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2022 (9) TMI 1258 - HC - Income TaxExpenditure incurred by the appellant in connection with the public issue of share application - setting off interest against expenses on public issue - Whether not to be deducted from the interest received on the share application monies from the banks? - whether interest accrued on account of deposit of share application money is taxable income at the hands of the assessee? - HELD THAT:- If money is deposited in the bank for the purpose of earning interest and accordingly interest is earned, then it is liable to be taxed as income from other sources. But, if the interest income accrued is merely incidental and not the prime purpose of earning interest income which resulted into accrual of some additional income, then such income is not liable to be assessed; eligible to be claimed as deduction. Applying the above ratio, Supreme Court Shree Rama Multi Tech Ltd. [2018 (4) TMI 1374 - SUPREME COURT] held that if the share application money received is deposited in the bank in the light of statutory mandatory requirement then the accrued interest is not liable to be taxed and would be eligible for deduction against public issue expenses. On the above basis, Supreme Court held that interest income earned out of the share application money is liable to be set off against the public issue expenses. On thorough consideration of all aspects of the matter, we are of the view that the above decision of the Supreme Court in Shree Rama Multi Tech Ltd. [2018 (4) TMI 1374 - SUPREME COURT] is squarely applicable to the facts of the present case. Accordingly, we answer the substantial question of law framed in favour of the assessee.
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