Appeal partly allowed with specific directions on issues, remitting matters for further examination, and upholding/denying deductions.

The appeal was partly allowed, with the Tribunal providing specific directions on each issue, remitting certain matters back to the Assessing Officer for further examination, and upholding or denying deductions based on established legal precedents. The order was pronounced in open court on 28.4.2014.

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Issues Involved:
1. Classification of interest income under "Income from other sources" vs. "Income from business and profession."
2. Denial of deduction under Section 80IB on various income items.
3. Reduction of deduction under Section 80IB from eligible profits for calculating deduction under Section 80HHC.
4. Reduction of 90% of certain income items from eligible profits for the purpose of calculating deduction under Section 80HHC.
5. Inclusion of miscellaneous income in the total turnover for calculating deduction under Section 80HHC.
6. Exclusion of 90% of gross interest income instead of net interest income for calculating deduction under Section 80HHC.
7. Non-admission of an additional ground of appeal regarding deduction under proviso to Section 80HHC(3) on duty drawback.

Detailed Analysis:

Issue 1: Classification of Interest Income
- The assessee argued that interest earned from inter-corporate deposits should be treated as business income since giving surplus money on interest was an object of the company.
- The Revenue countered with the Delhi High Court's decision in CIT vs. Shri Ram Honda Power Equip, stating that surplus funds borrowed from banks or other entities resulting in interest income should be categorized as "Income from other sources."
- The Tribunal upheld the Revenue's view, confirming that the interest income had no direct relation to the assessee's business and should be classified under "Income from other sources."

Issue 2: Denial of Deduction under Section 80IB
- The Assessing Officer denied deduction under Section 80IB on interest income, provisions written back, sundry balances written back, and miscellaneous receipts, asserting these were not derived from the industrial undertaking.
- The Tribunal upheld the denial for interest income, citing the Supreme Court's decision in Pandian Chemicals Ltd vs. CIT, which emphasized that income must have a direct nexus with the industrial undertaking to qualify for deduction.
- For provisions written back, the Tribunal allowed the deduction, noting these were related to earlier expenses, thus forming part of revenue receipts.
- Regarding sundry balances written back, the Tribunal remitted the matter back to the Assessing Officer to determine if these balances pertained to revenue or capital accounts.
- For miscellaneous receipts, the Tribunal allowed deductions for rebate and discount and sale of samples but denied it for duty drawback, referencing the Supreme Court's decision in Liberty India vs. CIT.

Issue 3: Reduction of Deduction under Section 80IB for Section 80HHC Calculation
- The Tribunal noted that the issue was covered against the assessee by the Punjab and Haryana High Court's decision in Broadways Overseas Ltd vs. CIT, which held that deduction under Section 80HHC should be computed after reducing the profits on which deduction under Section 80IB has already been availed.
- The Tribunal followed this precedent and decided the issue against the assessee.

Issue 4: Reduction of 90% of Certain Income Items for Section 80HHC Calculation
- The Tribunal remitted the matter back to the Assessing Officer to examine the nature of sundry balances written back.
- It allowed the deduction for provisions no longer required, as these were related to earlier expenses.
- For miscellaneous receipts, the Tribunal reiterated that rebate and discount and sale of samples should not be reduced, but duty drawback should be reduced and then added back to profits as per Section 80HHC(3).

Issue 5: Inclusion of Miscellaneous Income in Total Turnover
- The Tribunal remitted the matter back to the Assessing Officer to ascertain the nature of the items included in the total turnover and to give appropriate treatment based on whether they had a sale element.

Issue 6: Exclusion of 90% of Gross Interest Income Instead of Net Interest Income
- The Tribunal referred to the Supreme Court's decision in ACG Associated Capsules Pvt Ltd vs. CIT, which held that only net interest should be deducted from profits for calculating deduction under Section 80HHC.
- The Tribunal directed the Assessing Officer to reduce net interest from profits for this calculation.

Issue 7: Non-Admission of Additional Ground of Appeal
- The Tribunal reiterated that duty drawback should be reduced by 90% from profits but then added back as per Section 80HHC(3) before computing the deduction.

Conclusion:
The appeal was partly allowed, with the Tribunal providing specific directions on each issue, remitting certain matters back to the Assessing Officer for further examination, and upholding or denying deductions based on established legal precedents. The order was pronounced in open court on 28.4.2014.

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