JUDGMENT judgment of court was delivered by Sanjiv Khanna J.- Revenue has preferred these two appeals under section 260A of Income-tax Act, 1961 ("the Act", for short), in case of Kelvinator of India Ltd. (now known as Whirlpool India Ltd.). These appeals pertain to assessment years 1989-90 and 1990-91. order impugned, common to both appeals, passed by Income-tax Appellate Tribunal ("the Tribunal", for short) is dated August 30, 2000. By order dated December 6, 2001, following substantial questions of law were framed: I. T. A. No. 170 of 2001 (assessment year 1989-90) "(A) Whether Income-tax Appellate Tribunal is correct in law in deleting addition of Rs. 7,28,400 being guest house expenses relying on its earlier order when same are not accepted by Department and same expenditure is clearly disallowable under section 37(4) of Act? (B) Whether Income-tax Appellate Tribunal was correct in law in taking into consideration i nterest on FDR, miscellaneous receipts and interest from customers on delayed payments for purpose of section 80-I of Act? (C) Whether Income-tax Appellate Tribunal was correct in law in holding that deduction under section 32AB was available on profits of industrial undertaking and not on aggregate profit of assessee?" I. T. A. No. 165 of 2001 (assessment year 1990-91) "(A) Whether Income-tax Appellate Tribunal is correct in law in deleting addition of Rs. 51,655 being depreciation on guest house when same is clearly disallowable under section 37(4) of Act? (B) Whether Income-tax Appellate Tribunal is correct in confirming order of Commissioner of Income-tax (Appeals) and thereby allowing expenditure of Rs. 1,88,610 incurred by assessee on rent and repairs of guest house when same is clearly disallowable under section 37(4) of Act? (C) Whether Income-tax Appellate Tribunal is correct in law in taking into consideration interest on FDRs, miscellaneous receipts, interest from customers on delayed payments and dividend for purpose of section 80-I of Act? (D) Whether Income-tax Appellate Tribunal was correct in law in taking into consideration amount of interest on debentures, loans and intercorporate deposits and dividend for purpose of computing deduction under section 32AB?" Questions Nos. (A) and (B) in I. T. A. No. 170 of 2001 and questions Nos. (A), (B) and (C) in I. T. A. No. 165 of 2001 were disposed of and decided by order dated February 14, 2014, in following manner: "The learned counsel for parties submit that first two questions framed in present appeals are covered. So far as question No. 1, i.e., deductibility of guest house expenses under section 37(4) is concerned it is not disputed that matter is covered by decision of Supreme Court in Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 (SC). question is, accordingly, answered in terms of said decision, in favour of Revenue and against assessee. Question No. 3 in I. T. A. No. 165 of 2001 corresponds to question No. 2 in I. T. A. No. 170 of 2001. This pertains to permissibility of interest on FDRs, on miscellaneous interest, on delayed payments and their eligibility under section 80-I o f Act. It is not disputed that so far as first limb, i.e., interest received from customers on account of late payment beyond credit period goes, matter is covered against Revenue in decisions of this court reported as CIT v. Advance Detergents Ltd. [2011] 339 ITR 81 (Delhi) and CIT v. Jackson Engineers Ltd. [2012] 341 ITR 518 (Delhi). Accordingly, it is held in favour of assessee that such interest received from customers due to late payment beyond credit period is permissible as business income and entitled to benefit under section 80-I. As far as second limb, i.e., interest on FDRs, bank guarantees, deposits and miscellaneous receipts are concerned, benefit of section 80-I would be not available in view of conclusion in CIT v. Shri Ram Honda Power Equip [2007] 289 ITR 475 (Delhi). assessee would be entitled to claim limited benefit of expenditure of net interest by application of principles/conclusions Nos. 8 and 9 in Shri Ram Honda Power Equip (supra). matter is remitted to Assessing Officer to this limited extent to enable assessee to prove nexus as stipulated in Shri Ram Honda Power Equip question of law is, accordingly, answered in favour of Revenue but partly granting relief to extent indicated to assessee by limited remand. surviving question for consideration is as to permissibility of deduction under section 32AB to assessee in this case." In terms of aforesaid order, question in I. T. A. No. 170 of 2001 and questions and B in I. T. A. No. 165 of 2001 have been decided in favour of appellant-Revenue and against respondent-assessee. Question B in I. T. A. No. 170 of 2001 and question C in I. T. A. No. 165 of 2001 have been partly decided in favour of respondent-assessee but by observing that assessee would be entitled to netting of interest paid from interest accrued on application of principles/conclusions Nos. 8 and 9 in case of CIT v. Shri Ram Honda Power Equip [2007] 289 ITR 475 (Delhi). order of remand stands passed. Thus, what remains to be examined and decided is question C in I. T. A. No. 170 of 2001 relating to assessment year 1989-90 and question D in I. T. A. No. 165 of 2001 relating to assessment year 1990-91. However, we notice that question C in I. T. A. No. 170 of 2001 also arises for consideration in I. T. A. No. 165 of 2001 and it appears that by mistake said question has not been framed in latter I. T. A. Accordingly, we deem it appropriate to frame fourth substantial question in I. T. A. No. 165 of 2001 relating to assessment year 1989 -90 which will read as under: "(E) Whether Income-tax Appellate Tribunal was correct in law in taking into consideration amount of interest on debentures, loans and intercorporate deposits and dividend for purpose of computing deduction under section 32AB?" questions of law which have to be answered relate to interpretation under section 32AB of Act as it then existed. For sake of convenience, we are reproducing relevant portion of said provisions as it was applicable in assessment years 1989-90 and 1990-91. amendments effective from April 1, 1991, have been indicated in italics. "32AB. Investment deposit account.-(1) Subject to other provisions of this section, where assessee, whose total income includes income chargeable to tax under head'Profits and gains of business or profession', has, out of such income,- (a) deposited any amount in account (hereafter in this section referred to as deposit account) maintained by him with Development Bank before expiry of six months from end of previous year or before furnishing return of his income, whichever is earlier; or (b) utilised any amount during previous year for purchase of any new ship, new aircraft, new machinery or plant, without depositing any amount in deposit account under clause (a), in accordance with, and for purposes specified in scheme (hereafter in this section referred to as scheme) to be framed by Central Government, or if assessee is carrying on business of growing and manufacturing tea in India, to be approved in this behalf by Tea Board, assessee shall be allowed deduction (such deduction being allowed before loss, if any, brought forward from earlier years is set off under section 72) of- (i) sum equal to amount, or aggregate of amounts, so deposited and any amount so utilised; or (ii) sum equal to twenty per cent. of profits of eligible business or profession as computed in accounts of assessee audited in accordance with sub-section (5), whichever is less: Provided that where such assessee is firm, or any association of persons or any body of individuals, deduction under this section shall not be allowed in computation of income of any partner, or, as case may be, any member, of such firm, association of persons or body of individuals. (2) For purposes of this section,- (i)'eligible business or profession' shall mean business or profession, other than- (a) business of construction, manufacture or production of any article or thing specified in list in Eleventh Schedule carried on by industrial undertaking, which is not small-scale industrial undertaking as defined in section 80HHA; (b) business of leasing or hiring of machinery or plant to industrial undertaking, other than small-scale industrial undertaking as defined in section 80HHA, engaged in business of construction, manufacture or production of any article or thing specified in list in Eleventh Schedule; (ii)'new ship' or'new aircraft' includes ship or aircraft which before date of acquisition by assessee was used by any other person, if it was not at any time previous to date of such acquisition owned by any person resident in India; (iii)'new machinery or plant' includes machinery or plant which before installation by assessee was used outside India by any other person, if following conditions are fulfilled, namely:- (a) such machinery or plant was not, at any time previous to date of such installation by assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under this Act in computing total income of any person for any period prior to date of installation of machinery or plant by assessee; (iv)'Tea Board' means Tea Board established under section 4 of Tea Act, 1953 (29 of 1953); (3) [The profits of eligible business or profession of assessee for purposes of sub-section (1) shall,- (a) in case where separate accounts in respect of such eligible business or profession are maintained], be amount arrived at after deducting amount equal to depreciation computed in accord ance with provisions of sub-section (1) of section 32 from amounts of profits computed in accordance with requirements of Substituted by Finance Act, 1989, with effect from April 1, 1991, with following: profit of business or profession of assessee for purpos e of sub-section (1) shall ; Parts II and III of Sixth Schedule to Companies Act, 1956 (1 of 1956), as increased by aggregate of- (i) amount of depreciation; (ii) amount of income-tax paid or payable, and provision therefor; (iii) amount of surtax paid or payable under Companies (Profits) Surtax Act, 1964 (7 of 1964); (iv) amounts carried to any reserves, by whatever names called; (v) amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (vi) amount by way of provision for losses of subsidiary companies; and (vii) amount or amounts of dividends paid or proposed; if any debited to profit and loss account; and as reduced by any amount or amounts profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to profit and loss account; and (b) in case where such separate accounts are not maintained or are not available, be such amount which bears to total profits of business or profession of assessee after allowing depreciation in accordance with provisions of sub-section (1) of section 32, same proportion as total sales, turnover or gross receipts of eligible business or profession bear to total sales, turnover or gross receipts of business or profession carried on by assessee... (5) deduction under sub-section (1) shall not be admissible unless accounts of business or profession of assessee for previous year relevant to assessment year for which deduction is claimed have been audited by accountant as defined in Explanation below sub-section (2) of section 288 and assessee furnishes, along with his return of income, report of such audit in prescribed form duly signed and verified by such accountant: Provided that in case where assessee is required by or under any other law to get his accounts audited, it shall be sufficient compliance with provisions of this sub-section if such assessee gets accounts of such business or profession audited under such law and furnishes report of audit as required under such other law and further report in form presc ribed under this sub-section." Sub-section (1) of section 32AB of Act stipulates conditions when benefit of said section is available to assessee; (i) assessee should have income chargeable under head "Profits and gains from business or profession" and out of such income should have (a) deposited amount in account maintained with Development Bank within stipulated time; or (b) utilised amount during previous year for purchasing new ship, aircraft or machinery and plant without depositing any amount under clause (a). said sub-section, thus, prescribes pre-conditions for claiming deduction under section 32AB of Act. Sub-section (1) of section 32AB then stipulates that deduction allowed would be equal to (i) sum or aggregate thereof so deposited or amount so utilised; or (ii) equal to 20 per cent. of profits of eligible business or profession as computed in accounts of assessee audited in accordance with sub-section (5), whichever is less. Therefore, quantum under (i) and (ii) have to be quantified and deduction under section 32AB is allowed on lower of two amounts. latter portion, therefore, quantifies amount of deduction to be claimed under section 32AB of Act. sequitur is that quantum of deduction under section would never exceed 20 per cent. of profits of eligible business or profession. In present case, we are concerned with clause (ii) of section 32AB(1), i.e., computation of 20 per cent. of profits of eligible business or profession and said profits audited in accordance with sub-section (5). expression "eligible business or profession" has been defined in sub-section (2) of section 32AB, to exclude businesses mentioned in clauses (a) and (b) of sub-section (2). There is no dispute that assessee was engaged in eligible business. In fact respondent-assessee was multi-product company, having following separate divisions: 1. Refrigeration 2. Compressor 3. Lamination 4. Control 5. Control tool room 6. Scooter 7. Moped 8. Pressing 9. Cash register cash register business/division was not eligible business under section 32AB, thus, profits from said business would not be eligible for purposes of computation of deduction. Other divisions/businesses were eligible businesses. In assessment year 1989-90, assessee had claimed deduction under section 32AB at Rs. 3,95,85,158 as sum equivalent to 20 per cent. of profits earned from eligible business. aforesaid computation was made after taking into account only four eligible business units which had earned profits; eligible businesses, which had suffered losses, were ignored and profits and losses were not aggregated. Assessing Officer recomputed deduction under section 32AB to Rs. 2,15,83,649 by taking into account aggregate of profits earned by all businesses units, thus meaning that losses suffered in five other business units including non-eligible business unit, i.e., cash register unit, were also taken into consideration. Assessing Officer held that losses suffered in five units including cash register division should be also set off and reduced from profits earned from four eligible units for computing deduction. Similarly, in assessment year 1990-91, deduction under section 32AB of Act had been claimed at Rs. 2,97,37,455 being 20 per cent. of profit of Rs. 14,86,87,276 earned in three units and ignoring losses suffered in remaining five eligible divisions. Assessing Officer, disagreeing, held that aggregate of all eligible businesses should be taken into consideration and, therefore, losses suffered in five divisions (he excluded cash register division) should be reduced from profits earned by three eligible divisions. He recomputed deduction claimed under section 32AB of Act at Rs. 1,20,53,907. In first appeal, assessee succeeded on question of aggregation of profits. Appropriate in this regard would be to reproduce findings recorded by Commissioner of Income-tax (Appeals) in respect of assessment year 1989-90, which reads: "9.3 I have carefully considered submissions made on behalf of appellant. I find considerable merit in arguments raised. Sub-section (1) of section 32AB clearly specifies that deduction to be allowed will either be of sum equal to amount or aggregate of amounts deposited with IDBI and utilised for purchase of new machinery, etc., or sum equal to 20 per cent. of profits of eligible business or profession as computed in accounts of assesses. Sub-section (3), as existed before its amend ment by Finance Act, 1989, wi th effect from April 1, 1991, provides as to how profits of eligible business or profession have to be arrived at in situation where separate accounts in respect of such eligible business are maintained as well as case where separate accounts are not maintained or are not available. It would thus be seen that quantification of deduction has to be done with reference to profits of eligible business or profession. It logically follows that no deduction under section 32AB is to be allowed where there is no profit in eligible business or there is loss. It will be clear from language of section 32AB that there is no warrant for aggregating profits and losses of different businesses carried on by appellant, as has been done by Assessing Officer. issue presently in appeal before us actually covered by clarifications issued by senior Departmental officers in session with ASSOCHAM. It will be useful to quote relevant question and answer: 'Question: Where assessee operates single business, section 32AB deduction is available in year in which profit is earned. No allowance is made in year of loss. In other words, worst that can happen to industry is zero allowance in year of loss. In case of multi business industry where profits are earned in some businesses and losses in others, profits of eligible business would be entitled to allowance while losing businesses will be denied incentive. This should be made abundantly clear, so that there is no attempt at aggregating and offsetting profits and losses of different businesses carried on by same assessee. Answer: In case of so multi business assessees, both profits and losses in different units are to be considered to ensure that claim made by assessee in respect of profit-earning unit is limited to and is not in excess of overall profits of business. If there are two units of businesses and B run by assessee, earning profit of Rs.100 and B incurring loss of Rs. 85, maximum amount of claim that can be made by assessee will be limited to Rs. 15(100 - 85), notwithstanding A's entitlement to 20 (20 per cent. of 100).' 9.3 It will be observed from perusal of above clarification that if view taken by Assessing Officer was to be accepted then permissible deduction under section 32AB would have been stated to be 20 per cent. of Rs. 15 to abovementioned illustration. 9.4 Having regard to aforementioned facts and circumstances, I hold that that Assessing Officer was not justified in his action in restricting deduction under secti on 32AB at Rs. 2,15,83,649 by taking aggregate of profits/losses for all businesses including non- eligible business of cash register division. He is directed to work out deduction under section 32AB with reference to profits of eligible business on lines mentioned in preceding paragraphs." Tribunal in impugned order has affirmed said findings. We are in agreement with aforesaid finding and would like to come back to legal provision, i.e., section 32AB of Act, as it then existed. Reference to sub-section (3) of section 32AB would be illuminating. said sub-section uncertainly and clearly postulates that profits of eligible business of respondent-assessee should be separately computed. In case separate accounts in respect of eligible business were maintained, clause (a) of section 32AB(3) was applicable and clause (b) of section 32AB(3) was applicable when independent accounts were not maintained. present case, it is not disputed that separate accounts for each eligible business was maintained. In sub-section (3) of section 32AB, Legislature had consciously and deliberately used expression "profits of eligible business or profession" and clause (a) or clause (b) would apply to compute such eligible profit. expression "eligible business or profession" was defined in sub-section (2). Under sub-section (5) of section 32AB, assessee was required to get accounts audited by accountant defined in Explanation below section 288(2) and furnishes report of audit in prescribed form and verified by accountant. When we collate and harmoniously read different sub-sections, it is clear that special deduction under section 32AB has to be quantified under sub- section (1) clause (b) (ii) on sum equal to 20 per cent. of profits of eligible business. assessee entitled to compute deduction under said clause with reference to profits earned by eligible business. section did not have any reference to losses suffered or aggregation of profits and losses from distinct and separate eligible businesses. We have already interpreted sub-section (1) and observed that it consists of two parts. first part relates to eligibility requirement that assessee must have income chargeable under head "Income from profits and gains from business or profession" and from said income, assessee should have under clause (b) purchased any new ship, new aircraft, new machinery or plant. quantum of said deduction was dependent upon amount spent on purchase of new ship, new aircraft, new machinery or plant, but quantum could not exceed 20 per cent. of profits from eligible business or profession. quantum of profits refers to specific eligible business and profession and did not postulate aggregation or setting off of losses in eligible business or profession. Similar issue and contention was examined by Supreme Court in CIT v. Canara Workshops (P.) Ltd. [1986] 161 ITR 320 (SC). In said case, assessee had claimed deduction under section 80E of Act on manufacture of springs at Mangalore and Nagpur plant and manufacture unit of hubs and brake drums. However, assessee had not taken into account, losses suffered in alloy steel industry. question of aggregation or setting off of losses suffered in alloy steel industry from profits of spring units and manufacture of hubs and brake drums, came up for consideration before Supreme Court. issue was decided in favour of assessee, in following words (page 323): "It is obvious from object underlying enactment of section 80E and terms in which it provides relief that intention of Parliament in enacting provision was to encourage setting up of industries concerned with generation or distribution of electrical or any other energy and construction, manufacture or production of articles or things specified in list in Fifth Schedule. intention goes further. By making provision for rebate year after year on industry making profits and gains during year, intention also was to provide incentive for promoting efficiency in industry. It is clear that benefit was directed to setting up and also efficient working of priority industries. How is benefit to be worked out? First, it must be company to which section 80E applies, that is to say, company which satisfies requirements of sub-section (2) of section 80E. Second, total income as computed in accordance with Income-tax Act, 1961, without taking into regard provisions of section 80E, should include profits and gains attributable to business or industry mentioned in section. Third, from profits and gains attributable to such business or industry, deduction has to be allowed of amount equal to eight per cent. of such profits and gains and effect must be given to this deduction when computing total income of company. assessee in this case carries on two industries, both of which find places in list in Fifth Schedule and can, therefore, be described as priority industries. It is urged by learned Additional Solicitor-General, appearing for Revenue, that on true application of section 80E, profit in industry of automobile ancillaries must be reduced by loss suffered in manufacture of alloy steel, and reference has been made to number of cases to which we shall presently refer. After giving matter careful consideration, we do not find it possible to accept contention. It seems to us that object in enacting section 80E is properly served only by confining application of provisions of that section to profits and gains of single industry.The deduction of eight per cent. is intended to be index of recognition, that priority industry has been set up and is functioning efficiently. It was never intended that merit earned by such industry should be lost or diminished because of loss suffered by some other industry. It makes no difference that other industry is also priority industry. co-existence of two industries in common ownership was not intended by Parliament to result in misfortune of one being visited on other. legislative intention was to give to meritorious its full reward. To construe section 80E to mean that you must determine net result of all priority industries and then apply benefit of deduction to figure so obtained will be, in our opinion, to undermine object of section. example will illustrate this. industry entitled to object of section. example will illustrate this. industry entitled to benefit of section 80E could have its profits wholly wiped out on adjustment against heavy loss suffered by another industry, and, thus, be totally denied relief which should have been its due by virtue of its profits. In our opinion, each industry must be considered on its own working only when adjudging its title to deduction under section 80E. It cannot be allowed to suffer because it keeps company with some other industry in hands of assessee. To determine benefit under section 80E on basis of net result of all industries owned by assessee would be, moreover, to shift focus from industry to assessee. We hold that in application of section 80E, profits and gains earned by industry mentioned in that section cannot be reduced by loss suffered by any other industry or industries owned by assessee." aforesaid paragraph would indicate that alloy steel industry was also priority industry but this did not compel Supreme Court to follow principle of aggregation. It was observed that provisions did not intend that loss suffered in one priority industry should be set off from profits earned from another priority industry, on which deduction was allowable. assessee had option to only take into account profits-making priority industry to claim deduction under section 80E. stance and stand of assessee was, therefore, affirmed. said principle would be equally and squarely applicable to section 32AB of Act, as it then existed. identical controversy in relation to section 32AB of Act arose in CIT v. Pudumjee Agro Industries Ltd. [2006] 285 ITR 301 (Bom), and plea of Revenue was rejected, inter alia, observing (page 307): "At relevant time, deduction under section 32AB(1) of Act was available to assessee who had income chargeable under head'Profit and gains of business or profession' and out of said business income, assessee had either deposited certain amount with Industrial Bank of India or utilised business income for acquisition of certain assets before expiry of 6 months from end of previous year or before furnishing return of income whichever is earlier. On fulfilment of above conditions, assessee was entitled to deduction of sum equal to amount deposited/utilised or sum equal to 20 per cent. of profits of eligible business or profession computed under section 32AB(3), whichever is lower. Section 32AB(2) of Act, inter alia, sets out meaning of words'eligible business or profession' used in section 32AB(1) and section 32AB(3) of Act sets out separate methods for determining profits of eligible business or profession in cases where accounts of eligible business are maintained separately and in cases where accounts of eligible business are not maintained separately. Section 32AB(3)(a) deals with determination of profits of eligible business or profession where accounts are maintained separately and section 32AB(3)(b) deals with determination of profits of eligible business where accounts are not maintained separately... Thus, section 32AB(3)(a) of Act deals with each eligible business separately and profits of each eligible business have to be determined by increasing or decreasing profits of each eligible business computed separately under provisions of Companies Act, 1956. increases and decreases permitted under section 32AB(3)(a) do not contemplate setting off loss of another eligible unit. Therefore, in absence of any provision for setting off loss suffered by one eligible business from profits of another eligible business for purpose of deduction under section 32AB(1) of Act, Tribunal was justified in upholding claim of assessee. There can be no dispute that where assessee carried on eligible business and non-eligible business and assessee had maintained accounts of above two businesses separately and there was profit in eligible business and loss in non-eligible business, then for purpose of deduction under section 32AB(1) of Act, profits of eligible business alone would be considered without deducting therefrom loss suffered in non-eligible business. If loss suffered in non-eligible business is to be ignored for determining profits of eligible business, then, there is no reason as to why loss suffered by one eligible business should not be ignored from profits of other eligible business under section 32AB(3)(a) of Act. In other words, where accounts of each of eligible businesses are maintained separately, then profits of each of eligible businesses for purpose of deduction under section 32AB(1) have to be determined separately under section 32AB(3)(a) of Act and merely because there is loss suffered by one eligible business, it cannot be said that said loss is to be set off from profits of other eligible business. It is pertinent to note that by Finance Act, 1989, concept of eligible business and determination of profits of eligible business whose accounts have been maintained separately have been done away with prospectively with effect from April 1, 1991. As result from April 1, 1991, maintaining separate accounts has no relevance for purpose of deduction under section 32AB(1) of Act and what is relevant from April 1, 1991, is profits of business or profession of assessee and not profits of each business of assessee. Therefore, for assessment year 1990-91 with which we are concerned in this appeal, deduction under section 32AB(1) of Act in respect of profits of paper division has to be determined from profits of paper division as determined under section 32AB(3)(a) of Act without setting off loss suffered by agro division. It is true that under section 70 of Act, while determining total income chargeable to tax under head'Profits and gains of business', loss from agro division has to be set off against profits of paper division. However, said set off is not relevant for purpose of computing 20 per cent. deduction under section 32AB(1) of Act, in view of specific provisions contained in section 32AB(3)(a) of Act for determining profits of each eligible business of assessee." aforesaid paragraphs refer to amendments made by Finance Act, 1989, applicable from April 1, 1991. With effect from said date, concept of eligible business referred to in section 32AB was negated. With effect from April 1, 1991, provisions of section 32AB will have to be read and interpreted in light of said amendments. However, for assessment years in question under applicable provisions only profits of eligible business can be taken into consideration for computing deduction under section 32AB of Act and aggregation will not be permissible. Accordingly, question C in I. T. A. No. 170 of 2001 and question E in I. T. A. No. 165 of 2001 are decided in favour of assessee and against Revenue. This brings us to question D in I. T. A. No. 165 of 2001. relevant facts which are found in assessment order are that assessee for purpose of computation of profits earned by eligible business under section 32AB had included following incomes: Schedule K Other income (Rs. in lakhs) Miscellaneous income 52.56 Interest received (TDS Rs. 102.87) 530.77 Dividend (TDS Rs. 0.70) 3.01 Profit on sale of assets 2.74 Duty drawback and cash assistance 202.74 As per profit and loss account 791.82. Assessing Officer, during assessment proceedings, called upon assessee to explain why aforesaid incomes should not be shown under head "Other income" and excluded from head "Income from business or profession" for purpose of computing allowable deduction under section 32AB of Act. assessee in response had submitted that they had computed deduction under section 32AB of Act in accordance with Part II and Part III of Schedule VI to Companies Act and other income should not be excluded from business income of assessee-company while computing deduction under section 32AB. Assessing Officer, thereafter, observed as under: I have carefully examined assessee s claim. As explained by assessee s representative, nature of income as shown under head other income is summarised as under: Which consists of insurance receipt on account of repairs, rebate I. Miscellaneous Rs. on timely deposits of sales tax, receipts 52,56,000 receipts on disposal of various scrap items, sale of tender forms and forfeiture of security deposit, etc. II. Interest on Rs. Represents interest on debentures /FD 20,775 investments It represents interest on bank deposits which are compulsory III. Interest from Rs. required like margin money banks/other deposits 1,36,389 advance to supplier/telephone department, etc., during course of business. IV. Interest This represents interest received from Rs. received from customers in customers/moped 4,43,11,016 ordinary course of business. instalments Represents interest on V. Interest loans Rs. investment deposits with several intercorporate deposits 86,16,571 companies made out of surplus fund of company. Rs. Interest on shares of various VI. Dividend 3,01,460 companies VII. Profit on sale Rs. Represents profit on sale of of assets 2,73,537 business assets VIII. Duty draw Rs. Nature of assistance received back and cash 2,02,74,000 in export business. assistance I am unable to accept assessee s contention that total income shown under head Other income should be assessed as assessee s business income. On verification of above details it may be appreciated that incomes shown against items Nos. I, II, IV, VII and VIII have been earned in ordinary course of business carried on by assessee. However, income from remaining heads represents receipt from various investments. assessee-company itself has shown dividend income and interest on debentures under head Income from other sources . following income will, therefore, be assessed under head Income from other sources : Rs. I. Interest on debentures/FD 20,775 Interest on Rs. II. loans/intercorporate deposits 86,16,571 Rs. III. Dividend 3,01,460 Rs. 89,38,806 As above income is being assessed under head Income from other sources , same is also required to be excluded from total business income for purpose of section 32AB of Income-tax Act. Commissioner of Income-tax (Appeals) held that only profits of business and profession were to be considered for purpose and Assessing Officer was right in excluding non-business income from business profit for computation for deduction under section 32AB. However, he held that Assessing Officer had erred in excluding Rs. 1,84,80,973 being interest offered for taxation for assessment year 1989-90 and Rs. 56,91,243 being interest payable on convertible debentures for assessment year 1990-91, observing that assessee had himself reduced these amounts and Assessing Officer's action amounted to double reduction. said claim of assessee was factually correct. Therefore, what was subject matter of appeal before Tribunal Therefore, what was subject matter of appeal before Tribunal was only interest on debentures/fixed deposits of Rs. 20,775, interest on loan/intercorporate deposits of Rs. 86,16,571 and dividend of Rs. 3,01,460, totalling Rs. 89,38,806. Tribunal, in impugned order, decided issue in favour of assessee, inter alia, observing that issue was covered by finding of Tribunal in appeal against order under section 263 of Act relating to assessment year 1989-90, in which it was held as under: "We are of opinion that for purpose of deduction under section 32AB, benefit of said section will be available to all business incomes from whatever source, other than those mentioned in sub-clauses (a) and (b) of clause (i) of sub-section (2) of said section. Therefore, view of Commissioner of Income-tax (Appeals) that income from other sources will not be considered is not correct in matter. As such for purpose of deduction under section 32AB, profit of eligible business are not to be computed in accordance with provisions of Income-tax Act but are to be computed in accordance with requirement of Sixth Schedule to Companies Act, 1956. Similar view was taken by Tribunal also in case of Indian Transformers Ltd. v. CIT reported in [1995] 52 TTJ 654 (Cochin)." Copy of order under section 263 of Act as well as findings or ratio recorded therein is not available before us. What has been mentioned in quoted portion above is that benefit of section 32AB would be available to income from eligible business, i.e., income from whatever source other than those mentioned in sub-clauses (a) and (b) of clause (i) of sub-section (2) of section 32AB of Act. Further, deduction under said section was to be computed in accordance with Schedule VI to Companies Act. Similar controversy had arisen before Supreme Court in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC) and was answered in following manner (page 280): "The second question framed by us hereinabove arises for our consideration in following factual background. assessee-company in its books of account had shown certain sums of money representing'dividend' from units of UTI and had included said sums in computation of its profit as income from'eligible business'. It also claims that out of such income from'eligible business' it had purchased certain new machineries for its factory because of which it claimed deduction of 20 per cent. of said income as provided in section 32AB of Income-tax Act. This claim of company has been allowed by Tribunal and confirmed by High Court. argument of Revenue in this regard is that income received by assessee-company from its investment in UTI has been declared by company itself as an'income from other sources' which head of income is different from income from'profits and gains of business or profession' and under section 32AB, income from business alone is entitled for benefit of that section. assessee contends that its income from sale and purchase of units of UTI is part of its regular business and that it has held these units as stock-in-trade and has been doing business of buying and selling same. assessee also contends that its income from this business of investment in units of UTI and its business of manufacture and sale of tyres are pooled together in common account of funds which is managed by one common management. It is also submission of assessee that these two businesses, namely, business of buying and selling units of UTI and manufacture and sale of tyres are so intertwined and interlaced that same cannot be separated and treated independently, therefore, this income from UTI being part of its business income, it is entitled to claim benefit of section 32AB. perusal of section 32AB, as it stood at relevant time, shows that if assessee has total income including income chargeable to tax under head'Profits and gains of business or profession' and if income from such business is derived from an'eligible business' and if assessee has out of such income utilised any amount during previous year for purchase of new plant or machinery then it is entitled to set off of sum equal to 20 per cent. of profit of such eligible business as computed in accounts of assessee which account has been audited in accordance with sub-section (5) of section 32AB. dispute in present case is in regard to question whether assessee's investment in UTI is business, and if so, is it business which qualifies to be an'eligible business' under section 32AB? In regard to first aspect, we must note that Tribunal as question of fact based on material on record has come to conclusion that investment in UTI by assessee-company is in course of its business and its business of manufacture and sale of tyres and sale and purchase of units of UTI are common in nature and both businesses are intertwined and interlaced. This finding is accepted by High Court also. We also find that this business of assessee-company of buying and selling of units is business as contemplated under section 32AB of Act. question then is: is it eligible business under said section? term'eligible business' is defined under sub-section (2) of section 32AB. As per that definition, all business of assessee-company will be eligible business unless it falls under type of business enumerated in subclauses (a) and (b) of section 32AB(2). It is nobody's case that this business of assessee-company is one of those businesses which fall under business enumerated in sub-clauses (a) and (b) of sub-section (2) of section 32AB. Therefore, there is no doubt that business of assessee-company is eligible business. fact that it is shown under different head of income would not deprive company of its benefit under section 32AB so long as it is held that investment in units of UTI by assessee-company is in course of its'eligible business'. Therefore, in our opinion, dividend income earned by assessee-company from its investment in UTI should be included in computing profits of eligible business under section 32AB of Act." aforesaid paragraph indicates that to qualify for deduction under section 32AB of Act, earning must be from eligible business. In case of Apollo Tyres (supra), investment in UTI was held to be eligible business as defined in sub-section (2) of section 32AB of Act and, therefore, had to be taken into consideration for computing deduction under section 32AB of Act. As per findings recorded by Tribunal, interest income on debentures and fixed deposits of Rs. 20,775, interest on loan and intercorporate deposits amounting to Rs. 86,16,571 and dividend of Rs. intercorporate deposits amounting to Rs. 86,16,571 and dividend of Rs. 3,01,460 were income from business and was, accordingly, shown in Part II and Part II of Sixth Schedule to Companies Act. Identical view is found to have been taken by Calcutta High Court in Britannia Industries Ltd. v. Joint CIT [2004] 271 ITR 123 (Cal), and Madras High Court in Carborandum Universal Ltd. v. CIT [2004] 265 ITR 372 (Mad), where earlier decisions in CIT v. Dinjoye Tea Estate (P.) Ltd. [1997] 224 ITR 263 (Gauhati) and CIT v. Warren Tea Ltd. [2001] 251 ITR 382 (Cal) were dissented from and it was observed, they were no longer good law in view of decision in Apollo Tyres (supra). aforesaid ratio find resonance in subsequent decision of Madras High Court in CIT v. Tirupattur Co-operative Sugar Mills Ltd. [2009] 310 ITR 360 (Mad), CIT v. Macmillan India Ltd. [2007] 295 ITR 67 (Mad) and Deputy CIT v. United Nilgiris Tea Estate Co. Ltd. [2005] 273 ITR 470 (Mad). Full Bench of Kerala High Court in Parry Agro Industries Ltd. v. CIT [2006] 285 ITR 440 (Ker) [FB]; [2006] 156 Taxman 184 (Ker), has taken somewhat different view after referring to Part II of Sixth Schedule to Companies Act, inter alia, recording that by sub-section (3) of section 32AB, Legislature wanted profits from business and profession alone should be included in profits of business computed according to second part of Schedule VI to Companies Act and not net profits. They interpreted judgment in case of Apollo Tyres (supra), holding that only income from business of assessee himself and not any other income of assessee could be included for calculating deduction under section 32AB of Act. We need not enter into this question as findings recorded by Tribunal are that income earned by way of interest on debentures of Rs. 20,755, interest on loans of Rs. 86,16,571 and dividend of Rs. 3,01,460 was business income. Revenue has not placed any material documents or papers on record to show that aforesaid finding is wrong and incorrect. assessment order and first appellate order in this regard are not lucid. Further, Revenue has not placed complete order under section 263 on record. In these circumstances, and in view of findings recorded by Tribunal, question No. D in I. T. A. No. 165 of 2001 is to be decided in favour of assessee and against Revenue. appeals are, accordingly, disposed of. In facts of case, there will be no order as to costs. *** Commissioner of Income-tax v. Kelvinator of India Ltd