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2017 (5) TMI 716 - AT - Income TaxSet off of unabsorbed depreciation pertaining to A.Y. 2000-2001 and A.Y 2001-02 from income under the head “income from other sources” - Held that:- It is the amended section 32(2) of the Act that shall apply in relation to unabsorbed depreciation pertaining to A.Y. 2000-01 and A.Y 2001-02 and the restriction of 8 years which was in force till the law was amended by the Finance Act 2001 does not apply. In the instant case, it is not in dispute that the unabsorbed depreciation pertaining to A.Ys 2000-01 and 2001-02 have not been set off in the earlier years and the same is being carried forward to the year under consideration for being set off. In light of above, ground taken by the Revenue is dismissed. Maintainability of appeal - Held that:- It cannot be said that issue relating to set off of unabsorbed depreciation doesnt arise from the assessment order. At the same time, as far as governing law relating to set off for the year under consideration is concerned, the same is allowed as we have held above that it is the amended section 32(2) as amended by the Finance Act 2001 that will apply. In the result, ground no. 2 of assesses’s cross objection is partly allowed. Interest income earned - ‘Income from Business’ OR ‘Income from other sources’ - Held that:- What is relevant to examine is whether advancing of funds by way of interest bearing loan is one of the activities which has been regularly carried by the assessee as part of its business activities or not. And where such activities are not part of the regular business activities carried on by the assessee, what is the business expediency of advancing funds to the third parties. The next question that arise for consideration is the funds that have been advanced and whether the same have been advanced from borrowed funds as claimed by the appellant or internal surplus funds as available with the assessee and how the necessary nexus is established between the two. The ld AR has submitted that these advances were made in earlier years as is evidenced from copy of accounts submitted herewith along with Bank statement showing source of advance being from C.C A/c of Bank and thus they are not short term advances but are long term advances. There is no such finding of fact by the lower authorities in this regard. In our view, these are the matters which required further examination and we deem it fit to set aside the matter to the file of the AO to examine the same afresh.
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