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2014 (7) TMI 676 - ITAT DELHIDeduction u/s 80IB of the Act – Income from other sources - Interest earned on FDRs not derived from eligible undertaking – Held that:- The decision in CIT Vs. Shri Ram Honda Power Equip [2007 (1) TMI 86 - HIGH COURT, DELHI] - in deducting such interest, the AO will take into account the net interest, i.e., gross interest as reduced by expenditure incurred for earning such interest, (ix) Where, as a result of the computation of profits and gains of business and profession, the AO treats the interest receipt as business income, then deduction should be permissible, in terms of Explanation (baa) of the net interest i.e., the gross interest less the expenditure incurred for the purposes of earning such interest - The nexus between obtaining the loan and paying interest thereon (laying out the expenditure by way of interest) for the purpose of earning the interest on the fixed deposit, to draw an analogy from section 37, will require to be shown by the assessee for application of the netting principle - there has to be nexus between the payment of interest and earning of interest - CIT(A) only compared between the interest received and interest payment – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO to examine the nexus between the borrowed money and money utilized for the purpose of earning interest income – Decided in favour of Revenue.
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