Green Agro Pack (P) Ltd. vs The Commissioner of Income Tax

N. Kumar, J.—The assessee has preferred this appeal against the order dated 07.12.2007 passed by the tribunal declining to include the interest and insurance claim as the income from the business and treating them as income from other sources.

The substantial question of law that arise for consideration in this appeal is as under:

Whether in the facts and circumstances of the case, the tribunal was justified in treating the interest earned form the fixed deposits, interest earned on staff loans and fines collected from the staff and the insurance claim is not in connection with business as provided u/s 10B of the Income Tax Act".

In the assessee''s case itself, for the assessment year 1998-99, this Court in ITA No. 3112/2005 dated 13.04.2010 held the said income has to be included in the business income. This Court also had an occasion to consider this question in extenso in the case of the Commissioner of Income Tax vs. Motorola India Electronics (P) Ltd. In ITA 428/2007 and other connected matter disposed off on 11.12.2013 where interpreting Section 10B in particular, sub-section 4 held as under:

"By Finance Act, 2001, with effect from 01.04.2001, the present Subsection (4) is substituted in the place of old Subsection (4). No doubt Subsection 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But Subsection (4) explains what is the profit derived from export of articles as mentioned in Subsection (1). The substituted Subsection (4) says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the profits and gains from export of articles. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is interesting to note that similar provisions are not there while dealing with computation of income u/s 80HHC. On the contrary, there is specific provisions like Section 80HHB which expressly excludes this type of incomes. Therefore, in view of the aforesaid provisions, it is clear that, what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the undertaking".

In view of the aforesaid judgments, the impugned order passed by the tribunal cannot be sustained. Appeal is allowed. The substantial question of law framed is answered in favour of the assessee and against the revenue.