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2009 (5) TMI 617 - AT - Income TaxDeduction u/s 10A - Interest earned on fixed deposits - Whether or not the deduction is available u/s 10A on the interest income - AO observed that the interest income on fixed deposits was in the nature of "income from other sources" as it had no relation with the activity of export of goods and merchandise - It was, therefore, held that assessee not entitled to deduction u/s 10A - No relief was allowed in the first appeal. HELD THAT:- We find that sub-section (1) also employs the expression derived from the export of articles. But it is not the end of the matter. The expression ‘profits derived from export of articles or things or computer software’ as employed in sub-section (1) or (1A) has been given a specific meaning in sub-section (4). Once the expression ‘derived from’ having restricted scope has been specifically defined in the same section, then the meaning of such expression as understood in common parlance will not be applicable. Rather the specific meaning given to it will come into play. We further note that sub-section (4) has been worded on the pattern of section 80-IA, prior to its substitution with effect from 1-4-2000, which referred to ‘profits and gains derived from any business of an industrial undertaking’. From the facts of the instant case it is noted that the assessee had given FDRs to the bank for obtaining credit facility. Such interest income has nexus with the business of the undertaking and falls under the head ‘Profits and gains of business or profession’ as having relation with the carrying on of the business. Similar view has been taken in the case of Motorola India Electronics (P.) Ltd.[2006 (11) TMI 541 - ITAT BANGALORE]. In our considered opinion CIT(A) was not justified in treating the interest income as not derived from the export activity. We, therefore, hold that the assessee was entitled to deduction u/s 10A in respect of the interest income. The resultant denial of deduction u/s 10A is deleted. Appeal is allowed.
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