In this appeal by assessee in which assessee has taken four grounds before us. first issue and second issue are inter-connected, issue being whether interest earned from deposits with bank during course of construction of factory as income assessable under head 'other sources' and whether interest paid on loans borrowed for purposes of construction is allowable as deduction or not. Mr. C.L. Jhanwar, ld. counsel for assessee filed copy of this Tribunal's order in assessee's own case for asst. yr. 1979-80 dt. 9th May, 1985 and submitted that issue is fully covered in favour of assessee as it has been held that interest earned during course of construction has to be deducted from cost of construction and cannot be treated as income. On other hand, ld. Sr. departmental representative's argument was that Tribunal in order filed by assessee has placed reliance on two Special Bench decisions one of which was from Madras. Madras High Court i n CIT vs. Seshasayee Paper and Board's Ltd. (1985) 156 ITR 542 (Mad) has again considered its earlier decision in Addl. CIT vs. Madras Fertilisers Ltd. (1979) 13 CTR (Mad) 261: (1980) 122 ITR 139 (Mad) and has specifically answered this very issue and has held that interest earned during course of construction is assessable as income from other sources and that interest paid on borrowal cannot be allowed for reason that borrowal was not for earning of income but for construction of factory. He also referred to decision of Karnataka High Court in Karnataka Forest Plantations Corpn. Ltd. vs. CIT (1985) 156 ITR 275 (Kar) which has considered identical issue and has come to identical conclusion as that of Madras High Court. He, therefore, pleaded that decision in assessee's own case needs to be given re-thinking in light of recent decisions of two High Courts. We have given careful considerations to arguments of both parties. This Bench in its order dt. 9th May, 1985 has followed two Special Bench decisions in case in Arsan Aluminium Industries Pvt. Ltd. vs. First ITO (1982) 30 CTR (Trib) 19 (Mad) (SB) and also case of Nagarjuna Fertilisers where identical issue was considered by ld. Members and it was held that interest earned while construction activity is still in progress is not assessable as income as till construction is completed entire activity of Company is concentrate only on construction as such and, therefore, all expenses go to increase cost and all income, if any, go to reduce cost. Madras Special Bench has considered decision of Madras High Court in Addl. CIT vs. Madras Fertilisers Ltd. (1979) 13 CTR (Mad) 261: (1980) 122 ITR 139 (Mad) and had taken contrary view. Madras High Court in case of CIT vs. Seshasayee Papers & Boards Ltd. (1985) 156 ITR 542 (Mad) had again considered this very issue, which is before us. Their Lordships expressed that interest earned by assessee on investment in coal deposits could be separately under head other sources' and do not go reduce cost of construction. Karnataka High Court in case of Karnataka Forest Plantations Corporation Limited vs. CIT on identical issue expressed that interest earned is liable to be assessed as income from other sources and that interest paid on borrowals having no relation whatsoever with investment of earning of income cannot be allowed to be deducted. In view of these two recent decisions of two High Courts and there being no other contrary decision and in view of Bombay High Courts decision in case of CIT vs. Godawari Devi Saraf (1978) 113 ITR 589 (Bom). In absence of any contrary decision to decision of one or more High Courts they are law of land, we have no alternative but to respectfully follow decisions of these two High Courts and take contrary view to one already taken on same set of facts on assessee's own case for earlier year. For these reasons, we are compelled to take contrary view and respectfully following Madras and Karnataka High Court decisions, we uphold order of CIT (A) that interest earned on deposits have been rightly assessed as income from other sources and that interest paid on borrowed monies are not to be deducted as they do not come within ambit of s. 57(1)(iii) of IT Act. In result, Grounds No. 1 & 2 are decided in favour of Department and against assessee. next issue in this appeal is regarding claim of expenditure of Rs. 2,84,157 and also another item of Rs. 36,342. first of amounts have been claimed as expenses on ground that assessee, which is being established for purposes of manufacturing of cement and also has been given licence for extraction of minerals from mines has commenced extraction from mine of various minerals. According to assessee extraction activity is n independent activity, which has already been started in year under review. On behalf of assessee, it was submitted that minerals so extracted, no doubt, become basic raw material for manufacture of cement, but these r e in nature of independent activity as such which has no relation whatsoever whether or not construction activity is going on or completed. It was argued that claim of assessee has been negatived by placing reliance on Gujarat High Court decision in CIT vs. Sarabhai Sons Pvt. Ltd. (1973) 90 ITR 318 (Guj). It was further argued that Department has refused to accept claim of assessee though Gujarat High Court has on identical issue in CIT vs. Saurashtra Cement & Chemical Industries Ltd. (1973) 91 ITR 170 (Guj) on identical facts has come to conclusion that moment assessee started extraction of lime stones from mines, to that extent business of assessee has commenced and, therefore, expenditure incurred in extraction of lime stone is allowable as business expenditure. Before us, reliance was also placed in Prem Conductors Pvt. Ltd.vs CIT 1976 CTR (Guj) 324: (1977) 108 ITR 654 (Guj), CIT vs. Ralliwolf Ltd. (1980) 121 I T R 262 (Bom) and also in case of Instrumentation Ltd. in ITA No. 1304/Jp/1979 decided on 31st Oct., 1980. argument of ld. departmental representative, on other hand, was noval one as according to him, expenditure would follow income and not vice-versa for reason that s. 28 gives nature of income and s.29 indicates computations of income while expenses from s. 30 onwards follow. He also relied on Bombay High Court decision in Metropolitan Springs Pvt. Ltd. vs. CIT (1981) 22 CTR (Bom) 260: (1981) 132 ITR 893 (Bom) for proposition that trial production does not by itself mean that there has been any commencement of business activity. According to him, extraction of lime is nothing but procurement of raw material and, therefore, mere procurement of raw material cannot be held to mean that business has commenced especially when construction of entire plant is still in progress. We have given careful considerations to arguments of parties. In case of Sarabhai Sons Pvt. Ltd. (1973) 90 ITR 318 (Guj) Gujarat High Court has held that placing of orders for raw materials and machinery does not mean that business has commenced. This was considered by their Lordships of Gujarat High Court in this case of Saurashtra Cement & Chemical Industries (1973) 91 ITR 170 (Guj). In case, facts and claim were identical with present case before us. In that case also extraction of lime stone from mines were done while cement plant etc. were still under consideration. Department has referred to decision of that High Court in CIT vs. Sarabhai sons Pvt. Ltd. (1973) 90 ITR 318 (Guj). Their Lordships in present case in page 178 have made following observations: "Then reliance was placed on behalf of Revenue on recent decision given by this Court on 21st July., 1972, in Income-tax Reference No. 85 of 1970. That decision raised question as to when certain business carried on by assessee could be said to have been set up: whether it was set up prior to 31st March, 1966, or subsequent to that date. Tribunal had found that it was set up prior to 31st March, 1966, and question was whether this finding of this Tribunal could be said to be unreasonable or perverse or contrary to evidence or based on no evidence at all. We held on facts of that case that it was impossible for Tribunal to have come to decision that business was set up by assessee prior to 31st March, 1966, and decision of Tribunal was contrary to evidence or based on no evidences at all. We fail to see how decision given on one set of facts can bind us to reach similar decision on totally different set of facts. There is nothing in this decision which would deflect us from view which we are otherwise inclined to take." After making said observation, their Lordships came to conclusion that extraction of lime stone being one of activities of assessee which has been done meant assessee commencing business to that extent and that expenditure incurred by assessee in carrying on activity of lime stone as also depreciation allowance and development rebate in respect of machinery employed in extracting lime stone were deductible in computing trading profits of assessee. case law relied on by ld. departmental representative in case of Metropolitan Springs Pvt. Ltd. (1981) 22 CTR (Bom) 260: (1981) 132 ITR 893 (Bom) and issue in that case was about claim of relief under s. 15C i.e. as industrial undertaking, which is similar to present s. 80J in 1961 Act. This case would have no application to present issue before us for reason that in s. 80J words used are that industrial undertaking which begins to manufacture. In that case Their Lordships held that trial production does not mean that assessee had begun to manufacture and, therefore, had laid emphasis that relief is related to from period when assessee has begun to manufacture. issue before us is not claim under s. 80J but in connection with expenditure incurred on extraction of lime stone as to whether they are allowable as business expenditure or not. Their Lordships of Gujarat High Court in (1973) 91 ITR 170 (Guj) had upheld observation of Tribunal about business of assessee consisting of three stages. first stage was procurement of raw materials, second stage was manufacture of cement and third was sale of manufactured cement. They further observed that three stages together constituted business of assessee. They further observed that all three stages could not be commenced simultaneously. According to them, first stage had to be commenced earlier so that by time plant and machinery are installed, which materials would be ready for commencement of process of manufacture and this has been done with view that plant and machinery are not kept idle for want of raw materials. They went on to observe that extraction of lime stone, which constituted first stage of business was important activity of business as utilisation of lime stone in manufacture of cement and business of assessee must, therefore, be held to have commenced when assessee started first stage of business by extraction of lime-stone. They further observed each one of activities constituted integral part of business of assessee. They observed 'why then can it not be said that assessee commenced its business when it started first of these activities. activity of quarrying leased area of land and extracting lime stone from it was as much activity in course of carrying on business as other two activities of manufacture of cement and sale of manufactured cement. business could not in fact be carried on without this activity. This activity came first in point of time and laid foundation for second activity and second activity, when completed, laid foundation for third activity. business consisted of continuous process of these three activities and when first activity was started with view to embarking upon second and third activities, it clearly amounted to commencement of business. It may be that whole business was not set up when activity of quarrying leased area of land and extracting limestone was started. But as pointed out above, business is nothing more continuous course of activities and all activities which go to make up business need not be started simultaneously in order that business may commence. Their Lordships further observed by taking example of business of trader, who purchases and sales goods. They observed: "The assessee must necessarily purchase goods in order to be able to sell them and purchase of goods must, therefore, necessarily precede their sale. Can it be said in such case that when assessee purchases goods for purpose of sale, he does not commence his business? Is it necessary that he must start activity of selling goods before he can be said to have commenced his business. We have to consider question as to when assessee can be said to have commenced business from commonsense point of view. We have to ask ourselves question as to when businessman would regard business as being commenced? Would he not consider business as having commenced when essential activity of that business is started? argument of Revenue seeks to confound commencement of business with establishment of business as whole and carrying on of all activities of business. This confusion is result of loose description of business of assessee as business of manufacture and sale of cement. Revenue says that when business is of manufacture and sale of cement, how can assessee be said to have commenced business when manufacture has not started? This argument suffers from fault of over simplification and ignores true nature of activities which constitute business of assessee. We are of view that as soon as activity in course of carrying on business, or which, in other words, is business activity is started, assessee must be held to have commenced business. To take any other view would not only be illogical but also irrational." In ultimate paragraph, Their Lordships observed that Tribunal was right in taking view that expenditure incurred by assessee in carrying on activity of extraction of limestone as also depreciation allowance and development rebate in respect of machinery employed in extracting limestone were deductible in computing trading profits of assessee. facts in present case being identical and in light of detailed finding given by Their Lordships of Gujarat High Court on identical facts and circumstances and there being no contrary decision to one considered, we respectfully following decision of Gujarat High Court we hold that claim of assessee in respect of expenditure incurred on extraction of limestone amounting to Rs. 2,84,157 is allowable as business expenditure and also amount of Rs. 36,342 is also allowable under s. 35E as relatable to expenditure on prospecting for certain minerals. last issue is in connection with levy of interest under s. 217 which would be consequential to various grounds considered above, which we direct ITO to re-calculate after giving effect to this order. In result, appeal is partly allowed. *** MANGALAM CEMENT LTD. v. INCOME TAX OFFICER