hundred per cent export-oriented undertaking or from manufacturing any article or thing. The expression 'any profits and gains' derived by the assessee from a hundred per cent export oriented undertaking to which this section applies as used in section 10B has a distinct but narrow meaning and it cannot receive a flexible or wider concept. The assessee is entitled to claim deduction of the amount which it derives as direct profit by export of goods manufactured in its newly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as profit and gain derived by assessee from the eligible undertaking as it does not bear a direct nexus with the activities of the eligible undertaking only, the profit and gains of assessee which has direct nexus with the undertaking to which S.10A apply, interest would be excluded from the income of assessee. 6. In view of the above discussion, we are inclined to held that the interest income earned by the assessee from the bank deposits cannot be included as profit and gain from eligible undertaking so as to grant deduction u/s.10A of the Act and it is to be excluded from profit and gains of the business undertaking. Accordingly, this ground raised by the assessee is dismissed. 7. In the result, the appeal of the assessee is dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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