TMI Blog1994 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... g in Kandla Free Trade Zone and manufactured pharmaceutical products which were exported to USSR. The assessee-company advanced surplus fund of Rs. 35 lakhs to its sister-concern M/s. Cadila Laboratories Pvt. Ltd. and earned interest to the tune of Rs. 4,50,000. The assessee claimed exemption under section 10A in respect of this amount. The learned Assessing Officer held that since the interest income did not constitute "profits and gains of business or profession", the assessee was not entitled to exemption in respect of interest income under section 10A. 3. On appeal, the learned CIT (Appeals) confirmed the action of the Assessing Officer holding that the interest income cannot be treated as income derived from industrial undertaking of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the establishment of export oriented industries in the Free Trade Zones. This fact is clear from the following extract from the Speech of the then Finance Minister while introducing the Finance Bill: "I had earlier in my speech referred to the imperative need to promote our exports in view of our difficult balance of payments situation. To encourage establishment of export oriented industries in the Free Trade Zone, the Government proposes to allow complete tax holiday in respect of units set up in these Zones for an initial period of five years in lieu of other concessions." These provisions must, therefore, be interpreted in consonance with the avowed aims and objects of the Legislature enacting these provisions and to further this, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial assets which were lying in the form of surplus cash, for earning interest. Such earning, according to the Tribunal, arising from utilisation of commercial assets would be business income. On a reference, the Hon'ble High Court held that the funds utilised in making fixed deposits with banks were business funds lying temporarily surplus with the assessee. It was, therefore, assessable as business income and revenue expenditure could be deducted from it. In the case before us the question is not whether income from interest is business income or income from other sources. But the question is whether the assessee is entitled to exemption under section 10A on the interest income. As we have already stated that the intention behind th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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