TaxTMI 
TaxTMI 
2020 (8) TMI 618
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....es. 2. This Appeal has been filed by the Revenue against the order of the learned Tribunal dated 23.09.2016 for Assessment Year 2003- 04, by which the learned Tribunal decided against the Revenue that the Assessee was entitled to include the interest on bank deposits for the purpose of claiming deduction / exemption under Section 10A of the Act. 3. The substantial question of law raised in the present appeal is given hereunder. "Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessee company is eligible for setoff of business loss uls 10A against the other income like interest income etc., by applying the provision of section 70, when the assessee itself had returne....
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....usiness loss. The decisions relied by the Id. AR are in support of his arguments wherein held that the loss of lOB unit is available for set off u/s 70. So, same principle applies to the provisions of 10A. We find that a similar issue was considered by the jurisdictional High Court in the case of CIT vs M/s Lason India Pvt. Ltd in Tax case (Appeal) NO.1529 of 2007 dated 29.10.2013 wherein it was held as under: "6. In the light of the circular issued by the Government of India, Central Board of Direct Taxes, we do not find the contention of the Revenue remains any longer res integra for this court to consider the same. In this decision rendered in T.C(A) Nos. 72 & 73 of 2009, dated 22.10.2013, Commissioner of Income tax vs M/s Penta....
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.... Bench has held that the interest on bank deposits is also eligible to be included in the profits of 100% Export Oriented Units for the purpose of claiming deduction under Section 10A / 10B of the Income Tax Act. The relevant portion of the judgment of the Full Bench of the Karnataka High Court is quoted below. "35. The Scheme of Deductions under Chapter VIA in Sections 80-HH, 80-HHC, 80-IB, etc from the 'Gross Total Income of the Undertaking', which may arise from different specified activities in these provisions and other incomes may exclude interest income from the ambit of Deductions under these provisions, but exemption under Section 10-A and 10-B of the Act encompasses the entire income derived from the business of export of....
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....n though not as a direct result of export but from the Bank Deposits etc., and is therefore eligible for 100% deduction. 36. We have to take a purposive interpretation of the Scheme of the Act for the exemption under Section 10-A/10-B of the Act and for the object of granting such incentive to the special class of assessees selected by the Parliament, the play-in-the-joints is allowed to the Legislature and the liberal interpretation of the exemption provisions to make a purposive interpretation, was also propounded by Hon'ble Supreme Court in the following cases:- "I] In Bajaj Tempo Ltd., Bombay Vs. Commissioner of Income Tax, Bombay, [(1992) 3 SCC 78], the Hon'ble Supreme Court held that:- "5. ... ..Since ....
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....larly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Doud [351 US 457 : 1 L Ed 2d 1485 (1957)] where Frankfurter, J., said in his inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all....
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....respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary course of its business and also interest earned by it from the staff loans and such interest income would not be taxable as 'Income from other Sources' under Section 56 of the Act. The incidental activity of parking of Surplus Funds with the Banks or advancing of staff loans by such special category of assessees covered under Section 10-A or 10-B of the Act is integral part of their export business activity and a business decision taken in view of the commercial expediency and the interest income earned incidentally cannot be de-linked from its profits and gains derived by the Undertaking engaged in the export of Articles as envisaged under....