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2019 (1) TMI 473 - HC - Income TaxInterest on the Fixed Deposits Receipts (‘FDRs’) in bank and Inter-Corporate Deposits (‘ICDs’) with sister concerns earned by assessee - taxable under the head ‘income from other sources’ OR ‘business income’ - not allowing deduction of the interest paid from interest received - Held that:- Papers and documents referred to in the impugned order, have not been filed before us to show any incongruity and perversity in the factual and consequently in the legal finding. Accordingly, we do not think that the Assessing Officer and the First Appellate Authority were justified in not allowing deduction of the interest paid from interest received. Interest of ₹ 1,78,03,962 /- cannot be deducted/set-off from interest paid at the performance guarantees for the two blocks were given by the respondent- assessee. Interest earned on the FDRs obtained to procure the performance bank guarantees was connected with the two oil blocks. The Tribunal has mentioned that the Commissioner of Income Tax (Appeals) had allowed deduction under Section 35D thereby indirectly accepting that assessee had commenced business. the assessee had advanced more than ₹ 12.11 Crores to M/s Jubilant Capital Private Limited in furtherance to the business transfer agreement to meet the cash calls for participatory interest in the Ankleshwar Block. Thus, the finding that the business was ‘set up’ has sufficient backing and support from the material and evidence referred to in the impugned order. In any case, this objection regarding ‘commencement of business’ loses much significance and importance in view of the direct nexus between interest paid and interest received on ICDs. Interest paid to earn interest has to be allowed as a deduction under Section 57 of the Act. - Decided against revenue.
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