R.V. Easwar, Vice President: This appeal by assessee relates to asst. yr. 2001-02. assessee i s individual engaged in business of export of garments and made-up articles. first ground is general and requires no decision. second and fourth grounds are connected. They are directed against assessment of interest income of Rs. 5,10,008 under head "Income from other sources". assessee received aforesaid interest in respect of fixed deposit receipts placed as margin money with bank for purpose of availing various credit facilities such as packing credit, etc. assessee contended before IT authorities that interest income must be assessed under head business and consequently, deduction under s. 80HHC should also be correspondingly allowed. contention was rejected by IT authorities who took view that interest has to be assessed under head Income from other sources . They further held that interest income was not derived from export activities and was, therefore, eligible for deduction under s. 80HHC. contention of assessee before us, is that interest income is inextricably linked with carrying on of assessee s business and, therefore, it should be assessed under head business and correspondingly deduction under s. 80HHC is also to be allowed. We see force in assessee s contention. It is not in dispute that assessee is engaged in export of garments and other articles. It is also not in dispute that assessee availed of various credit facilities and guarantees given by bank for purpose of carrying on business. For obtaining these facilities, assessee was obliged to place fixed deposit receipts with bank as margin money. interest was derived from fixed deposit receipt. In normal circumstances, interest will have to be assessed only as Income from other sources since immediate source thereof is investment in fixed deposits. Once fixed deposit receipts were utilized by assessee for purpose of its business by placing them with bank as margin money for purpose of availing of various credit facilities, fixed deposit ceased to be mere investment and became commercial asset which was utilized for purpose of assessee s business. Such utilization affords nexus between interest and fixed deposit, and therefore, interest becomes liable to be assessed under head business . source of interest no doubt continues to be fixed deposit, but since fixed deposit, which was either to be treated as pure investment, became converted into asset utilization for purpose of business, which became commercial asset, and therefore, interest became taxable as business income . It would be too simplistic view, to tell that even after conversion of fixed deposit (investment) into commercial asset which was put to use for purpose of facilitating assessee s business, source of interest still continues to be investment and not commercial asset. characteristic of asset had changed and change cannot be ignored while examining nature of interest income. We, therefore, hold that interest income is liable to be assessed as business income . So far as question of deduction under s. 80HHC, with regard to interest income is concerned, it is regulated by Expln. (baa) below section. This Explanation itself recognizes position that in any given case, amount received by way of interest would be treated as part of profits and gains of business. However, 90 per cent of interest amount will be excluded from profits of business for purpose of computing deduction under section. Accordingly, 90 per cent of interest income of Rs. 5,10,008 will be excluded while computing deduction under s. 80HHC in respect of interest. We may add that no argument was advanced before us on behalf of assessee to effect that interest amount of Rs. 5,10,008 represents gross interest and that it is only net interest which would fall to be excluded. In result, grounds are allowed. Ground No. 3, which relates to disallowance of monies paid to Customs Department, is dismissed as not pressed. Ground No. 5, relates to disallowance of 20 per cent of vehicle expenses of Rs. 11,87,742. assessee has five or six vehicles and expenditure includes depreciation, repairs and maintenance, petrol, driver salary and interest on loan taken for acquiring vehicles. It was stated before us that assessee does not own personal vehicle, therefore, use of aforesaid vehicles for personal purposes cannot be ruled out. We therefore, uphold disallowance in principle but reduce disallowance to 10 per cent of total expenditure and allow ground in part. Ground No. 6 relates to deduction under s. 80HHC. While completing assessment, AO noted that assessee had credited Rs. 60,89,183 as DEPB (Duty Entitlement Pass Book Scheme) and that assessee had claimed deduction under s. 80HHC in respect of 90 per cent of aforesaid credit. similar claim had also been made in respect of DFRC receipt which means Duty Free Replenishment Certificate . Both AO as well as CIT(A) took view that DEPB and DFRC schemes were to be treated as business receipts as per s. 28(iv) of Act and they were covered by ss. 28(iiia), (iiib) and (iiic) of Act. They have accordingly applied Expln. (baa) and excluded both receipts from profits of business. They have also held that amounts so excluded cannot be added back to profits of business under proviso to sub-s. (3) of s. 80HHC since that proviso also permits addition of only such receipts which are specifically mentioned in cls. (iiia), (iiib) and (iiic) of s. 28. In this view of matter, both receipts were held not entitled to deduction under s. 80HHC of Act. assessee s contention before us is that issue is now fully covered in his favour by order of Delhi Bench of Tribunal in case of P&G Enterprises (P) Ltd. vs. Dy. CIT (2005) 93 TTJ (Del) 788: (2005) 93 ITD 138 (Del).It was pointed out that import export policy and procedure for period 1997-2002 deals with DFRC and DEPB. According to para 7.4 of policy, DFRC is issued to merchant-exporter or manufacturer-exporter for import of in-puts used in manufacture of goods without payment of basic customs duty and special additional duty. conditions under which DFRC would be issued are mentioned in sub-paras (i) to (vi). Para 7.14 deals with DEPB. It says that for customs not desirous of going through licensing route, optional facility is given under DEPB and objective of DEPB scheme is to neutralize incidence of customs duty on import content of export neutralize incidence of customs duty on import content of export product. neutralization shall be provided by way of grant of duty credit against export product. issue whether DEPB credit is eligible for deduction under s. 80HHC has been considered by Delhi Bench of Tribunal in above order. In that case, there was no dispute that DEPB receipt was in nature of business receipt chargeable to tax under s. 28(iv) of Act and consequently, would form part of profits of business. Tribunal proceeded to examine question whether 90 per cent of DEPB receipt can be excluded from profits of business in view of Expln. (baa) to s. 80HHC. It was held that it cannot be excluded because what was mentioned in Explanation was only any sum referred to in cls. (iiia), (iiib) and (iiic) of s. 28 and DEPB receipt, which falls under s. 28(iv) of Act, does not find mention in Explanation. Tribunal observed that deliberate omission to exclude s. 28(iv) in first category of sums mentioned in Explanation clearly suggests that legislature never intended to exclude 90 per cent of any receipt falling under s. 28(iv) of Act. Tribunal then proceeded to examine whether DEPB receipt can fall within clause any other receipt of similar nature mentioned in aforesaid Explanation. Tribunal held that DEPB receipt is not similar to receipt by way of brokerage, commission, interest, rent, charges, etc., mentioned specifically in Explanation since these words show that only those receipts which can be considered as compensation for services rendered or for use of property can be excluded and its scope cannot be extended to receipts such as DEPB which accrued to assessee on account of exports. On this reasoning, Tribunal held that 90 per cent of DEPB receipts, which are assessed under s. 28(iv) of Act, cannot be excluded from profits of business for purpose of computing deduction under s. 80HHC. In present case, Departmental authorities have brought DEPB receipt as well as DFRC receipt of Rs. 7,79,946 to tax under s. 28(iv) of Act and not under cls. (iiia) to (iiic) of s. 28. facts of controversy being identical with those in cited order of Tribunal, respectfully following same, we direct AO to allow deduction under s. 80HHC in respect of DEPB and DFRC. We must however, notice argument advanced by learned Departmental Representative based on judgment of Supreme Court in case of Hindustan Lever Ltd. vs. CIT (1999) 157 CTR (SC) 506: (1999) 239 ITR 297 (SC). In that case, assessee made profits on sale of export entitlements and claimed deduction under s. 80HHC in respect of such profits. Supreme Court held that profits cannot be said to have been derived from export of goods out of India as required by section. It was held that immediate source of profits was sale of import entitlements and not export activities. Firstly, Supreme Court was not concerned with DEPB and DFRC receipts. We have already referred Import Export Policy and Procedure 1997-2002. Both incentives are provided to assessee only because of exports. To repeat, DFRC is issued to exporter for import of inputs used in manufacture of goods without payment of basic customs duty and special additional duty. However, such inputs would be subject to payment of additional customs duty equal to excise duty at time of import. There are other conditions attached to issue of certificate. Firstly, DFRC shall be issued only in respect of export products covered under provisions as notified by DGFT. Secondly, certificate shall be issued for import of inputs having same quality, technical characteristics and specification as those used in end-product and as indicated in shipping bills. Thirdly, certificate shall be subject to minimum value addition of 33 per cent. Fourthly, certificate may be issued in respect of exports for which payments are received in non-convertible currency. DEPB is issued as optional facility for exporters who do not wish to go through licensing route. objects of DEPB scheme is to neutralize incidence of customs duty on import content of export product. neutralization shall be provided by way of grant of duty credit, against export product . credit is given as percentage of FOB value of exports made in freely convertible currency. credit is available against export products and at such rates as may be specified by way of public notice, for import of raw material, intermediates, components, etc. DEPB is freely transferable subject to condition that it shall be for import at port specified by DEPB, which shall be port from where exports have been made. above conditions of issue of DFRC and DEPB show that immediate source of these two receipts is actual exports of goods out of country. No person other than exporter would be eligible for these two receipts. immediate source of DEPB and DFRC is, therefore, exports made by assessee and in that view of matter, ratio laid down by Supreme Court in aforesaid decision is also fully satisfied in sense that t h e immediate source of DEPB and DFRC is exports made by assessee. For above reasons, we hold that assessee is entitled to deduction under s. 80HHC in respect of DEPB and DFRC. ground is allowed. Ground No. 7 is directed against levy of interest under ss. 234B and 234C of Act. contention is that interest has been mechanically charged. We find that no reasons have been given in assessment order for charging interest. Respectfully following order of Special Bench of Tribunal in case of Motorola Inc. vs. Dy. CIT (2005) 96 TTJ (Del)(SB) 1, we restore matter to file of AO, who shall afford adequate opportunity to assessee before charging interest and giving reasons therefor. In result, appeal is partly allowed. *** MRS. SAROJ DASSANI v. ASSISTANT COMMISSIONER OF INCOME TAX