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2. The assessee has raised more or less similar grounds for both the assessment years, therefore, for the sake of brevity, the grounds raised in ITA No.190/Hyd/2016 for A.Y. 2010-11 read as under :

"1. The order of the learned Commissioner of Income tax(Appeals)-9, Hyd. in ITA No.0369/ITO, Ward-2(2)/2015-16 dt.28-12-2015 rejecting the claim of the appellant is contrary to law and facts.
2. It is contended that the disallowance of Rs.35,35,167 being pro-rata premium on Foreign Currency Convertible Bonds (FCCB) is erroneous and arbitrary. In the facts and circumstances of the case, the entire premium is allowable as expenditure as FCCB's were issued for obtaining finance for general business purposes of the entire appellant's business and not for any specific business activity.
3. Without prejudice the appellant contends that both Assessing officer and learned commissioner erred in treating premium to be paid on FCCB bonds as interest falling under section 36(1)(iii) of the IT Act. The appellant contends that the premium payable on redemption of bonds falls to be allowed as a expenditure u/s 37 (1) of the IT Act and not u/s 36(1)(iii) of the I.T. Act.
4. It is contended that the assets in the shipping division aggregating to Rs.6.19 crores were acquired out of FCCB proceeds and these FCCB's were converted into share capital in the financial year 2007-08. As such the acquisition of assets cannot be termed as assets relatable to the shipping division purchased out of borrowed funds. Hence, the pro-rata disallowance of premium of Rs.35,35,167 relatable to utilization of FCCB proceeds for acquisition of assets of shipping division is erroneous.
17. The Appellant craves leave to add, amend or alter any of the above grounds as the occasion may require.
18. For these and other reasons that will be submitted at the time of hearing of appeal, the appellant prays that the disallowances made may be deleted and the appeal be allowed."

3. The brief facts of the case are that assessee company, engaged in Express Cargo Distribution and Warehousing, filed its return of income for AY 2010-11, declaring NIL income from the EDSE Division and Rs.22,46,480/- from the CTC Division under normal provisions, and book profits of Rs.30.11 crores under Section 115JB of the Act. The return was processed under Section 143(1) and selected for scrutiny under CASS. During assessment proceedings, notices under Sections 143(2) and 142(1) were issued and sought for furnishing the details of utilization of FCCB proceeds received at Rs.85,23,89,442/- and other details. The assessee's representatives appeared to furnish the required details. After verifying the information submitted and submissions made, Assessing Officer observed that assessee had invested major amounts in purchase of lands in place of warehouses and out of Foreign Currency Convertible Bonds (FCCB) proceeds, the Allcargo Gati Limited assessee had utilized Rs.6,19,00,000/- towards purchase of containers and vessels. Assessing Officer thereafter, completed the assessment by making disallowances on interest claims related to FCCB proceeds, including Rs.35.35 lakhs for vessels and containers (tonnage tax system), Rs.68.19 lakhs for buildings under construction under Section 36(1)(iii)), Rs.1.17 crores for vacant lands not utilized for business, Rs.54.25 lakhs for unregistered disputed land, and Rs.12.49 lakhs for foreign subsidiary investments under Section 14A of the Act. Thereafter, passed assessment order u/s 143(3) of the Act dt.31.03.2013, assessing the total income of the assessee at Rs.25,73,81,330/-.

13. Per contra, ld.DR has drawn our attention to para 2.2. of the assessment order wherein the contention of issuing FCCB were captured by the Assessing Officer which is to the following effect :

2.2 As could be seen from the FCCB offer document, the assessee has to invest a major portion of the FCCB proceedings in warehousing projects.

During the course of hearings, the assessee was asked to furnish the details of utilization of FCCB proceeds received at Rs.85,23,89,442/-. As per the information filed, the utilization details of FCCB so furnished are as under: