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TMI Blog2015 (10) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. CIT (A) erred in law as well as on the facts of the case in confirming the disallowance of the deduction claimed u/s 80IB on interest received on FDR amounting to Rs. 16,97,627/- by treating the said income under the head "Income from other sources" instead of "income from business and profession", which is contrary to the provision of law as well as the facts. Hence the interest income be directed to be assessed as income from business and the deduction u/s 80IB be allowed, as claimed. 3) The AO erred in law as well as on the facts of the case in charging interest u/s 234A, 234B & 234C of the Act. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m bank on account of FDR's was not a business income of the appellant. The same was an independent source of income which had rightly been taxed as income from other sources in view of the Supreme Court decision in the case of CIT vs. Sterling foods (237 ITR 579), decision in the case of Pandian Chemicals vs. CIT (262 ITR 278), decision of Tuti Courin Alkalies and Fertilizers Ltd. vs. CIT (227 ITR 172). Hence the addition made by the AO is, therefore, confirmed." 5. Now the assessee is in appeal before us. 6. During the course of argument, the ld. A/R submitted that all the interest income earned on the FDRs is a business income. It was submitted by the ld. A/R that the investment in the subjected FDRs of Rs. 172,30,000/- were made from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the AO to examine the case of the assessee. The relevant direction issued by the Tribunal is reproduced herein below :- " 5. This issue has been settled by the Hon'ble Apex Court in the case of Liberty India vs. CIT, 317 ITR 218 (SC)whereby it has been held that interest component cannot be treated as derived from industrial undertaking. Therefore, deduction under section 80IB etc. is not allowable. However, we find that netting of interest i.e. interest expenditure and interest income has to be taken into consideration while arriving at the conclusion that whether interest earned is income from other sources or is liable to be set off against each other. It was submitted by ld. A/R that for making FDR in the bank for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received interest of Rs. 1,16,822/- while it had paid interest of Rs. 2,01,780/-. Therefore, the company had borne excess interest of Rs. 84,957.91 Looking to the submissions given by the assessee and the directions of the Hon'ble ITAT the interest income being in the negative after netting in the case of the assessee, therefore deduction u/s 80IB is computed after considering the interest income.". 8. The ld. Counsel for the assessee has further pointed out the assessment order for the A.Y. 2009-10 whereby the AO has allowed the deduction considering the interest income as Business Income, as claimed by the appellant herein, submitting that no variation was made in the claim of deduction by the AO. 9. The ld. A/R of the assessee has su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26,10,761/-. Thus there was no net interest received by the assessee. In view of the above said discussion and in view of the fact that there is no change in the circumstances for the AY 2008-09 vis-a-vis preceding years i.e. 2006-07 & 2007-08, we therefore, extend the benefit which has been extended to the assessee by the AO for the A.Y. 2006-07 for the present assessment year also. Accordingly ground no. 1 & 2 are allowed. Hence we have no hesitation to set aside the orders passed by the ld. CIT (A) and the AO for the A.Y. 2008-09.
8. Ground no. 3 is consequential in nature. The AO is directed to allow relief accordingly.
9. In the result, assessee's appeals is allowed.
Order pronounced in the open court on 17.9.2015 X X X X Extracts X X X X X X X X Extracts X X X X
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