TMI Blog2021 (3) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. And since this issue has come to our notice only in this appeal, in the interest of justice and fair play and as per settled principle of law, we are of the opinion that the net interest should only be brought to tax. Needless to say, the assessee in this case has claimed to have made the FDs for the purpose of procuring bank guarantee which was a condition precedent for procurement of raw material from M/s SAIL. And therefore, according to us, the interest income even if it does not qualify for deduction u/s 80IC of the Act being not having first degree nexus, still the nature of the receipt since being business in nature and not from other sources [refer CIT vs. Nirma Ltd.[ 2014 (10) TMI 388 - GUJARAT HIGH COURT] needs to be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest income survives and according to him only the net interest (i.e. interest income- interest paid-expenses) be taken out of the deduction u/s 80IC. According to Ld. A.R, the interest receipt from FD was business income, because the FD s were maintained in the bank for the purpose of issue of bank guarantee which were in-turn required for purchase of raw material from M/s SAIL. In order to substantiate this fact according to Ld. A.R, necessary documents were already placed before the AO and the same is also part of the audited accounts. And he drew our attention to page 5 of the paper book (letter dated 08.07.2016 to the AO in assessment proceedings) and pages 25 and 29 respectively of the paper book (which is the part of the audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 80IC wherein we held as under: 3. Aggrieved the assessee preferred an appeal before the Ld. CIT(A), who in respect of the AO s action disallowing interest income of ₹ 20,37,345/- has held as under: In view of the above discussion and respectively following the decision of the jurisdictional High Court in the case of Reckitt Benckiser (India) Vs. Addl. Commissioner of Income Tax (supra), I am of the view that there is no infirmity in the finding of the AO in holding that the appellant was not entitled for deduction u/s 80IC of the I. T. Act, 1961 in respect of the interest income of ₹ 5,52,844/- from bank deposits under the head other Income . Therefore, the interest income of ₹ 5,52,844/- is held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 80IC of the Act being not having first degree nexus, still the nature of the receipt since being business in nature and not from other sources [refer CIT vs. Nirma Ltd. (supra)] needs to be treated as business receipt, if the facts are correct, which may be verified by the Ld CIT(A), since we have restored certain issues back to him, while adjudicating the Revenue Appeal for this assessment year. And if the contention of the assessee is found to be correct, then netting should be allowed to their interest receipt as held by the Hon ble Gujrat High Court in the case of CIT vs. Nirma Ltd.(supra). Therefore we restore this issue back to the file of the Ld. CIT(A) who shall consider this issue which considering our order in Revenue appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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