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2013 (1) TMI 929 - AT - Income TaxInterest on Fixed Deposits - Netting of interest income on FD with interest expenses on borrowings for setting up of business u/s 57(iii) - Assessee had obtained large amount of secured loan, out of which it had invested an amount in FD in banks, from which it had earned interest. Since the assessee had not commenced business operation, the AO was of the view that the said amount of interest earned on that FDS in banks, is taxable as income under the head ‘income from other sources.’ - HELD THAT:- The interest income earned during the year by the assessee, from the FDs made out of borrowed funds was rightly taxed by the AO. Interest payable on borrowed funds has no connection with the receipt of interest. The interest payable on the loans out which the FDs were made is not allowable as deduction u/s 57(iii). Decision in the case of TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD VERSUS COMMISSIONER OF INCOME-TAX [1997 (7) TMI 4 - SUPREME COURT], relied upon. Decided against the assessee.
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