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2007 (10) TMI 650 - HC - Income TaxDenial of Rectification Application - Business income Vs. Other sources - Deduction u/s 80HHC - Interest received on FDRs - availing credit facilities - Whether the Tribunal was correct in law in holding that the assessee is entitled to reduce interest paid by it from the interest received by it, while calculating deduction u/s 80HHC(3A) read with Explanation (baa)? - HELD THAT:- Nowhere in the assessment order has the Assessing Officer found that the interest earned by the assessee was business income. Therefore, the first question stands answered against the assessee in view of the categorical pronouncement in Shri Ram Honda Power Equip.’s case that interest earned on FDRs kept for availing credit facilities is not business income but ‘income from other sources.’ The decision in Punjab Stainless Steel Ind.’s [2007 (1) TMI 543 - DELHI HIGH COURT] case where the AO had held the interest income to be business income and which finding was not challenged is, therefore, of no assistance to the assessee. Also, in view of the finding by the AO in the instant case that there is no nexus between the interest paid and the interest earned by the assessee, the second question will also have to be answered against the assessee. Thus, the question of law as re-framed by us, is answered in the affirmative, that is, against the assessee and in favour of the revenue. The appeal is dismissed.
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