JUDGMENT : K.S. Jhaveri, J. 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench C, Ahmedabad (hereinafter referred to as the Tribal) dated 30.04.2007 in ITA No. 2293/Ahd/2000 for the Assessment Year 1995-1996, the revenue has preferred the present Tax Appeal. 2. This appeal was admitted on 07.08.2008 for consideration of the following substantial question of law: "B. Whether the Appellate Tribunal is right in law and on facts in holding that deduction under Section 80IA was allowable in respect of an amount of Rs.46,18,021/- which was towards forfeiture of advance? C. Whether the Appellate Tribunal is right in law and on facts in holding that while calculating the deduction under Section 80IA, only the net interest is required to be excluded?" 3. The facts of the case are that the assessee claimed deduction u/s. 80IA in respect of other income amounting to Rs.82,79,873/-. The assessing Officer disallowed the claim for deduction under section 80IA in respect of other income amounting to Rs.8279873/-. This disallowance included an amount of Rs.68,11,960/- towards service charges and Rs.1,79,254/- towards interest income. On appeal before the CIT (A) by the assessee, the CIT(A) confirmed the disallowance. 4. Being aggrieved by the order of the first appellate authority, the assessee preferred appeal before the ITAT and the ITAT vide impugned order directed the assessing officer to allow deduction u/s. 80IA in respect of the amount of Rs.46,81,021/- which was in respect of forfeiture of advance. The Appellate Tribunal restored the matter to the file of the assessing officer to decide this issue after verifying from the accounts and related documents that the interest received by the assessee has nexus with the interest paid by the assessee. Being aggrieved by the said order, the present appeal is filed by the revenue. 5. Mrs. Bhatt assisted by Mr. MM Bhatt, learned advocate for the revenue contended that as far as issue (C) is concerned, the same is already concluded by the decision of this Court in case of Commissioner of Income Tax versus Nirma Ltd. - [2014] 367 ITR 12. The relevant para 2 is reproduced as under: "Insofar as question Nos. 1, 4, 8, 10 and 11 are concerned, they have a common element, namely, whenever certain income is to be excluded for the purpose of deduction under section 80-I, 80-IA and80HH, etc. The relevant para 2 is reproduced as under: "Insofar as question Nos. 1, 4, 8, 10 and 11 are concerned, they have a common element, namely, whenever certain income is to be excluded for the purpose of deduction under section 80-I, 80-IA and80HH, etc. gross income is to be excluded or only the net thereof is the question. In a separate order passed by us today in Tax Appeal No. 810 of 2013, we have rejected the Revenues appeal making following observations: The question is when certain income of the assessee is excluded from the claim of deduction under section 80I or 80HH of the Act, should the gross income be excluded or should it be only net, that is, total receipt minus the expenditure incurred by the assessee for earning such income which should be so excluded. Such a question in the context of deduction under section 80HHCcame up for consideration before the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. v. CIT, 343 ITR 89 (SC). The Supreme Court held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. It was observed as under: If we now apply Explanation (baa) as interpreted by us in this judgment to the facts of the case before us, if the rent or interest is a receipt chargeable as profits and gains of business and chargeable to tax under section 28 of the Act, and if any quantum of the rent or interest of the assessee is allowable as expense in accordance with sections 30 to 44D of the Act and is not to be included in the profits of the business of the assessee as computed under the head Profits and gains of business or profession, ninety per cent of such quantum of the receipt of rent or interest will not be deducted under clause (1) of Explanation (baa) to section 80HHC. In other words, ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head Profits and gains of business or profession, is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business. In view of such decision, question No.3 raised by the Revenue gets automatically answered since the amounts referred to in the said question are to be excluded for the purpose of deduction under section 80HHC of the Act. Learned counsel for the Revenue vehemently contended that the ratio of the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra) cannot be applied to a situation where the exclusion from the claim of deduction relates to section 80HH or section 80-I of the Act. He strenuously urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80-I of the Act. He submitted that number of tax appeals have been admitted by this Court on this issue and this appeal may also be likewise admitted. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80-I of the Act. He submitted that number of tax appeals have been admitted by this Court on this issue and this appeal may also be likewise admitted. He drew our attention to the order dated 6.5.2013 passed by this Court in the case of Bloom Decor Ltd. in Tax Appeal No.447 of 2013 where at the instance of the assessee, similar question was not considered. On the other hand, learned counsel Shri Soparkar for the assessee, in addition to relying on the decision in the case of ACT Associated Capsules Pvt. Ltd. (supra), also placed heavy reliance on an order dated 30.11.2013 in Tax Appeal No. 213 of 2006 in the case of Rajoo Engineers Ltd. in which the Revenues appeal raising such a question came to be dismissed relying on the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). The counsel also relied on a decision of the Delhi High Court in the case of Essel Shyam Communication Ltd. v. Commissioner of Income tax, (2012) 28 taxmann.com 243 (Delhi), in which in detailed consideration, relying on the decision of the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra), exclusion was approved for deduction under section 80-IA of the Act. Having heard the learned counsel for the parties, we see no reason to entertain this tax appeal. The Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra) has already laid down the foundation for the logic for excluding the net profit and not the gross profit from the claim of deduction when it is found that the source of income does not quality for such deduction under section 80HHC of the Act. It is true that section 80HHC represents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduction under different situations depending on whether the exporter is also engaged in the local business or not. However, this distinction would not be material insofar as central question of exclusion of certain profit from the activity which is not eligible for deduction under section 80HH and 80-I are concerned. However, this distinction would not be material insofar as central question of exclusion of certain profit from the activity which is not eligible for deduction under section 80HH and 80-I are concerned. The logic being when the profit is being excluded form the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded. That is precisely how this Court in the case of Rajoo Engineers (supra) viewed the situation. That is how the Delhi High Court in the case of Essel Shyam Communication (supra) held referring to the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). It is true that in the case of Bloom Decor Ltd., a question was suggested by the assessee which may have some bearing on the controversy on hand. However, the entire focus of the order of the Court was regarding applicability of the decision of the Supreme Court in the case of Topman Exports (supra) and not on the question of netting. In any case, therein, the decision in the case of ACG Associated Capsules Pvt. Ltd. was not noticed." 6. The learned advocate for the revenue therefore, submitted that in view of the aforesaid decision, the same is not required to be contented. 7. As far as issue No. [B] is concerned, it is contended that the Tribunal has seriously committed error in setting aside the factual findings arrived at by the CIT (Appeals) and the assessing officer where the advances which were received was not for a particular unit. 8. Learned advocate appearing for the revenue contended that the order of the Appellate Tribunal is erroneous as the forfeiture of the advance is only for breach of contract and cannot be stated to have been 'derived from' from the running of eligible industrial undertaking. Learned advocate for the revenue further relied upon the decision of the Delhi High Court in case of Liberty India versus Commissioner of Income-Tax - [2009] 317 ITR 218 (SC) wherein in para 13 which reads as under: "13. Before analyzing section 80-IB, as a prefatory note, it need to be mentioned that the 1961 Act broadly provides for two types of tax incentives, namely, investment- linked incentives and profit linked incentives. Before analyzing section 80-IB, as a prefatory note, it need to be mentioned that the 1961 Act broadly provides for two types of tax incentives, namely, investment- linked incentives and profit linked incentives. Chapter VI-A which provides for incentives in the form of tax deductions essentially belong to the category of "profit linked incentives". Therefore, when section 80-IA/80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives. What attracts the incentives under section 80-IA/80-IB is the generation of profits (operational profits). For example an assessee-company located in Mumbai may have a business of building housing projects or a ship in Nava Sheva. Ownership of ship per se will not attract section 80-IB(6). It is the profits arising from the business of a ship which attracts sub-section (6). in other words, deduction under sub-section (6) at the specified rate has linkage to the profits derived from the shipping operations. This is what we mean in drawing the distinction between profit linked tax incentives and investment linked tax incentives. Ii is for this reason that Parliament has confined the deduction to profits derived from eligible business in sub-sections (3) to (11A) (as they stood at the relevant time). One more aspect needs to be highlighted. Each of the eligible business in sub-sections (3) to (11A) constitutes a stand alone item in the matter of computation of profits. That is the reason why the concept of "Segment Reporting" stands introduced in the Indian Accounting Standards (IAS) by the Institute of Chartered Accountants of Indian (ICAI). 9. She further relied upon the decision of the Delhi Court in case of Commissioner of Income Tax versus Jackson Engineers Ltd., [2012] 341 ITR 518 (Delhi). More particularly he relied upon the paragraph No. 23 and 24 which read as under: "23. After having considered the matter, we are of the view that the order of the AO as upheld by the CIT (A) on this aspect is correct in law. Having regard to the aforesaid judgment of the Supreme Court, the amount was to be treated as trading receipt and therefore, it has to be added as income of the assessee. The transferring of this amount to the capital reserve account unilaterally by the assessee by means of book entry was not an appropriate step. Having regard to the aforesaid judgment of the Supreme Court, the amount was to be treated as trading receipt and therefore, it has to be added as income of the assessee. The transferring of this amount to the capital reserve account unilaterally by the assessee by means of book entry was not an appropriate step. The following observations in T.V. Sundaram Iyengar & Sons Ltd. (supra) needs to be highlighted: "...If a common sense view of the matter is taken, the assessee, because of the trading operation, had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally was not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time-barred and the amount attained a totally different quality. It became a definite trade surplus. In Jay's case it was pointed out that in Tattersall's case (1939) 7 ITR 316 (CA) no trading asset was created. Mere change of method of book-keeping had taken place. But, where a new asset came into being automatically by operation of law, common sense demanded that the amount should be entered in the profit and loss account for the year and be treated as taxable income. In other words, the principle appears to be that if an amount is received in course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee." 24. Once it is treated as business income, the question is as to whether deduction could be claimed under Section 80IA of the Act. Here again, we find that CIT (A) rightly held that it was not derived from any goods or services produced by the said unit and it arose from the absence of any goods having been produced and supplied by Daman Unit. Ratio of liberty would, therefore, be applied squarely. " 10. Here again, we find that CIT (A) rightly held that it was not derived from any goods or services produced by the said unit and it arose from the absence of any goods having been produced and supplied by Daman Unit. Ratio of liberty would, therefore, be applied squarely. " 10. Learned advocate appearing for the respondent supported the impugned order and submitted that the Tribunal has rightly observed in holding that deduction under Section80IA was allowable in respect of an amount of Rs.46,18,021/- which was towards forfeiture of advance. He submitted that the present appeal lacks merits and therefore deserves to be dismissed. 11. We have considered the argument of the revenue. Looking to the fact that advances were taken from the customers and on receipt of advance deposit, the assessee company commences manufacturing of such specific equipments for which expenditure in excess of the advance deposit received has to be incurred by the assessee company. In case, when the customer fails to take the delivery due to his inability to pay the balance price of equipment manufactured, the assessee company has already incurred huge expenditure for manufacturing such equipments which cannot be sold to any other customer for the reasons that the same has been manufactured as per specific requirement of the customer who has placed order. The assessee had to incur loss in this regard. If the expenses are not allowed, it will be contrary to well settled principles. He must get the deduction from the expenses for which he has received the advance. Further, the decisions which have been relied upon by learned advocate for the revenue will not apply in the facts of the present case since the amount which has been received by the assessee is for the same unit of which they have commenced manufacturing. 12. Having heard learned advocates for the revenue and the question posed for consideration for us reproduced hereinabove and considering the decisions cited, the question which is raised in the present appeal is required to be answered in favour of the assessee. 13. In view of the above, the question raised in the present appeal is answered in favour of the assessee and against the revenue and consequently, the impugned judgment and order passed by the ITAT is confirmed. Hence, the present Tax Appeal is dismissed.