TaxTMI 
TaxTMI 
2014 (10) TMI 974
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....riefly stated that facts are as under : The respondent got itself registered as 100 per cent. export oriented unit. In its returns, for the assessment year 1995-96, it claimed certain deductions, or exemptions referable to section 10B of the Income-tax Act, 1961 (for short "the Act"). They included, (a) the interest earned in respect of bank deposits kept for opening letters of credit, being Rs. 1,89,270 ; (b) interest given by banks in respect of moneys received by them, on behalf of the respondent, against public issue of shares, Rs. 3,48,214 ; and (c) interest earned in respect of temporary intercorporate deposits kept by the respondent with other companies out of the proceeds of the public issue of shares, Rs. 10,09,981. 3. The....
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....that the exemption or deduction is in its entirety. However, the basic principle, namely, that the profit and gain, must be derived from the concerned activity, is common to both the provisions. 7. In the instant case, the respondent claimed exemption from tax, the three amounts, referred to above. There should not have been much difficulty as regards the first one. The reason is that obtaining of letters of credit is an essential activity for undertaking exports and the deposit of amounts for that purpose is a condition precedent. If the deposits so made have yielded interest, it certainly is attributable to or can be said to be derived from the activity of export. However, as regards the remaining two, it is difficult to relate or connec....
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....ferable to the amounts that were invested prior to the commencement of production, the same analogy applies, subsequent to the production also. Other judgments were also relied upon. 10. The Tribunal reversed the findings of the Commissioner of Income-tax (Appeals) just by making a reference to its own order. That was an order, passed before the Madras High Court rendered its judgment in CIT v. Pandian Chemicals Ltd. [1998] 233 ITR 497 (Mad), which, in turn, was upheld by the Supreme Court in Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278 (SC). The principle of law laid down therein was referred to section 80HH of the Act. Their Lordships held that unless the amount is referable to the activity of the concerned industry and it has close ....