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2018 (1) TMI 1709 - AT - Income TaxDeduction u/s 80IB - exclusion only the net interest income after adjusting the interest expenditure from the profit eligible for deduction - HELD THAT:- It is observed that the case of Spring Merchandisers Pvt. Limited [2012 (8) TMI 1215 - ITAT AGRA] decided by the Agra Bench of this Tribunal and cited by the ld. D.R. is distinguishable on facts, inasmuch as, the interest income earned on FDRs in the said case was held to be chargeable to tax under the head “income from other sources” while interest expenditure constituted the business expenditure of the assessee. In these facts and circumstances of the case, it was held by the Tribunal that netting of the income under one head of income against expenditure under the different head of income is not possible as per law. In the present case, interest income was offered by the assessee to tax as business income and even the interest expenditure was also claimed under the same head as business expenditure. As regards the case of Asian Cement Industries [2013 (1) TMI 178 - JAMMU AND KASHMIR HIGH COURT] cited by the ld. D.R., it is observed that even though the issue relating to the netting off interest was raised as question no. 3, the same apparently was not decided by the Hon’ble Jammu & Kashmir High Court specifically by giving any finding or conclusion. On the other hand in the case of CIT –vs.- Warren Tea Limited [2015 (8) TMI 465 - CALCUTTA HIGH COURT] relied upon by the ld. CIT(Appeals) in his impugned order has upheld the principle of netting off of interest income against interest expenditure and although the said decision of the Hon’ble jurisdictional High Court was rendered in the context of computing business income of the term manufacturing unit as per Rule 8, we are of the view that the same analogy can justifiably be applied even in the present case to hold that only net interest income after adjusting the interest expenditure is liable to be excluded while computing the profit eligible for deduction under section 80IB. Business of the assessee as eligible for deduction under section 80IB. Disallowance under section 14A read with Rule 8D only on the investment in shares of Punjab National Bank
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