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TMI Blog2020 (5) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... roject and the same, therefore, was eligible for deduction under section 80IB(10). The immediate source of the said income was the business of the assessee of developing a housing project and therefore, the said income was eligible for deduction under section 80IB(10). Regarding the balance amount of other income the assessee has not been able to furnish any details of the same to show that the said amount was eligible for deduction under section 80IB(10). I accordingly allow partly Ground No. 1 of the assessee s appeal. Alternative claim that the disallowance of deduction under section 80IB(10) in respect of interest income should be restricted to net interest and not gross interest as done by the authorities below - This altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Kolkata dated 25.10.2019. 2. The issue involved in Ground No. 1 of this appeal relates to the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of assessee s claim for deduction under section 80IB(10) of the Income Tax Act, 1961 in respect of interest received amounting to ₹ 11,10,810/- and other income amounting to ₹ 6,36,746/-. 3. The assessee in the present case is a Company, which is engaged in the business of Builders and Property Developers. The return of income for the year under consideration was filed by it on 17.09.2011 declaring total income at NIL . During the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80IB(10) envisages a direct or first degree connection of the income eligible for deduction with the corresponding business of the assessee of developing a housing project. It means the immediate source of the income should be the business of the assessee of developing a housing project in order to make it eligible for deduction under section 80IB(10). If this well settled test is applied in the present case, I find that the interest of ₹ 11,10,810/- earned by the assessee during the year under consideration on Bank deposits etc. cannot be held to be eligible for deduction under section 80IB(10) as the immediate source of the said interest income was not the business of the assessee of developing housing project and it was the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACG Associated Capsules Pvt. Limted vs.- CIT (343 ITR 89), wherein it was held in the context of assesee s claim for deduction under section 80HHC that 90% of not the gross interest but only the net interest which had been included in the profits of business of the assessee, as computed under the head profits and gains of business or profession should be deducted for determining the profits of the business eligible for deduction. Keeping in view the said decision of the Hon ble Supreme Court, I direct the assessing Officer to verify the amount of net interest keeping in view the direct nexus theory and allow appropriate relief to the assessee on this issue. Ground No. 2 of the assessee s appeal is accordingly treated as allowed. 6. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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