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2019 (7) TMI 1370 - BOMBAY HIGH COURTDeduction u/s 80HHC - exclude 90 % of ‘net' interest income excess of interest received or paid provided there is direct nexus between interest earned and paid after establishing the fact that all the interest income except the interest on income tax is forming part of the profits of the business and not income from other sources - HELD THAT:- The learned Counsel for the parties agree that these substantial questions of law be taken up for consideration together. Both the learned Counsel have further agreed and jointly submit that this issue stands covered by the Judgment of the Apex Court in the case of ACG Associated Capsules Pvt. Ltd. v/s. The CIT [ 2012 (2) TMI 101 - Supreme Court] in favour of the Respondent-Assessee and against the Revenue. Therefore, the substantial questions of law at (I), (II), (V), (VII) and (VIII) are answered against the Revenue and in favour of the Respondent-Assessee. Taxability of interest income - ‘Interest on bank deposits, inter-corporate deposits, debentures, from sister concerns and ‘other interest' is forming the part of the head “Profits and gains of business or profession” - HELD THAT:- This question stands answered in favour of the Assessee and against the Revenue in the decision of a Division Bench of this Court in assessee own case [2014 (9) TMI 1195 - BOMBAY HIGH COURT] wherein it was held that the money of the company was used for making investment in the bank deposits or call money market or inter-corporate deposits with the objective for availing short term loans or for keeping deposits for the purpose of LC's and said money had always retained its character as business assets. In our opinion, the surplus money, unless and until it is pulled out totally from the business and having absolutely no nexus with the amount or ancillary business activity and thereby the same is deposited with the bank only and solely with a view of earning interest by keeping the said funds idle, then it can be treated as non- business income or income from the other sources Computation of sec 80HHC deduction - Receipts on account of ‘professional services' and ‘proceeds from electronic data processing' - whether are not income falling within the exclusionary provisions of clause (baa) of Explanation to section 80HHC, is right in law? - HELD THAT:- The question of law has, in fact, been answered in favour of the Revenue in the case of Sesa Goa Ltd. vs. The CIT [2015 (5) TMI 621 - BOMBAY HIGH COURT] TDS u/s 195 - applying the provision of Section 172 in holding that section 40(a)(i), is not applicable - HELD THAT:- There is no dispute that the issue stands covered by the ruling of the Full Bench of this Court in assessee own case [2016 (2) TMI 308 - BOMBAY HIGH COURT] .This substantial question of law is, therefore, to be answered in favour of the Assessee and against the Revenue.
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