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2015 (7) TMI 40 - AT - Income TaxDeduction u/s 80HHBA - interest income from bank’s fixed deposit, kept as margin money for guarantees - Held that:- In the present case, it is noticed that the AO while disallowing the claim of the assessee categorically stated that the assessee had not furnished the details of FDR at the opening of the year i.e. on 01.04.2001, made during the year and encahsed during the year. He also stated that the assessee had not reconciled against which FDRs, the guarantees were provided to the Principal Contractee. At the same time, it is nowhere stated that the assessee had not made the FDRs for issuing bank guarantee in favour of principal client viz., NJPC, for the award and execution of the contract. The ld. CIT(A) also held in para 7.1 of the impugned order that the interest income earned on FDR was the business income and once it is held that it was the business income, the assessee becomes eligible for deduction u/s 80HHBA of the Act. However, the ld. CIT(A) in para 7.4 of the impugned order has given a contradictory finding by stating that the aforesaid interest income cannot be said to be derived from execution of housing project. Therefore, the facts are not clearly brought on the record by the AO and contradictory findings have been given by the ld. CIT(A). In that view of the matter, we deem it appropriate to remand this matter relating to the deduction u/s 80HHBA of the Act, on account of the interest, back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. As regards to the observations of the ld. CIT(A) that the interest earned on claims settled by Dispute Review Board, was related to the claims on account of work done by the assessee for the housing project is concerned, nothing contrary was brought on record to rebut the same. We, therefore, do not see any infirmity on this issue in the order of the ld. CIT(A). Accordingly, the direction for allowing the deduction u/s 80HHBA of the Act on the interest received by the assessee on the claims settled by the DRB during the year under consideration, is upheld. As regards to the issue relating to the bank guarantee commission paid to the bank, we are of the view that it was directly related with the FDRs made for giving guarantee for getting contract, therefore, the ld. CIT(A) rightly directed the AO to allow the deduction of these expenses from the interest earned on the FDR. - Decided in favour of assessee for statistical purposes
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