TMI Blog2010 (6) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... duction in the claim u/s 10B of I. T. Act, by Rs.26,14,775/- representing interest received on loans to employees, scrap sales etc. in respect of three units of the appellant. 2) That on the facts and in the circumstances of the case and under the provisions of the act, the Ld. Commissioner has erred in sustaining disallowance benefit of Rs.1,03,695/- u/s 80IB of the I. T. Act in relation to interests received on loans to employees and duty draw back. 3) That on the facts and in the circumstances of the c se and under the provisions of law, no interest u/s 234A, 234B 234C is chargeable for which the Ld. Commissioner has given no finding. 2. Regarding ground No.1 of the appeal, it was submitted by the Ld. A.R. for the assessee that while wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee can establish direct nexus between interest receipt and interest payment, it was submitted by the Ld. A.R. that there is no necessity to establish any such nexus. 3. As against this, it was submitted by the Ld. D.R. for the revenue that interest income has to be assessed as income from other sources as was held by Hon ble Delhi High Court in the case of Sriram Honda Power Equipments as reported in 289 ITR 475. 4. Regarding 2nd ground, it was submitted that with regard to deduction claimed by the assessee u/s 80IB also, the A.O. has reduced the same by excluding interest income and duty drawback. It is submitted that admittedly the issue regarding duty drawback is now covered against the assessee by the judgement of Hon ble Apex Court ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10B(4) in the proportion of export turnover to total turnover without excluding the sale proceeds of scrap from business profit. Such sale proceeds of scrap should be added to total turnover and thereafter, the amount of deduction allowable to the assessee should be worked out as per sub-section (4) of Section 10B. 7. Regarding 2nd aspect i.e. regarding interest income we are not in agreement with the Ld. A.R. of the assessee because he could not show us any direct nexus between interest received and interest payment by showing that interest payment was incurred for the purpose of earning interest income. Interest payment has to be excluded from business profit because this is business expenditure. Interest income is generally assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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