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2015 (8) TMI 465 - HC - Income TaxIncome arising out of interest - whether cannot be taken into account for the purpose of giving benefit under section 33AB as held by Tribunal? - Held that:- It is not in dispute that the surplus commercial funds available with the company were kept in short- term fixed deposits. The company has borrowed funds for the purpose of carrying on its business. The funds may not always be necessary or may not always be blocked. Therefore, the funds which were surplus at any point of time were fruitfully invested in short-term fixed deposits and the assessee thus earned interest which in a way has reduced its burden on account of interest as would appear from the two figures indicated above. It is, therefore, not possible to hold that the interest earned was not a business income. When the assessee has paid interest of nearly ₹ 2.66 crores and has earned interest of nearly ₹ 1.88 crores, the effective debit on that side is less than ₹ 1 crore. No reason why it can be said that the interest earned by the assessee should not be treated as the business income for the purpose of the benefit under section 33AB. Another reason why the views expressed by the Tribunal cannot be accepted is that the benefit under section 33AB can be obtained provided the assessee has made the deposits with the national bank. Such deposits are not interest-free deposits. Interest also accrues from such deposits. If the intention of the Legislature was that income arising out of interest is to be excluded then a specific provision in that regard would have been made in the section itself. - Decided in favour of the assessee.
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