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2015 (3) TMI 793 - AT - Income TaxDeduction u/s 36(1)(viii) disallowed - computation of deduction under Chapter VI-A - Nexus with income chargeble as income from other sources - nexus of investment in such bonds with the interest bearing or interest free bonds - CIT(A) restored the deduction u/s 36(1)(viii) to the amount as claimed by the assessee - case of the Revenue is that since the amount of ‘Reserves and surplus’ appearing in the assessee’s balance sheet is more than the investment made in the UP State Bonds, etc. which fetched interest income of ₹ 10.41 crore, and the amount of interest bearing advances being more than the interest bearing loans, the presumption should be drawn that such investments were financed by the assessee out of its capital and reserves and not from any interest bearing funds. And as such, the claim for deduction of interest and other charges amounting to ₹ 145.66 crore is untenable. Held that:- There is no discussion in the assessment or the impugned order as to the nexus of investment in such bonds with the interest bearing or interest free bonds. The AO has gone with the figures of the current year to hold that interest bearing advances are more than the interest bearing loans. On the other hand, the contention of the assessee is that investment in such bonds were made in earlier years and that too out of interest bearing funds. The ld. CIT(A) has simply held that since deductions under Chapter VI-A are to be done on net basis, the assessee deserves relief. He failed to note that the question under consideration was not about the calculation of the amount of deduction under Chapter VI-A, but the computation of income under the head `Income from other sources’, for which there is a separate scheme set out in Chapter IV-F of the Act. Under such circumstances, we cannot sustain the view canvassed by the ld. CIT(A). Accordingly, the impugned order is set aside and the matter is sent back to the AO for deciding this issue afresh to find out the source of the amount invested in such funds, at the time when such investments were made. - Decided in favour of revenue for statistical purposes.
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