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Section 32AB of the Income-tax Act, 1961 - Investment deposit allowance - Assessment year 1988-89 - Whether in view of ratio laid down in case of CIT v. Tamil Nadu Mercantile Bank Ltd. [2002] 255 ITR 205/[2003] 126 Taxman 45 (Mad.), Tribunal was right in law in holding that interest received on temporary deposits with scheduled banks, interest received on deposit for allotment of car and dividend received from company were to be excluded while computing income from eligible business under section 32AB - Held, yes CASE REFERRED TO CIT v. Tamil Nadu Mercantile Bank Ltd. [2002] 255 ITR 205/[2003] 126 Taxman 45 (Mad.) [Para 2]. J. Narayanasamy for the Appellant. JUDGMENT P.D. Dinakaran, J. - Heard. The appeal is preferred against the order of the Income-tax Appellate Tribunal, Madras Bench "C", dated September 11, 2002 in I.T.A. No. 2135/MDS of 1993. 2. The assessee is a widely held company. For the assessment year 1988- 89, the assessee filed a return of income on July 28, 1988 declaring a total income of Rs. 30,84,820. The assessment was completed on December 29, 1988 determining the total income at Rs. 92.02 lakhs. The Commissioner of Income-tax, Tamil Nadu-II, exercising power under section 263 of the Income-tax Act had set aside the original assessment dated July 28, 1988, by giving directions to the Assessing Officer to reconsider the working of relief/deduction under section 32AB of the Act. Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), who held that the Assessing Officer has acted upon the direction issued by the Commissioner of Income-tax under section 263 of the Income-tax Act. Accordingly, the Commissioner of Income-tax (Appeals) partly allowed the appeal for the assessment year 1988-89, against which the assessee preferred an appeal before the Income-tax Appellate Tribunal for the assessment year 1988-89. The Tribunal following the decision in CIT v. Tamil Nadu Mercantile Bank Ltd. [2002] 255 ITR 2051 (Mad.) allowed the appeal. Hence, the Revenue preferred the above appeal on the following substantial question of law : "Whether, on the facts and circumstances of the case, the Tribunal was right in…

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