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2013 (11) TMI 563 - AT - Income TaxDeduction u/s 10AA/10A - Netting of interest income and expenditure - Nexus of interest income and expenditure - Held that:- it is settled position in law that interest income is to be assessed as income from other sources and not under the head business income for the purpose of deduction under Section 10AA/10A. However, this issue in respect of netting i.e. interest income and expenditure income has to be netted of, if there is a nexus. There is no dispute in respect of nexus as the interest income earned by the assessee is earned on FDs kept with the bank as margin money against credit facility - If after netting of interest it is found that interest income is more than then the surplus income has to be treated as income from other sources and if interest expenditure is more than the interest income, then no deduction is to be made while calculating deduction under Section 10AA/10A. Disallowance u/s 36(1)(iii) - Interest attributed to capital borrowed for purchase/acquisition of assets - Held that:- Under the provisions of section 36(1)(iii), any interest on borrowings made for acquisition of assets for extension of existing business is required to be capitalized till the asset is first put to use - Authorities below have proceeded with the presumption that the assets had been acquired from borrowed funds. However, no basis for such finding has been given. The assessee has pointed out that most of the payments had been made in earlier years in which year there was no disallowance of interest. Therefore, in the earlier years, the payments were made from own funds - source of current payment is easily explained from own funds. Therefore, when the payment for acquisition of assets have been made from own funds, there cannot be any case of disallowance of interest - Decided in favour of assessee. Deduction u/s 10AA - Services under SEZ rules - Whether 'trading' is covered by the term 'services' - Held that:- assessee is engaged in trading of re-export of imported goods and, therefore, the assessee is entitled for deduction under Section 10AA - SEZ Act under Section 51, it has been clearly provided that the provision of SEZ Act will override the provision of any other Act, meaning thereby the provision provided under the SEZ Act has to override on the provision of Section 10AA of the Income Tax Act. Under the rules, it is not provided but under Section 51 of the SEZ Act - Following decision of CIT Vs. Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - Delhi High Court] and Deputy Commissioner of Income-tax, Circle-2 Versus Goenka Diamond & Jewellers Ltd. [2012 (3) TMI 258 - ITAT JAIPUR] - Decided in favour of assessee.
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