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2013 (12) TMI 1251 - HC - Income TaxWhether interest income earned on surplus amount of funds involved in FDRs be treated as business income - Held that:- Following Totgar's Co-operative Sale Society Ltd v. Income-Tax Officer [2010 (2) TMI 3 - SUPREME COURT] - The interest on the FDRs cannot be treated as income from profits and gains of business - The word 'income' has been defined in Section 2 (24) (i) of the Act to include 'profits and gains'. Sub-section is an inclusive. The business profits have been specifically included in the word 'income' - The assessee-company had invested the surplus funds, which were not immediately required by it, in FDRs, which were later on encashed and used for expansion of business - The deposits made by the company were not in the regular course of business, nor it was the business of the company to make deposits and earn interest - The interest income cannot be said to be attributable to the activities of the company. The interest had accrued on the funds, which were not immediately required by the assessee-company for its business purposes and which were invested in FDRs - The assessee company is engaged in the business of manufacture of oxygen and nitrogen gas; re-rolling of steel; and fabrication of railway wagons. The surplus profits retained by the company were kept in FDRs - The interest earned on such income was not earned out of business regularly carried out by the assessee company - Decided in favour of Revenue. Deduction u/s 32AB of interest earned on FDRs - Held that:- The AO had rightly disallowed the deductions under Section 32AB out of the interest income treating the same as income from other sources - Decided in favour of Revenue.
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