TMI Blog2010 (3) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee not carrying on any banking activity and was a mere exporter of silk waste and polished granites? Whether the Tribunal was correct in holding that for the purpose of computation of deduction under section 80 HHC of the act the gross total income should include not only the income from profits of export sales but also interest income derived from fixed deposits made in banks in India? 2. The Facts of the case are that the respondent-Assessee has been assessed to tax in the status of a registered firm. It is carry on business of export in silk waste and polished granites. For the assessment year 1996-97 the return of income was filed which was proessed under section 143(1)(a) of the act. The Assessing officer found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off towards the interest paid as business expenditure and placing reliance on a decision of the Calcutta High Court in the case of CIT Vs. Tirupati Woolen Mills Ltd. 193 ITR 252 held that the interest earned is chargeable under the head, profile and gains under the business and acoordingly granted relief of deduction under section 80HHC of the act. Being aggrieved by the said order, the revenue has preferred this appeal. 4. We have heard the learned counsel for the revenue and the learned counsel for the respondent-assessee. 5. It is submitted on behalf of the appellants that the Tribunal was not right in holding that the interest income derived by the assessee from the fixed deposits should be treated as business, but was an exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RUCTIONS so as to contend that the order of the Tribunal does not call for any interference in this appeal. 7. Having heard the counsel on both sides, it is not in dispute that respondent-assessee is engaged in the export business of silk waste and polished granites for the purpose of which he has obtained credit facilities. To obtain the credit facilities by the assessee which was required for the purpose of his export business, it was necessary to pledge the fixed deposits as a collateral security. The question, however, is as to whether the interest earned on the fixed deposits should be adjusted towards the interest payments paid, made on the bank deposits and as to whether the benefit under section 80HHC of the act has to be covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orically states that with regard to amounts received under an arbitration award By the assessee which was a company in the said case, the said amount was treated as business income and not income from other sources. 9. However, the learned counsel for the appellants relied upon another decision of apex court in PANDIAN CHEMICALS LTD. VS. COMMISSIONER OF INCOME TAX, to contend that with regard to deposits made with the Electricity Board, the interest on the said deposits would not be said to be derived from the industrial undertaking as it is a step removed from the business undertaking and therefore not liable for deduction under section 80HHC of the act. 10. We are of the view that on the fact of the present case and taking into cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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