FLEX FOODS LTD. Vs. DCIT, CENTRAL CIRCLE-18

JUDGEMENT

(1.) THIS appeal by the assessee is directed against the order passed by the CIT(A) 12.09.2011 in relation to the assessment year 2007 -08.

(2.) BRIEF facts of the case are that the company, a 100% EOU, in the relevant assessment year, was primarily engaged in growing and processing of mushrooms, culinary herbs and other fruits and vegetables. A search and seizure operation u/s. 132 was carried out on 10th May, 2007 in M/s. Uflex Group of cases. The assessee's case was also covered u/s. 132(1). In response to notice u/s. 153A, the assessee filed return of income declaring total income of Rs. 40,20,864/ -. Book profit u/s. 115JB was declared at Rs. 49,22,980/ -. The total turnover declared was Rs. 34.21 crores. 'Business income' was declared at Rs. 3.75 crores and 'Income from other sources' at Rs. 47.36 lac. The gross total income declared was Rs. 4.23 crores from which deduction u/s. 80IC had been claimed for Rs. 3.75 crores. The relevant assessment year was the third year for claim of deduction u/s. 80IC. The assessee, accordingly, declared the total income at Rs. 47.36 lac. The assessment under normal provisions was completed at Rs. 78,41,945/ -, inter alia, making addition of Rs. 27,00,483/ - on account of denial of deduction u/s. 80IC in respect of interest income earned from bank of Rs. 26,08,881/ - and Rs. 91,002/ - in respect of deduction u/s. 80IC claimed in respect of duty drawback receipt. The total book profit u/s. 115JB was determined at Rs. 5,00,32,212/ -, after making an addition in respect of provision for doubtful debts of Rs. 40,47,232/ -. The ld. CIT(A) partly allowed the assessee's appeal. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us and has taken the following grounds of appeal: -

(3.) WE have considered the submissions of both the parties and have perused the record of the case. As far as allowability of deduction u/s. 80IC in respect of interest earned from bank is concerned, we do not find any infirmity in the order of the ld. CIT(A) in view of the decision of Hon'ble Supreme Court in the case of Liberty India Ltd. (supra). The Hon'ble Supreme Court has, inter alia, held that the words 'derived from' are narrower in connotation as compared to the words 'attributable to.' The interest income derived from bank cannot be held to come within first degree source as per the test laid down by the Hon'ble Supreme Court in Liberty India Ltd. Respectfully following the decision of the Hon'ble Supreme Court in Liberty India Ltd., (supra), ground Nos. a, b and c raised by the assessee are dismissed.