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TMI Blog2013 (1) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit required for availing credit facilities for business, against interest paid, claiming deduction u/ss. 10A and 10B on the net income from its eligible undertakings. It is not a case of earning interest on surplus funds for the time being parked in investments. The Revenue, though segregated and assessed interest income (Rs.19,17,771), that stood set off, as business income, yet disallowed deduction u/ss. 10A & 10B on the same to the extent it relates to EOU and SEZ Units (Rs.14,27,547) on the ground that the same do not represent income of the eligible undertaking, relying on the decisions in the case of, among others, CIT v. Sterling Foods (1999) 237 ITR 579 (SC), Pandian Chemicals Ltd. v. CIT (2003) 262 ITR 278 (SC), CIT v. A. Srinivasa Pai, 242 ITR 29 (Ker.) and Shriram Honda Power Equipment 207 CTR (Del) 689. The tribunal in the case of ITO v. Jewelex International Pvt. Ltd. (supra) was of the view that even so, penalty u/s. 271(1)(c) of the Act could not be levied in view of section 10B(4), which provides that the income exigible to deduction under the said section is profits of the said business as further worked out on a proportionate basis, taking us through the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1827/Mum/2006 dated 30.09.2011/copy on record), the interest income had been assessed as income from other sources, and which was held by the tribunal as assessable as income from business due to its nexus with the appellant's business, while in the instant case the AO had himself assessed it only as business income. 2.2 On being questioned by the Bench as to whether there is a finding in respect of the interest income as arising out of margin money kept with the bank toward various fund or non-fund based credit facilities availed there-from for its business, he stated that same was not in dispute, taking us to paras 5, 6 (page 3) of the assessment order. On further query as to whether section 10A also contains a provision similar to section 10B(4), the deduction for the year having been also claimed u/s. 10A, he drew our attention to section 10(A)(4), which was found to be identically worded in the relevant part, so that the two provisions are para materia. Finally, he would submit that the assessee should in any case get the benefit of doubt, in view of the provision sections 10(A)(4) & 10(B)(4), which read as under: Section 10A (4) "(4) For the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR before us and, further, that this aspect has also not been disputed by the assessee in appeal. In this view of the matter, the assessee's reliance on the decision in the case of Tropicate Textiles Pvt. Ltd. (supra), rendered by relying on the judgment in the case of CIT vs. Indo Swiss Jewels Ltd. [2006] 284 ITR 389 (Bom.), wherein interest on margin money had been held as assessable as business income on account of its close nexus with the appellant's business, may not be of much assistance. This is more so as the matter, in any case, it needs to be appreciated, is as to whether the said income is derived from the export by the assessee's eligible undertaking/s or not, which only qualifies for the deductions claimed; the word 'derived from' being restricted in scope, as explained by the apex court time and again per a series of decisions, so that the same ought to considered as well settled. In the case of Pandian Chemicals Ltd. (supra), the interest income was on deposit placed with the Electricity Board for supply of electricity, an essential input to the assessee's industrial undertaking. It was however held as not liable to be considered as derived from the said undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the provision of sections 10A(4) and 10B(4), reproduced hereinabove, on which basis only favor stood extended to the assessee-respondent in the case of ITO v. Jewelex International Pvt. Ltd. (supra). Though in our clear view the assessee should have, particularly given the clear and settled position of law in the matter per a host of judgments by the hon'ble apex court, clearly stated of its reliance on the language of sections 10A(4) & 10B(4) for claiming deduction on interest income there-under, establishing its bona fides, yet, it cannot be denied that the said provisions do inject an ambiguity in the matter inasmuch as the deduction u/s. 10A(1) and s.10B(1) of income derived from an eligible undertaking is subject to the provisions of the said sections and, thus, to subsections 10A(4) & 10B(4) respectively, which provide for the manner of working of the deduction under the said sections. The Revenue has not placed on record any decision by the apex court or by the hon'ble jurisdictional high court on the interpretation of the sections 10A(4) & 10B(4) in the context of income, which though not derived from export per se, yet forms a part of the business carried on b ..... 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