J U D G M E N T

S.VAIDYANATHAN,J., and C.SARAVANAN,J., This Tax Case Appeal has been directed against the order of the Income Tax Appellate Tribunal, 'D' Bench (in short 'the Tribunal), Chennai dated

28.02.2007 made in I.T.A.No.1389/Mds/04.

2. On 22.10.2007, this Court admitted this Appeal along with T.C.A.Nos.1267 to 1269 and 1272 of 2004, on the following Substantial Questions of Law:

"(1) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in holding that clause (baa) to the Explanation to Section 80 HHC applies to the income from interest and 90% thereof has to be excluded?

(2) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that clause (baa) to the Explanation to Section 80HHC applies to the income from rent and 90% thereof has to be excluded?

(3) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal is right in law in not considering the appellant's claim for relief under Section 80HHC in respect of the income from lease and whether the Tribunal ought not to have decided the said issue in favour of the appellant?"

2. The Appellant had suffered adverse order in the 1st round itself. The Tribunal vide Judgment dated 19.09.2001 in I.T.A.No.1359/Mds/94 for the Assessment Year 1992-1993, has remanded the case to the Assessing Officer with the following observations:

".... In out considered opinion all these judgements are not applicable to the facts and circumstances of the present case as the question of relief u/s 80HHC has not been considered in those cases, which is the subject matter of appeal before us. As the decisions relied upon by the Ld.D.R. are distinguishable on facts and are not applicable to the facts and circumstances of the present assessee's case, we allow this issue in favour of the assessee. The orders of the authorities below are set aside and we direct that deduction under Section 80 HHC should be allowed first and only thereafter unabsorbed depreciation be carried forward from earlier year's set off, as prayed for by the assessee. Accordingly the appeal of the assessee with regard to ground No.1 is decided in favour of the assessee and against the Revenue."

3. The aforesaid order of the Tribunal was also given effect to by the Deputy Commissioner of Income Tax on 05.06.2003 which was taken on Appeal before the Assistant Commissioner by the Assessee/Appellant and against the adverse order passed by the Appellate Commissioner a further Appeal before the Tribunal. The Tribunal by following the Judgment of Hon'ble Supreme Court in the case of IPCA Laboratories Ltd. V. DCIT (266 ITR 521). The same view has also been taken by the Karnataka High Court in the case of J.K.Industries Ltd. V. Assistant Commissioner of Income Tax in reported in 351 ITR 434 (Karnataka) has dismissed the Appeal vide order dated 28.02.2007, which is impugned in the present Appeal.

4. Though the present Appeal was admitted on the Substantial Questions of Law, stated supra, when the matter is taken up for hearing, the learned counsel appearing for the Appellant would submit that the issue attained finality in terms of the order of the Appellante Tribunal in the 1st round vide order dated 19.09.2001 in I.T.A.No.1359/Mds/94. The learned counsel for the Appellant placed reliance on the order of the Division Bench of this Court in the case of Seshasayee Paper & Boards Ltd. Vs. Inspecting Assistant Commissioner reported in (1986) 24 TAXMAN 604 (MAD). In this case a reference was made to paragraph 8, which is extracted hereunder:

“8.When the Income-tax Officer gave effect to the direction of the Tribunal by making the computation by order dated December 7, 1977, undoubtedly he had correctly interpreted the order that, according to the Tribunal, the assessee was entitled to the benefit of section 80J. The attempt on the part of the Inspecting Assistant Commissioner now to take away the relief under section 80J virtua