Tribunal grants deduction for interest income under section 10A, directs AO to verify

The Tribunal allowed the assessee's claim for deduction under section 10A for interest income earned, following previous decisions in the assessee's case and its sister concern. The Assessing Officer was directed to verify the exact amount of interest income and allow the exemption accordingly.

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Issues involved:
- Disallowance of exemption under section 10A on interest income earned by the assessee.

Detailed Analysis:
1. The assessee, a 100% export-oriented unit, filed its return of income for the assessment year 2008-09, declaring total income and book profit. The Assessing Officer allowed exemption under section 10A for a certain amount but disallowed it on an interest income amount. The assessee appealed this decision before the learned Commissioner (Appeals).

2. During the appeal, the assessee argued that the interest income was part of its business income and eligible for exemption under section 10A. The assessee had excluded the interest income while computing the exemption but explained the reason for doing so. The learned Commissioner (Appeals) relied on a decision of the Hon'ble Madras High Court and held that as the interest income was not derived from an industrial undertaking, it was not eligible for deduction under section 10A.

3. The assessee's Senior Counsel argued that the issue was covered by previous Tribunal decisions in the assessee's own case and in the case of its sister concern. The Tribunal had previously allowed deduction under section 10A for interest income related to the business of the industrial undertaking. The Departmental Representative agreed that the issue was covered by the Tribunal's previous decision in the assessee's case.

4. The Tribunal considered the submissions and previous orders. It found that a similar issue had arisen in the case of the assessee's sister concern, where the Tribunal had allowed deduction under section 10A for interest income related to the business. Following the previous decisions, the Tribunal allowed the assessee's claim of deduction under section 10A for the interest income, directing the Assessing Officer to verify the exact amount of interest income.

5. The Tribunal noted that no material difference for the impugned assessment year had been brought to its notice. Therefore, it allowed the assessee's claim of deduction under section 10A. The appeal was allowed, and the Assessing Officer was directed to verify the exact amount of interest income and allow the exemption accordingly.

In conclusion, the Tribunal upheld the assessee's claim for deduction under section 10A for the interest income earned, following previous decisions in the assessee's case and its sister concern. The Tribunal directed the Assessing Officer to verify the exact amount of interest income and allow the exemption accordingly.

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