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2014 (7) TMI 1313 - HC - Income TaxDeduction u/s 80IB - interest earned by the assessee on account of fixed deposits was also made from out of the borrowed fund - CIT(A) allowed an appeal preferred by the assessee holding, inter alia, that the interest earned by the assessee on account of fixed deposits was also made from out of the borrowed fund as endorsed the views of the CIT(A) - HELD THAT:- In the present case it is difficult to say that the interest earned by the assessee from the buyers of the goods on account of delayed payment of the sale proceeds does not have any direct nexus with the business of the assessee. Similarly, the interest received by the assessee on account of fixed deposits made for the purpose of providing margin money to the lending bank also has a direct nexus because the finding of the CIT (A) is, which is not disputed before us, that for the purpose of making such deposit the assessee had also borrowed money from the bank. The resultant effect is that if a deposit of ₹ 10/- is to be made by way of margin money for borrowing ₹ 100/-, the assessee has to borrow ₹ 110/- out of which ₹ 100/- can be used for his business and ₹ 10/- can be invested by way of margin money. When he is paying interest for ₹ 110/- and receiving interest on the amount of ₹ 10/-, it can only be said that he is really paying interest for ₹ 100/- which he originally needed for the business. The income arising out of the deposit made by him is, therefore, his business income. We are of the opinion that the CIT (A) and the tribunal have taken a possible view. There is no reason for us to interfere. The appeal is, therefore, dismissed.
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