1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.996 OF 2008 The Commissioner of Income Tax-24 ..Appellant. Vs. M/s. Shah Originals ..Respondent. ..... Ms. Suchitra Kamble for the Appellant. Mr. Vipul B. Joshi with Mr. Sameer G. Dalal for the Respondent. .... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 22 April, 2010. P.C.: 1. The Appeal filed by the Revenue under Section 260-A of the Income Tax Act, 1961 has been admitted on the following two questions of law : “(a) Whether on the facts and in circumstances of the case and in law, the Hon’ble Tribunal was right in holding that the receipts on account of Foreign Exchange Fluctuation on EEFC Account, can be treated as part of business income and accordingly included in the profits of business while calculating deduction u/s. 80.HHC? (b) Whether on the facts and in circumstances of the case and in law, the Hon’ble Tribunal was right in holding 2 that the receipts in the nature of duty draw back Foreign Exchange Fluctuation and sale of import license is to be considered as not income derived from industrial undertaking and accordingly restrict the deduction u/s. 80IB?” 2. Counsel appearing on behalf of the assessee and counsel appearing on behalf of the Revenue are agreed in stating that question (a) would stand covered in favour of the Revenue and against the assessee in terms of the judgment delivered today in companion Income Tax Appeal No.431 of 2008 pertaining to the same assessee for Assessment Year 2000-01. 3. Insofar as question (b) is concerned, the issue would stand covered against the assessee and in favour of the Revenue by the judgment of the Supreme Court in Liberty India v. Commissioner of Income Tax1 where the Supreme Court has held that the expression ‘derived from’ is narrower than the words ‘attributable to’. Moreover, in using the expression ‘derived from’ in Section 80-IB Parliament intended to cover sources not beyond the first degree. Having regard 1 (2009) 317 ITR 218 SC) 3 to the principle of law which has been laid down by the Supreme Court, the second issue would stand covered in favour of the Revenue. For the aforesaid reasons, the appeal filed by the Revenue is allowed and the questions of law shall stand answered as aforesaid. There shall be no order as to costs. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)