IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.68 OF 2009 INCOME TAX APPEAL NO.68 OF 2009 INCOME TAX APPEAL NO.68 OF 2009 M/s.Eurotex Industries & Exports Ltd. ..Appellant. V/s. Commissioner of Income Tax & Anr. ..Respondents. Mr.P.R.Toprani for appellant. Mr.Vimal Gupta for respondent. CORAM : V.C.DAGA AND CORAM : V.C.DAGA AND CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. DATED : 15TH APRIL, 2009. DATED : 15TH APRIL, 2009. DATED : 15TH APRIL, 2009. P.C. :- P.C. :- P.C. :- 1. Heard learned counsel for the appellant and the respondents. The present appeal sought to raise the following questions of law :- 1) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in confirming the view of the CIT(A) holding that export incentives received by the appellants in a form of premium on sale of export quota amounting to Rs.7,05,658/- and sale of special import license amounting to Rs.58,30,235/- in respect of its two 100% Export Oriented Units are not eligible for exemption under section 10B of the I.T. Act ? 2) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in confirming the view of the CIT (A) holding that interest on deposits for supply of electricity and water connection amounting to Rs.8,68,107/- and Rs.2,38,565/- in respect of the appellant’s 100% Export Oriented Units No.1 & 2 respectively is not eligible for exemption under section 10B of the I.T. Act ? - = : 2 : = - 3) While holding as aforesaid whether the ITAT was justified in not following the CBDT Circular No.528 dated 16/12/1988 granting enhanced benefits to 100% EOU in comparison to benefits provided under the provisions of section 80HHC of the Act and in rejecting the submission of the appellant that the aforesaid benevolent circular ought to have been followed even if the same is found contrary to the provisions of the Act as per the ratio laid down by the Supreme Court in the case of Paper Products Ltd. V/s. Commissioner of Central Excise (247 ITR 128) ? 4) Whether the ITAT failed to appreciate that the receipt of export benefits by way of sale of Special Import License and quota benefits which are exempt from tax under the provisions of section 80HHC will also be tax free under the provisions of section 10-B of the Act ? 2. Having heard the rival parties, so far as first question is concerned the same is answered by the Tribunal by drawing distinction between 80HHC and 10B of the Income Tax Act and the finding recorded in this behalf is as under :- " For determination of deduction under section 80HHC, one of the components required to be determined is business profits of the assessee. However, in the context of determination of exemption under section 10B, the income which is derived from the industrial undertaking alone qualifies for deduction. Any income which may be incidental to the business of the assessee but which is not derived from the industrial undertaking does not qualify for deduction under section 10B. In the light of this position of law, whether the interest income is treated as ’business income’ or ’income from other sources’ is in consequential. We accordingly, do not find any merit in this ground of appeal raised by the assessee. " - = : 3 : = - 3. Considering the distinction drawn by the Tribunal between the two sections, the sale proceeds of the import license can hardly be considered as income derived from industrial undertaking. The view taken by the Tribunal is a reasonable and possible view. No substantial question of law in this behalf is involved in the present appeal. 4. So far as the second question is concerned, the Tribunal has relied upon the Judgment of the Supreme Court in the case of Pandian Chemicals Ltd. V/s. C.I.T. [262 ITR 278]. In this view of the matter, question No.2 can hardly be said to be substantial question of law. 5. So far as question No.3 and 4 are concerned, they do not arise from the order of the Tribunal. 6. The appeal is thus dismissed in limini. (V.C.DAGA, J.) (V.C.DAGA, J.) (V.C.DAGA, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) - = : 4 : = -