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5 Ground nos. 1 to 5 relate to denial of deduction u/s 80HHC in respect of DEPB license.

5.1 The AO disallowed the deduction u/s 80HHC in respect of the profit earned on account of DEPB scheme at Rs. 6,55,01,801/-.

6 The ld counsel of the assessee, who appeared before the Tribunal stated that in view of the decision of the Special Bench in the case of Topman Exports reported in 318 ITR 87(SB)(AT) the deduction u/s 80HHC on account of DEPB receipt is eligible. On the other hand, the ld DR placed reliance on the orders of the authorities below.

7 After considering the material on record, we find that the issue in respect of DEPB profit for the purpose of deduction u/s 80HHC has been decided by the Special Bench in the case of Topman Exports (supra). Accordingly, we set aside this issue to the file to the AO to allow deduction u/s 80HHC on the profit of DEPB scheme in light of the decision of the Special bench (supra). We order accordingly.

8 Ground nos 6 to 8 relate to in confirming the action of the AO in treating the interest income as income from other sources as against business income and without prejudice, only 90% of the net interest has to be reduced for the purpose of claiming deduction u/s 80HHC.

26 Regarding ground nos. 3 to 7 which relates to deduction u/s 80HHC on account of DEPB license, it was submitted that the issue is now being decided by the Special Bench of the Tribunal in the case of Topman exports reported in 318 ITR 87(AT). Therefore, the same may be sent to the file of the AO to decide the issue accordingly.

27 Regarding the grounds no. 8 & 9 which are in respect of interest income treated as income from other sources, it was submitted that most of the deposits were for bank guarantee; therefore, interest income earned on FDRs which were for availing overdraft facility cannot be treated as income from other sources as held by the Hon'ble Bombay High Court in the case of Indo swiss Jewels Pv Ltd in 284 ITR 389(Bom).

32.3 The ld counsel of the assessee has also raised contention that DEPB issue has been decided by the Special Bench in the case of Topman Export in favour of the assessee; therefore, reopening of the assessment was also bad in law. In our considered view, this contention of the ld AR are also not well founded for the reasons that the reopening of the assessment were started prior to the date of pronouncement of the decision of the Special Bench in the case of Topman Export (supra); therefore, these contentions of the ld AR are also rejected. In view of these facts and circumstances, the ground in respect of reopening of the assessment for AY 1999-00 is rejected.