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TMI Blog2014 (7) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on account of fixed deposits made for the purpose of providing margin money to the lending bank also has a direct nexus because the finding of the CIT (A) is, which is not disputed before us, that for the purpose of making such deposit the assessee had also borrowed money from the bank. The resultant effect is that if a deposit of ₹ 10/- is to be made by way of margin money for borrowing ₹ 100/-, the assessee has to borrow ₹ 110/- out of which ₹ 100/- can be used for his business and ₹ 10/- can be invested by way of margin money. When he is paying interest for ₹ 110/- and receiving interest on the amount of ₹ 10/-, it can only be said that he is really paying interest for ₹ 100/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The CIT(A) allowed an appeal preferred by the assessee holding, inter alia, that the interest earned by the assessee on account of fixed deposits was also made from out of the borrowed fund. The learned Tribunal has endorsed the views of the CIT(A). The fact is that the assessee borrowed more money from the bank than what he actually needed so as to make fixed deposits by way of margin money. It is not in dispute that the assessee borrowed money from the banker for the purpose of its business. The delay in payment of sale proceeds by the customers naturally exposed the assessee to increased borrowing and therefore, payment of more interest. When the assessee realised interest on account of delayed payment of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... origin or formation of . The source of import entitlements could not be said to be the industrial undertaking of the assessee. The source of the import entitlements could only be said to be the Export Promotion Scheme of the Central Government whereunder the export entitlements became available. There must be, for the application of the words derived from , a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus was not direct but only incidental. The industrial undertaking exported processed sea foods. By reason of such export, the Export Promotion Scheme applied. Thereunder, the assessee was entitled to import entitlements, which it could sell. The sale consideration therefrom could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from out of deposits made with the electricity board. It could, therefore, be said that the income arising out of interest did not have any direct nexus with the industrial undertaking of the assessee. In the case of CIT vs. Sterling Foods (supra), the assessee was engaged in the business of sea foods. The income in question was derived from out of sale of the import entitlements. It was, therefore, possible to say that the income was not or did not have any direct nexus with the activity of the assessee. Similarly, in the case of Liberty India (supra) the income in question was the amount of drawback incentives received by the assessee which did not have any direct nexus with the export made by the assessee. But, in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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