TMI Blog2008 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment year 2001-02. 2.The question that has arisen for our consideration is whether the assessee is entitled to reduce the interest paid by it on a loan taken by it from the Bank of Rajasthan, by adjusting the interest received by it on fixed deposits which were pledged with the Bank of Rajasthan for obtaining the loan. 3.It appears to us that the matter is fully covered by the decision of this court in CIT v. Shri Ram Honda Power Equip [2007] 289 ITR 475 and that no substantial question of law arises. 4. In paragraphs 35 and 36 of the above decision, this court has considered two categories of fixed deposits taken by the assessee. The first category is fixed deposits taken by the assessee for the purposes of parking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome given by the assessee. Therefore, we are proceeding on the basis that the income earned by the assessee on the fixed deposits receipts pledged with the Bank of Rajasthan are required to be treated as business income in view of the assessment order passed in the case of the assessee. 7. The second question that would arise, as a result of the decision of this court, is whether the deduction claimed by the assessee on the interest d from these fixed deposits can be adjusted against the interest paid by the assessee to the Bank of Rajasthan in view of Explanation (baa) to 80HHC of the Income-tax Act, 1961. 8 In paragraph (ix) of the decision rendered by this court under the heading "Conclusions", it has been held as follows "Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. 12 It has been mentioned in paragraph 3 of the order passed by the Tribunal that the Commissioner of Income-tax (Appeals) had held that the fixed deposits pledged by the assessee were a part of the business assets and the interest earned thereon had a direct nexus with the payment of interest. The Tribunal has also recorded in paragraph 4 of the order that the interest received and paid have a close nexus, on the facts found by the Commissioner of Income-tax (Appeals) which were not disputed before the Tribunal. 13 This being the factual position, it is quite clear that the assessee had I been able to establish the nexus as required by paragraph (ix) arrived at by this court in CIT v. Shri Ram Honda Power Equip. [2007] 289 I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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