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TMI Blog2020 (8) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 20-8-2020 - HONOURABLE DR.JUSTICE VINEET KOTHARI AND HONOURABLE MR.JUSTICE ABDUL QUDDHOSE For Appellant : Mr. J. Narayanaswamy, Sr. Standing Counsel J U D G M E N T (Judgment of the Court was delivered by DR.VINEET KOTHARI, J.) The Court was held by Video Conference as per the Resolution of the Full Court dated 3rd July 2020, by the Judges at their respective residences and the counsel, and staff of the Court appearing from their respective residences. 2. This Appeal has been filed by the Revenue against the order of the learned Tribunal dated 23.09.2016 for Assessment Year 2003- 04, by which the learned Tribunal decided against the Revenue that the Assessee was entitled to include the interest on bank deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same head of income is allowed. By applying this provision the assessee-company has f adjusted and set off the other income including the interest income with the business loss u/s 10A of the Act and filed the return of income. Further there was an amendment to this provision where deduction u/s 10A has to be treated as a deduction from total income, therefore, the assessee by applying the provision has claimed the set off against the business loss. The decisions relied by the Id. AR are in support of his arguments wherein held that the loss of lOB unit is available for set off u/s 70. So, same principle applies to the provisions of 10A. We find that a similar issue was considered by the jurisdictional High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer is directed to allow set off of the other income with business loss determined u/s 10A of the Act. 10. In the result, appeal of the assessee is allowed. Order pronounced on Friday, 23'd September, 2016, at Chennai. 5. It has been brought to the notice of this Court that there is a judgment of the Full Bench of the Karnataka High Court, to which one of us (Dr.Vineet Kothari, J.) was a party, in which the Full Bench has held that the interest on bank deposits is also eligible to be included in the profits of 100% Export Oriented Units for the purpose of claiming deduction under Section 10A / 10B of the Income Tax Act. The relevant portion of the judgment of the Full Bench of the Karnataka High Court is quoted below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived by an Undertaking in Section 10-A or 10-B are different from derived from employed in Section 80-HH etc. Therefore all Profits and Gains of the Undertaking including the incidental income by way of interest on Bank Deposits or Staff loans would be entitled to 100% exemption or deduction under Section 10-A and 10-B of the Act. Such interest income arises in the ordinary course of export business of the Undertaking even though not as a direct result of export but from the Bank Deposits etc., and is therefore eligible for 100% deduction. 36. We have to take a purposive interpretation of the Scheme of the Act for the exemption under Section 10-A/10-B of the Act and for the object of granting such incentive to the special class of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J., that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. 37. On the above legal position discussed by us, we are of the opinion that the Respondent assessee was entitled to 100% exemption or deduction under Section 10-A of the Act in respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary course of its business and also interest earned by it from the staff loans and such interest income would not be taxable as Income from other Sources under Section 56 of the Act. The incidental activity of parking of Surplus Funds with the Banks or advan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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