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2016 (5) TMI 1470 - AT - Income TaxDeduction u/s 80IC on interest earned on FDR - interest income netted off with interest expenditure incurred by the assessee - Held that:- The assessee has claimed that the interest income earned by him on FDRs are linked with the business of the assessee and therefore they should be netted off with interest expenditure incurred by the assessee. Most of the fixed deposit receipts are for the purposes of obtaining bank guarantee for the purposes of the business of the assessee. CIT (A) has himself held that Interest earned on FDR placed as margin money for securing letter of credit from bank. Assessee has placed balance sheet on record which shows that assessee has only borrowed funds such as secured loan, unsecured loan and partners capital which is also a borrowings because interest is allowable as expenditure on this sum it might not have claimed such expenditure during the year. It does not have its own reserve and surplus which does not carry interest. All FDRs have been taken from C C account, used for the bank guarantee purposes as submitted by AR, and not disputed by the Ld DR. Interest Income on FDR is also taxed by the AO as business income. It is also apparent that assessee does not have any other business other than the business of eligible undertaking. Further CIT (A) has rejected the reliance on all the decided case laws by the assessee holding that those cases pertain to Section 80 HHC not on section 80IA of the act. Deduction u/s 80IC is allowed from the income derived from industrial undertaking. Therefore, we do not find that word “derive “can have different meaning for these two sections. In view of this we hold that all those decisions relied by the assessee squarely applies to the facts of the present case as far as the issue of netting off the interest is concerned. In view of this, the ground of the assessee so far as netting off the interest income of ₹ 302269/- is allowed and order of CIT (A) is reversed to that extent. - Decided in favour of assessee.
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