9911796707
TMI Blog2016 (5) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee has only borrowed funds such as secured loan, unsecured loan and partners capital which is also a borrowings because interest is allowable as expenditure on this sum it might not have claimed such expenditure during the year. It does not have its own reserve and surplus which does not carry interest. All FDRs have been taken from C C account, used for the bank guarantee purposes as submitted by AR, and not disputed by the Ld DR. Interest Income on FDR is also taxed by the AO as business income. It is also apparent that assessee does not have any other business other than the business of eligible undertaking. Further CIT (A) has rejected the reliance on all the decided case laws by the assessee holding that those cases pertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities availed from Bank and the firm has earned lower interest as compared to interest paid on Bank borrowing, so netting should be done between interest paid and interest received and after netting if there was no interest income, nothing could be reduced from profit gains of business. Hence addition of claim made by Learned Assessing officer is unwarranted, unjustified and bad in law. 3. Brief fact of the case is the assessee is partnership firm filed return of income on 13.09.2010 declaring income of Rs.NIL. The assessee is eligible for deduction u/s 80IC of the Income Tax Act. During the year, assessee has earned interest income of ₹ 302269/- on which deduction u/s 80IC was denied holding that this income is not derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that the interest income earned by him on FDRs are linked with the business of the assessee and therefore they should be netted off with interest expenditure incurred by the assessee. Most of the fixed deposit receipts are for the purposes of obtaining bank guarantee for the purposes of the business of the assessee. As Ld. CIT (A) has himself held in para no 8 that Interest earned on FDR placed as margin money for securing letter of credit from bank. The Assessee has placed balance sheet on record which shows that assessee has only borrowed funds such as secured loan, unsecured loan and partners capital which is also a borrowings because interest is allowable as expenditure on this sum it might not have claimed such expenditure during t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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