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of <h1>Court affirms Tribunal decision on interest income classification & Section 80HHC(4A) interpretation</h1> The Court affirmed the Tribunal's decision regarding the classification of interest income and interpretation of clause (baa) of Explanation below Section ... Computation of deduction u/s 80HHC - 90% exclusion of net interest or gross interest – Held that:- Assessee is entitled to reduce interest paid from interest received under clause (baa) to Explanation below Section 80HHC(4A) of the Income Tax Act. The appeal is dismissed. Issues:1. Classification of interest income under different heads.2. Interpretation of clause (baa) of Explanation below Section 80HHC(4A) of the Income Tax Act.Analysis:1. The appeal involved the classification of interest income earned by the assessee under the head 'income from other sources' or 'profits and gains of business or profession.' The Tribunal decided to send back the question of interest on inter-corporate deposits, interest on securities, and interest on bank deposits for fresh adjudication. Additionally, the interpretation of clause (baa) of Explanation below Section 80HHC(4A) was a key issue. The Tribunal referred to a previous decision and set aside the order of the CIT(A) for fresh computation based on the Special bench's decision.2. The main question framed was whether the assessee could reduce interest paid from interest received under clause (baa) of the Explanation below Section 80HHC(4A) of the Income Tax Act. This question had already been addressed in a previous judgment by the Court in CIT v. Shriram Honda Power Equip. The Court held that the assessee was entitled to reduce interest paid on interest received under the mentioned clause. The Court referred to other cases where this decision was followed, confirming the position. The Tribunal's decision to remit the matter to the Assessing Officer for computation in line with the Court's directions was upheld.3. The Court dismissed the appeal based on the above analysis, affirming the Tribunal's decision and directing the Assessing Officer to conduct the computation in accordance with the Court's decisions. The judgment provided clarity on the classification of interest income and the interpretation of the relevant clause, ensuring consistency with previous legal precedents.
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