TMI Blog2016 (12) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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. - Decided against assessee - ITA No.2080/Mds/2016 - - - Dated:- 22-12-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER For The Appellant : Shri S.Parthasarathy, CA and Shri M. Narayanan, CA For The Respondent : Shri A.V.Sreekanth, JCIT ORDER PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-11, which were subject to scrutiny u/s.143(3) of the Act, interest on such fixed deposit has been taxed under the head profits and gains from business or profession and thereby granted exemption u/s.10B of the Act for the entire interest earned on fixed deposit after considering the facts of the case. He relied on the decision in the case of CIT v. Western Outdoor Interactive P. Ltd. 349 ITR 309, wherein it was held that sec.10A of the Act exemption in allowable in case allowed in earlier years and there is no change in the business. 3.1 The ld. AR, also placed reliance on the judgment of the Karnataka High Court in the case of Motorola India Electronics (P) Ltd. In ITA No.428 of 2007 and 447 of 2007 dated 1.12.2013, wherein it was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles or things or computer software shall be the account which bears to the profits of the business of the undertaking and not the profits and gains from export of articles. According to him, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. 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. He submitted that the provisions of sec.80HHC of the Act cannot compare to sec.10A of the Act, as they are standing on different footing. Further, he placed reliance on the decision of the Tribunal, Special Bench, Indore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e falls specifically under one head, it has to be charged under that head and not other. Whatever be the nature of the activity or the nature of the income, the income of an assessee is to be classified and computed under the specific heads enumerated in section 14. Even if such income arose in the course of business, if the same falls clearly under some other head or satisfies the test of any specific head, then such income has to be classified and computed only under such head. The several heads of income are mentioned in section 14 and dealt with separately in sections 15 to 59. A particular variety of income must be assignable to one or the other of these sections. If the income under consideration is taxable under any particular sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a part of the profit and gain from the industrial undertaking as stipulated in Sec.10A(4) of the Act. In our opinion, similar issue came for consideration before Jurisdictional High Court in the case of CIT Vs.Menon Impex P. Ltd. in [2003] 259 ITR 403 (Mad) wherein held that:- the interest received by the assessee was on deposits made by it in the banks. It was the deposit which was the source of the interest income. The mere fact that the deposit was made for the purpose of obtaining letters of credit which were in turn used for the purpose of the business of the industrial undertaking did not establish a direct nexus between the interest and the industrial undertaking . Similar view was taken by the Jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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