1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.1763 OF 2009 The Commissioner of Income Tax-VI ..Appellant. Vs. M/s. Cebon Apparels Pvt. Ltd. ..Respondent. .... Mr. Suresh Kumar for the Appellant. Mr. Nishant Thakkar with Mr. Atul K. Jasani for the Respondent. ..... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 22 April, 2010. P.C.: 1. The appeal by the Revenue under Section 260-A of the Income Tax Act, 1961 is admitted on the following questions of law : “(a) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that 90% of gain on cancellation forward cover amounting to Rs. 3,82,646/- and sale of quota licence amounting to Rs. 9,78,636/- are not to be excluded from the profit of business within the meaning of clause (baa) to section 80HHC of the IT Act 1961 for the purpose of computation of deduction u/s 80 HHC of the IT Act; b) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in setting aside 2 the issue whether the interest income of Rs.45,30,256/- was earned on deposits which were made out of the business funds or otherwise for the purpose of clause (baa) of explanation to Section 80HHC of the IT Act 1961, even though the CIT (A) in his order gave a clear finding of fact that no evidence was produced before him to support the claim that this interest income has been earned in normal course of business and therefore in view of Mumbai High Court decision in the case of Ravi Rattan Export (P) Ltd. reported in 246 ITR 443, the same to be treated as income from other source;” 2. Insofar as question (a) is concerned, it has not been disputed that both the cancellation forward cover and the sale of quota licence constitute independent incomes which are unrelated to export activity. Hence, in terms of the judgment of the Commissioner of Income Tax v. K. Ravindranathan Nair1, 90% of such incomes would have to be excluded from the profits of business for the purpose of computing the deduction under section 80HHC. Hence, question (a) shall stand answered in favour of the Revenue and against the assessee. 3. Insofar as question (b) is concerned, the Tribunal has restored the issue to the Assessing Officer. We only clarify that in 1 (2007) 295 ITR 228 (SC). 3 determining the issue upon remand, the Assessing Officer shall determine the issue in accordance with law and after taking due cognizance of the relevant judgments holding the field, particularly the judgments of this Court in Commissioner of Income Tax v. Asian Star Company Ltd. (ITA 200 of 2009 decided on 18/19 March 2010) and Commissioner of Income Tax v. Swani Spice Mills Pvt. Ltd. (ITA 1019 of 2007 decided on 19 April 2010). 4. The questions of law shall accordingly stand answered in the aforesaid terms. The Appeal is accordingly disposed of. There shall be no order as to costs. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)