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2010 (8) TMI 785 - HC - Income TaxWhether ITAT was correct in law in allowing benefit of netting of interest to the assessee while computing deduction under section 80HHC of the Act? Held that:- Furnishing of the fixed deposit receipts is an obligation, and is a pre-condition for obtaining export quota in the absence of which exports cannot be made. In such a scenario, the furnishing of these bank guarantees is a direct nexus with the export activities of the assessee and interest earned thereupon would clearly be treated as having an immediate nexus with the export business. Once this position is accepted, as per the formulation of principle laid down in Shri Ram Honda Power Equip’s case (2007 (1) TMI 86 - HIGH COURT, DELHI) itself, netting has to be allowed by the adjustment of aforesaid interest received against the interest paid by the assessee to the bank on the credit facilities availed as is clear from the conclusion No. 8 in the judgment. We, accordingly, concur with the aforesaid view of the ITAT and thus, answer the question in favour of the assessee and against the revenue.
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