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2015 (8) TMI 417 - AT - Income TaxPenalty u/s. 271(1)(c) - interest receipt consequent to the denial of deduction u/s. 10B claimed by the assessee - Held that:- In the facts of the present case, the interest income stands earned on deposits placed with the bank/s for fixed term/s (FDRs) and inter-corporate deposits (ICDs). The A.O. has further given a categorical finding of the interest income, which is even otherwise apparent, i.e., from the manner in which it is being derived, as having no direct relationship with the assessee’s business activity. AR on this being pointed out during hearing, i.e., that the interest income stands specifically assessed u/s.56, i.e., as income from other sources, for A.Y. 1997-98, would submit that it stands assessed as business income for the subsequent two years. Further, the tribunal vide its order for A.Y. 2000-01 held that in light of the fact that the assessee is entitled to relief u/s.10B of the Act on its receipt, it becomes naturally entitled to deduction there-under on the interest income. We find little merit in the assessee’s said contention in view of the undisputed facts of the case, i.e., of the interest income in the undisputed facts of the case arising out of bank FDRs and ICDs. In fact, the A.O.’s finding that the same has no nexus with the assessee’s business, remains unchallenged. Rather, the assessee’s plea in the appellate proceedings was for the netting of the interest income in-as-much as the assessee had also paid interest. While the interest income stands specifically assessed as income from other sources for A.Y. 1997-98, there is no head-wise classification of the income for A.Y. 1998-99, which though cannot be read to imply or mean that the said income stands assessed as business income, particularly considering the clear finding/s in the matter and the undisputed facts of the case. For A.Y. 1999-2000, again, there is a clear reference by the A.O. to the reasons mentioned by him in the assessment order for A.Y. 1998-99, the immediately preceding year. In fact, the A.O., and only rightly, has gone further to state that the interest income could not be regarded as derived from the assessee’s business That is to say, that the interest income does not form part of the assessee’s business, the same could not in any case be said to be derived there-from, a condition precedent for the income of the assessee’s export business from being eligible for deduction u/s. 10B. Penalty u/s. 271(1)(c) confirmed - Decided against assessee.
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