Tribunal upholds CIT(A) order granting exemption under section 10B for interest income and foreign exchange gain.

The Tribunal upheld the CIT(A) order allowing exemption under section 10B for interest income and foreign exchange gain. Interest income from specific sources qualified for exemption, while interest from other sources did not. Additionally, the foreign exchange gain was deemed eligible for exemption. The Tribunal's decision, based on the income's nature and connection to the appellant's business activities, was in line with relevant case laws. The Revenue's appeal was dismissed, affirming the exemption for interest income and foreign exchange gain totaling &8377; 22,36,437/- and &8377; 6,98,838/- respectively.

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Issues involved: Appeal against CIT(A) order allowing exemption u/s 10B for interest income and foreign exchange gain.

Interest Income:
The appellant, engaged in research and development services, claimed deduction u/s 10B for interest income. The CIT(A) directed the Assessing Officer to consider the claim based on a previous Tribunal decision. After considering the nature of interest income, the Tribunal held that interest on FD for custom bonding and Money Flex Deposit qualifies for exemption u/s 10B, while interest from MSEB deposit does not. Citing relevant case laws, the Tribunal dismissed the Revenue's appeal regarding interest income of &8377; 22,36,437/-.

Foreign Exchange Gain:
The appellant also claimed exemption u/s 10B for foreign exchange gain. The Tribunal found in favor of the appellant based on a previous decision, allowing the exemption for foreign exchange gain of &8377; 6,98,838/-. Consequently, the appeal of the Revenue was dismissed, upholding the CIT(A) order.

The Tribunal's decision was based on the nature of the income and its link to the appellant's business activities, as well as relevant case laws. The order was pronounced on May 13, 2011.

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