2021 (9) TMI 290 - AT - Income Tax

Deduction u/s 80IC - interest received by the assessee from the FD - whether interest received should have been netted off with interest paid since it is inextricably linked with the business of the eligible unit and as such only the net interest ought to have been considered for the purpose of deduction u/s. 80IC - HELD THAT - As relying in assesse's own case 2021 (3) TMI 1248 - ITAT KOLKATA we restore this issue raised in the additional ground of appeal of the assessee to the file of Ld. CIT(A) to pass appropriate order in terms of the Tribunal s order in assessee s own case supra for AY 2014-15. Therefore, this appeal of assessee is allowed for statistical purposes.

Summary

Issues involved:
1. Eligibility of interest income for deduction u/s 80IC of the Income-tax Act, 1961.
2. Consideration of netting off interest received with interest paid for the purpose of deduction.

Detailed Analysis:
Issue 1: The appellant appealed against the order of the Ld. CIT(A)-16, Kolkata dated 25.04.2019 for AY 2013-14, challenging the disallowance of interest income of ?28,07,860 as income. The appellant claimed that the interest income from fixed deposits with the bank, used for margin money, should be eligible for deduction u/s 80IC of the Act as it is integral to the business requirement. However, both the AO and the Ld. CIT(A) did not accept this submission, leading to the disallowance of the interest income.

Issue 2: The appellant raised an additional ground of appeal, requesting the netting off of interest received with interest paid for the purpose of deduction u/s 80IC. The Tribunal referred to a previous order on the same issue for AY 2014-15, where it was decided that even if the interest income from fixed deposits does not qualify for deduction u/s 80IC, it should be allowed to be netted. The Tribunal emphasized that the interest income, though not eligible for deduction, should be treated as a business receipt and only the net interest should be considered. The Tribunal directed the Ld. CIT(A) to consider this issue in light of their previous order and allowed the appeal for statistical purposes.

Conclusion: The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Ld. CIT(A) to consider the issue of netting off interest income as per their previous order for AY 2014-15. The judgment highlighted the importance of treating interest income as a business receipt and only considering the net interest for deduction u/s 80IC, even if the interest income itself does not qualify for the deduction.