Is deduction u/s 10A of the Income Tax Act given to the “profits and gains derived by an undertaking”?

IN THE INCOME TAX APPELLATE TRIBUNAL
“A’’ BENCH: BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER

 ITA No.153/Bang/2017
 Assessment Year : 2012-13

Ocwen Financial Solutions Pvt. Ltd.
Pritech Park, Survey No.51 to 64/4
Block No.12, 5th Floor of B Wing & 6th Floor of
A Wing, Bellandur village, Marathahalli Ring
Road, Bengaluru 560 103
PAN NO : AAACO3764E
APPELLANT 

Vs.

ACIT Circle5(1)(2)
Bengaluru
RESPONDENT

ITA No.2292/Bang/2019
 Assessment Year : 2010-11

Ocwen Financial Solutions Pvt. Ltd.
Bangalore 
APPELLANT 

Vs. 

JCIT Spl.Range-5
Bangalore
RESPONDENT

Appellant by : Shri K.R. Vasudevan, A.R.
Respondent by : Ms. Neera Malhotra &
Shri Kannan Narayanan, D.Rs

Date of Hearing : 23.06.2021
Date of Pronouncement : 12.07.2021

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER: 

The assessee has filed these appeals relating to AY 2010-11 and 2012-13. The appeal filed for AY 2010-11 is directed against the order dated 30-08-2019 passed by Ld CIT(A)_10, Bengaluru. The appeal filed for AY 2012-13 is directed against the assessment order dated 23-11-2016 passed by the assessing officer u/s 143(3) r.w.s 144C(13) in pursuance of directions given by Ld Dispute Resolution Panel (DRP). 

2. The assessee is engaged in the business of providing IT enabled services (ITES), i.e., providing backend operations like payroll processing, document imaging, loan accounting etc., to its Associated Enterprises (AE). The assessee herein is a wholly owned subsidiary of M/s Ocwen Asia Holdings Limited, Mauritius.

3. We shall first take up the appeal filed for AY 2010-11. Only issue urged in this appeal is whether the Ld CIT(A) was right in law in holding that the interest income earned from deposits kept in banks for availing bank guarantees is assessable under the head “Income from other sources”.

4. This is second round of proceedings. In the earlier round, the Tribunal has restored this issue to the file of AO, vide its order dated 19-05-2017 passed in ITA No.863/Bang/2016. The Tribunal directed the AO to determine the purpose for which the deposits were kept in banks and decide the issue on the basis of ratio laid down in the case of Motorola India Electronics Ltd (2014)(225 Taxman 11) by Hon’ble Karnataka High Court. The relevant observations made by the Tribunal in the first round are extracted below:- 

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