The DCIT, Circle-5,, Ahmedabad v. Narayan Organics Pvt.Ltd.,, Ahmedabad

ITA 3548/AHD/2008 | 2003-2004
Pronouncement Date: 12-07-2010 | Result: Allowed

Appeal Details

RSA Number 354820514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 3548/AHD/2008
Duration Of Justice 1 year(s) 8 month(s) 19 day(s)
Appellant The DCIT, Circle-5,, Ahmedabad
Respondent Narayan Organics Pvt.Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 12-07-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-07-2010
Date Of Final Hearing 12-07-2010
Next Hearing Date 12-07-2010
Assessment Year 2003-2004
Appeal Filed On 24-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI A.N.PHAUJA ACCOUNTANT MEMBER ITA NO.3548/AHD/2008 & ASSESSMENT YEAR: 2003-04 ITA NO.2541/AHD/2009 ASSESSMENT YEAR:2006 -07 DATE OF HEARING:12.7.10 DRAFTED:12.7.10 DY. COMMISSIONER OF INCOME-TAX CIRCLE-5 AHMEDABAD V/S. NARAYAN ORGANICS PVT. LTD. 1305/6/A PHASE- IV GIDC ESTATE NARODA AHMEDABAD PAN NO.AAACN5297K (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- WRITTEN SUBMISSIONS REVENUE BY:- SHRI K. MADHUSUDAN SR-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE APPEALS BY THE REVENUE ARE ARISING OUT OF TH E ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-XI AHMEDABAD IN APPEAL NOS CIT(A)-XI/387 & 721/07- 08/09-10 BY DIFFERENT DATE 12-08-2008 & 30-06-2009. THE ASSESSMENTS WERE FRAMED BY THE DCIT CIRCLE-5 AHMEDABAD/JCIT CIRCLE-5 AH MEDABAD U/S.143(3) R.W.S.147 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED T O AS THE ACT) VIDE THEIR ORDERS DATED I.E. 28-08-2007 AND 15-12-2008 FOR THE ASSESS MENT YEAR 2003-04 AND 2006- 07 RESPECTIVELY. 2. THE ONLY COMMON ISSUE IN BOTH THE APPEALS OF REV ENUE IS AGAINST THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S.80IA IN RESPECT OF DIVIDEND INCOME AND INTEREST INCOME EARN ED BY THE ASSESSEE ON FDRS MADE WITH THE BANK. ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 2 3. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSU ES ARE THAT THE ASSESSING OFFICER DISALLOWED DEDUCTION U/S.80IA ON OTHER INCO ME LIKE DIVIDEND BANK INTEREST AMOUNTING TO RS.75 000/- AND RS.5 72 059/- FOR ASSE SSMENT YEAR 2003-04 U/S.80IA OF THE ACT. FOR ASSESSMENT YEAR 2006-07 THE AO ALSO DISALLOWED THE CLAIM OF INTEREST INCOME FROM BANK AND DIVIDEND INCOME AMOUNTING TO R S.15 23 293/- AND RS.1 LAKH RESPECTIVELY. THE CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT DIVIDEND AND INTER EST INCOME IS DIRECTLY CONNECTED WITH THE BUSINESS OF THE ASSESSEE. THEREFORE DEDUC TION U/S.80IA SHOULD NOT BE DENIED. THE CIT(A) ALSO ALLOWED THE NETTING OF INT EREST STATING THAT DEDUCTION ALLOWED IS ONLY ON BUSINESS INCOME WHICH IS DERIVED AFTER ADJUSTING INTEREST PAYMENTS FROM INTEREST RECEIPTS. 4. BEFORE US LD. SR-DR SHRI K. MADHUSUDAN RELIED O N THE CASE LAW OF PANDIAN CHEMICALS LTD. V. CIT (2003) 262 ITR 278 (SC) WHEREIN THE HONBLE APEX C OURT HAS HELD:- THE HIGH COURT REJECTED THE SUBMISSION OF THE APPE LLANT BY RELYING UPON THE DECISION OF THIS COURT IN COMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT (1978) 113 ITR 84 WHERE THIS COURT HAS CLEARLY STA TED THAT THE EXPRESSION DERIVED FROM HAD A NARROWER CONNOTATION THAN THE EXPRESSION ATTRIBUTABLE TO ( PAGE 93 ); IN THIS CONNECTION IT MAYBE POINTED OUT THAT WHEN EVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER S UGGESTED BY THE LEARNED SOLICITOR-GENERAL IT HAS USED THE EXPRESSI ON DERIVED FROM AS FOR INSTANCE IN SECTION 80J. IN OUR VIEW SINCE TH E EXPRESSION OF WIDER IMPORT NAMELY ATTRIBUTABLE TO HAS BEEN USED T HE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF E LECTRICITY. THE WORD DERIVED HAS BEEN CONSTRUED AS FAR BACK IN 1948 BY THE PRIVY COUNCIL IN CIT V. RAJA BHADUR KAMAKHAYA NARAYAN SINGH [1948] 16 ITR 325 WHEN IT SAID ( PAGE 328 ): THE WORD DERIVED IS NOT A TERM OF ART. ITS USE I N THE DEFINITION INDEED DEMANDS AS ENQUIRY INTO THE GENEALOGY OF THE PRODUC T. BUT THE ENQUIRY SHOULD STOP AS SOON AS THE EFFECTIVE SOURCE IS DISC OVERED. IN THE GENEALOGICAL TREE OF THE INTEREST LAND INDEED APPEARS IN THE SEC OND DEGREE BUT THE IMMEDIATE AND EFFECTIVE SOURCE IS RENT WHICH HAS S UFFERED THE ACCIDENT OF NON-PAYMENT. AND RENT IS NOT LAND WITHIN THE MEANIN G OF THE DEFINITION. ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 3 THIS DEFINITION WAS APPROVED AND REITERATED IN 1955 BY A CONSTITUTION BENCH OF THIS COURT IN THE DECISION OF MRS. BACHA F. GUZDAR V. CIT [1995] 27 ITR 1 AT PAGE 7. IT IS CLEAR THEREFORE THAT THE WORD DER IVED FROM IN SECTION 80HH OF THE INCOME-TAX ACT 1961 MUST BE UNDERSTOOD AS SOM ETHING WHICH HAS DIRECT OR IMMEDIATE NEXUS WITH THE APPELLANTS INDUSTRIAL UNDERTAKING. ALTHOUGH ELECTRICITY MAY BE REQUIRED FOR THE PURPOSES OF THE INDUSTRIAL UNDERTAKING THE DEPOSIT REQUIRED FOR ITS SUPPLY IS A STEP REMOVED F ROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING. THE DERIVATION OF PROFITS O N THE DEPOSIT MADE WITH ELECTRICITY BOARD CANNOT BE SAID TO FLOW DIRECTLY F ROM THE INDUSTRIAL UNDERTAKING ITSELF. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE APPE LLANT HAS REFERRED TO SEVERAL DECISIONS OF THE MADRAS HIGH COURT IN ORDER TO CONTEND THAT THE WORD DERIVED FROM COULD BE CONSTRUED TO INCLUDE SITUAT IONS WHERE THE INCOME AROSE FROM SOMETHING HAVING A CLOSE CONNECTION WITH THE INDUSTRIAL UNDERTAKING ITSELF. ALL THE DECISIONS CITED BY THE APPELLANT HAVE BEEN CONSIDERED BY THE MADRAS HIGH COURT IN THE CASE OF PANDIAN CHEMICALS LTD. [1998] 233 ITR 497. WE SEE NO REASON TO DISAGREE W ITH THE REASONING GIVEN BY THE HIGH COURT IN PANDIAN CHEMICALS LTDS CASE [1998] 233 ITR 497 WITH RESPECT TO THOSE DECISIONS TO HOLD THAT THEY DO NOT IN ANY WAY ALLOW THE WORD DERIVED IN SECTION 80HH TO BE CONSTRUED IN THE MA NNER CONTENDED BY THE APPELLANT. THE LEARNED COUNSEL FOR THE APPELLANT THEN CONTENDE D THAT HAVING REGARD TO THE OBJECT WITH WHICH SECTION 80HH WAS INTRODUCED I N THE STATUTE BOOK THIS COURT SHOULD GIVE A LIBERAL INTERPRETATION TO THE W ORDS IN A MANNER SO AS TO ALLOW SUCH OBJECT TO BE FULFILLED. THE RULES OF IN TERPRETATION WOULD COME INTO PLAY ONLY IF THERE IS ANY DOUBT WITH REGARD TO THE EXPRESS LANGUAGE USED. WHERE THE WORDS ARE UNEQUIVOCAL THERE IS NO SCOPE FOR IMPORTING ANY RULE OF INTERPRETATION AS SUBMITTED BY THE APPELLANT. IN TH E CIRCUMSTANCES OF THE CASE WE AFFIRM THE DECISION OF THE HIGH COURT AND DISMIS S THE APPEAL WITHOUT ANY ORDER AS TO COSTS. 5. THE LEARNED SR. DR FURTHER STATED THAT NOW THE I SSUE HAS BECOME CLEAR AFTER THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT V. ASIAN STAR CO. LTD. IN ITA NO.200 OF 2009 (BOM) WHEREIN HONBLE BOMBAY HIGH COURT OBSERVE D EVEN IN REGARD TO DEDUCTION U/S.80HHC OF THE ACT THAT EXPLANATION (BAA) TO S. 80HHC REQUIRES THAT NINETY PER CENT OF RECEIPTS BY WAY OF BROKERAGE COMMISSION INTEREST RENT CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NAT URE HAVE TO BE REDUCED FROM THE PROFITS. THE REASON WHY ITEMS LIKE BROKERAGE ETC HA VE TO BE EXCLUDED IS BECAUSE THEY DO NOT POSSESS ANY NEXUS WITH EXPORT TURNOVER AND THEIR INCLUSION IN PROFITS WOULD RESULT IN A DISTORTION OF THE FIGURE OF EXPOR T PROFITS. HOWEVER AS SOME EXPENDITURE MIGHT HAVE BEEN INCURRED IN EARNING THE SE INCOMES AN ADHOC DEDUCTION ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 4 OF TEN PER CENT FROM SUCH INCOME IS ALLOWED. IT WAS FURTHER OBSERVED BY THE HONBLE HIGH COURT THAT ONCE PARLIAMENT HAS LEGISLATED BOTH IN REGARD TO THE NATURE OF THE EXCLUSION AND THE EXTENT OF THE EXCLUSION IT WOULD NOT BE OPEN TO THE COURT TO ORDER OTHERWISE BY REWRITING THE LEGISLATIVE PROVISION. T HE TASK OF INTERPRETATION IS TO FIND OUT THE TRUE INTENT OF A LEGISLATIVE PROVISION AND IT I S CLEARLY NOT OPEN TO THE COURT TO LEGISLATE BY SUBSTITUTING A FORMULA OR PROVISION OT HER THAN WHAT HAS BEEN LEGISLATED BY PARLIAMENT. IT IS NOT OPEN TO SAY THAT SOMETHING MORE THAN THE 10% STATUTORILY PROVIDED SHOULD ALSO BE ALLOWED. HONBLE HIGH COURT FURTHER HELD THAT IN CIT V. SHRI RAM HONDA POWER EQUIP (2007)289 ITR 475 (DEL) THE DELHI HIGH COURT HA S NOT ADEQUATELY EMPHASIZED THE ENTIRE RATIONALE FOR CONF INING THE DEDUCTION ONLY TO THE EXTENT OF NINETY PER CENT OF THE EXCLUDIBLE RECEIPT S AND IT CANNOT BE FOLLOWED. AS REGARDS THE JUDGEMENT OF THE SPECIAL BENCH IN LALSONS ENTERPRISES HONBLE HIGH COURT HELD THAT WE ARE AFFIRMATIVELY OF THE VIEW THAT THE TRIBUNA L HAS TRANSGRESSED THE LIMITATIONS ON THE EXERCISE OF JUDICIAL POWER A ND . HAS IN EFFECT LEGISLATED BY PROVIDING A DEDUCTION ON THE GROUND OF EXPENSES OTH ER THAN IN THE TERMS WHICH HAVE BEEN ALLOWED BY PARLIAMENT. THAT IS IMPERMISSIBLE. 6. ON THE OTHER HAND WE FIND THAT THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS STATING THAT IT HAD ALREADY SUBMITTED BEFORE THE LO WER AUTHORITIES THAT DIVIDEND INCOME AND INTEREST INCOME FORM PART OF PROFITS OF INDUSTR IAL UNDERTAKING. AS REGARDS TO DIVIDEND INCOME OF RS.75 000/- THE ASSESSEE STATED THAT THE INVESTMENT IN SHARES OF THIS COMMON PLANT IS NOT AN INVESTMENT ACTIVITY IT IS FOR PART AND PARCEL OF COMPANYS BUSINESS ACTIVITY. ACCORDING TO DIRECTION OF HONBL E JURISDICTIONAL HIGH COURT THE COMPANY CANNOT MANUFACTURE WITHOUT BEING THE MEMBER OF THE COMMON PLANT. THEREFORE THE CASE LAW OF PANDIAN CHEMICALS (SUPRA) IS NOT APPLICABLE TO THIS CASE BECAUSE THERE IS ONLY ONE SEGMENT OF BUSINESS AND O NE ACTIVITY OF OPERATION I.E. MANUFACTURING CHEMICALS AND THE PURPOSE OF SUBSCRIB ING THE SHARES TO BECOME THE MEMBER AND GET BENEFIT OF COMMON EFFLUENT TREATMENT PLANT WHICH IS PROMOTED BY THE MEMBERS OF ANKLESHWAR INDUSTRIAL ESTATE AS PER DIRECTION OF HONBLE JURISDICTIONAL HIGH COURT FOR THE PURPOSE OF DISCHARGING THE EFFLU ENTS BY THE MANUFACTURERS OF CHEMICAL AND OTHER ITEMS. THE ASSESSEE CLAIM THAT IT HAD NOT CLAIMED THE DIVIDEND AS EXEMPT IN SPITE OF EXEMPTION AVAILABLE U/S.10(33 ) OF THE ACT AND EVEN THE INCOME IS NOT COMPUTED AS INCOME FROM OTHER SOURCES. AS R EGARDS TO INTEREST OF ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 5 RS.5 72 059/- THE ASSESSEE-COMPANY HAD RECEIVED INT EREST RS.5 72 059/- FROM BANK FDR AND OTHER PARTIES DURING NORMAL CONDUCT OF BUSI NESS AND HAD PAID INTEREST RS.33 50 870/- TO BANK AND OTHER PARTIES FOR THE PU RPOSE OF THE BUSINESS ACTIVITIES. THE ASSESSEE-COMPANY HAS NO INVESTMENT ACTIVITY OR PURPOSE AND TO MAKE FDR FOR THE PURPOSE OF REGULAR BANKING TRANSACTION FOR L/C AND GUARANTEES. THE ASSESSEE RELIED ON CASE LAW OF CIT V. NAGPUR ENGINEERING CO. LTD. (2000) 244 ITR (ST.) 54 55 AND IN THE CASE OF NIRMA INDUSTRIES LTD. V. DCIT (2006) 155 TAXMAN 330 (GUJ). AS REGARDS TO NETTING OF INTEREST THE LD. COUNSEL STA TED THAT THE INTEREST PAID IS EXCEEDING THE INTEREST RECEIPT THEREFORE THE NET I NTEREST SHOULD BE EXCLUDED FOR THE PURPOSE OF SEC.80-IA CALCULATION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE THAT THESE FIXED DEPOSITS ON WHICH INTERE ST INCOME IS EARNED BY THE ASSESSEE ARE NOT UTILIZED FOR THE PURPOSES OF OBTA INING CREDIT LIMIT OR IS USED FOR THE PURPOSES OF MARGIN MONEY FOR LETTER OF CREDIT. ONC E THESE FDRS ARE MADE OUT OF IDLE FUNDS THE INTEREST OUT OF THE SAME CANNOT BE HELD TO BE INCOME FROM BUSINESS. ON THE ISSUE RELATING TO THE DETERMINATION OF NATURE O F INTEREST INCOME THE CONTENTION WAS THAT EVEN THE INTEREST EARN ON SURPLUS FUND BY THE EXPORTERS IN FIXED DEPOSIT WOULD BE BUSINESS INCOME AND FOR THIS THE FOLLOWING CONTENTIONS WERE MADE:- I) WHEN THERE IS NO QUARREL WITH THE PROPOSITION T HAT THE INTEREST INCOME IN QUESTION SHOULD BE COMPUTED UNDER THE HEAD INCOME FROM OTHER SOURCES THE REAL ISSUE IS TO FIND OUT THE NATURE OF THE INTEREST INC OME IN QUESTION. II) IN CASE INTEREST INCOME IS ASSESSED UNDER THE H EAD INCOME FROM BUSINESS IN THAT CASE THE INTEREST INCOME IS SEEN TO HAVE AR ISEN FROM A BUSINESS ACTIVITY OR IN OTHER WORDS IT HAS A CLOSE NEXUS WITH THE BUSINESS CARRIED ON BY THE ASSESSEE THEN IT WILL BEAR THE IMPRINT OF OR HAVE THE QUALITY OF BUSINESS INCOME FOR LIMITED PURPOSES. FOR THIS WE HAVE TO PLACE RELIANCE ON THE JUDGMENT OF HOBLE DELHI HIGH COURT IN THE CASE OF SUNAM PROGETTI S.P.A. V. ADDL. CIT (1981) 132 ITR 70 (DELHI) WHICH HAS BEEN UPHELD BY HONBLE SUPREME COURT BY THE DISMISS AL OF THE SPECIAL LEAVE PETITION IN[1991] 189 ITR (ST.) 116(SC) WHEREIN IT WAS HELD THAT THE QUESTION TO BE EXAMINED IS WHETHER THE INTEREST INCOME WAS DERIVED FROM WHA T MAY BE DESCRIBED AS A ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 6 BUSINESS ACTIVITY AND IF IT IS SO DERIVED THEN THE MERE FACT THAT IT IS TAXED UNDER DIFFERENT SECTION WILL MAKE NO DIFFERENCE. IT WAS H ELD THAT IN THAT CASE THE INCOME EARNED BY WAY OF INTEREST FROM DEPOSITS WHICH REPRE SENTED THE SPARE FUNDS OF THE ASSESSEE WOULD NEVERTHELESS CONSTITUTE BUSINESS IN COME. III) FURTHER RELIANCE WAS PLACED ON THE CENTRAL BO ARD OF DIRECT TAXES CIRCULAR NO.564 DATED JULY 5 1990 [1991] 184 ITR (ST.) 137 WHICH EXPLAINS THAT THE DEDUCTION COULD BE OF THE PROFITS OF THE BUSINESS EVEN THOUGH IT COULD CONTAIN ELEMENTS WHICH WERE NOT STRICTLY PROFITS DERIVED FR OM THE EXPORT OF GOODS. THIS WAS FURTHER ACCEPTED BY THE SPECIAL BENCH OF THE TRIBUN AL IN RAJEEV ENTERPRISES V. ASSESSING OFFICER (2003) 261 ITR (AT) 34 (JAIPUR). IV) FURTHER INVESTMENT OF SURPLUS FUNDS MAY NOT BE BUSINESS INCOME IN SOME CASES BUT WHERE MONEY NECESSARILY HAS TO BE INVEST ED FOR THE SAKE OF CARRYING ON BUSINESS AND INCOME IF EARNED WOULD BE BUSINESS I NCOME. 8. WE FIND FROM THE FACTS OF THIS CASE THAT A QUES TION ARISES IS THAT WHERE ON ACCOUNT OF THE CONDITIONALITIES IMPOSED BY THE BANK ER ON THE ASSESSEE FOR THE PURPOSES OF OBTAINING LETTERS OF CREDIT BANK GUARA NTEES AND OVERDRAFT FACILITIES FOR THE PURPOSES OF ITS EXPORT BUSINESS IS CONTAINED TO KEE P MONIES IN FIXED DEPOSIT THEN THE INTEREST EARNED ON SUCH FIXED DEPOSITS SHOULD ALSO BE TREATED AS BUSINESS INCOME. IN OTHER WORDS THAT IF IT CAN BE DETERMINED WHETHE R IN FACT THE PLACING OF THE AMOUNTS IN FIXED DEPOSIT BEARS A CLOSE PROXIMITY OR IS IMME DIATELY PRECEDING THE AVAILING OF FACILITIES FROM THE BANK FOR THE PURPOSES OF EXPORT BUSINESS THEN THE NEXUS BETWEEN THE PLACING OF SUCH FIXED DEPOSIT AND THE EXPORT BU SINESS IS CLEARLY ESTABLISHED AND IN SUCH EVENT THERE IS NO JUSTIFICATION TO HOLD SU CH INCOME AS INCOME FROM OTHER SOURCES. TURNING TO THE SUBMISSIONS IN THE PRESENT CASE AS REGARDS THE PARKING OF SURPLUS FUNDS THERE SHOULD BE NO DIFFICULTY AT ALL . IN VIEW OF THE LARGE NUMBER OF THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CONTE XT OF SECTION 56 AND SECTION 57 AND THOSE OF THE KERALA HIGH COURT IN THE CONTEXT O F SECTION 80HHC ITSELF WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE BAS ED ON SUNAM PROGHETTI (1981) 132 ITR 70 (DELHI) THAT INTEREST EARNED ON PARKED S URPLUS FUNDS SHOULD QUALIFY AS BUSINESS INCOME. CLEARLY SNAM PROGHETTI (1981) 132 ITR 70 (DELHI) WAS NOT ITA NO.3548/AHD/2008 & 2541/AHD/2009 A.YS. 03-04 & 06 -07 DCIT CIR-5 ABD V. NARAYAN ORGANICS P.LTD. PAGE 7 RENDERED IN THE CONTEXT OF SECTION 80IA OR 80HHC OF THE ACT AND CANNOT BE CONFINED TO THE FACTS OF THE CASE. CIRCULAR NO.564 DATED JU LY 5 1990 [1990] 184 ITR (ST. 137) CAN ALSO NOT HELP IN INTERPRETING SECTION 80I A OR 80HHC OF THE ACT WHICH ARE STAND ALONE PROVISIONS. WE ARE THEREFORE OF THE VIEW THAT WHERE SURPLUS FUNDS ARE PARKED WITH THE BANK AND INTEREST IS EARNED IT CAN ONLY BE CATEGORIZED AS INCOME FROM OTHER SOURCES. THIS RECEIPT MERITS SEPARATE TR EATMENT UNDER SECTION 56 OF THE ACT WHICH IS OUTSIDE THE AMBIT OF PROFIT AND GAINS FROM BUSINESS AND PROFESSION AND IT GOES ENTIRELY OUT OF THE RECKONING FOR THE PURPOSE S OF SECTION 80IA OR 80HHC OF THE ACT. 9. IN VIEW OF THE ABOVE FACTS AND CASE LAWS OF HON BLE APEX COURT IN PANDIAN CHEMICALS LTD. (SUPRA) AND OF HONBLE BOMBAY HIGH COURT IN ASIAN STAR CO. LTD. (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE DIV IDEND AND INTEREST INCOME IS INCOME FROM OTHER SOURCES AND DEDUCTION IS NOT ALLO WABLE ON THIS U/S 80IA OF THE ACT. ACCORDINGLY THE APPEALS OF REVENUE ARE ALLOWED. 10. IN THE RESULT APPEALS OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12/07/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 12/07/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XI AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD