Tribunal allows deduction for interest on fixed deposits and sets off against OD interest. Consistency emphasized with bank statements.

The Tribunal allowed the appeal, permitting the deduction under section 80IB for interest earned on fixed deposits and allowing the setting off of such interest against the bank's interest on the OD account. The Tribunal emphasized consistency and supported its decision with bank statements. The assessment's validity due to notice under section 143(2) not being issued within the limitation period was not specifically addressed. The issue of charging interest under sections 234D and 244A was considered consequential without detailed findings. The decision was rendered on May 29, 2019, by the Tribunal comprising Vice President Shri G.D. Agrawal and Judicial Member Shri Kuldip Singh.

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Issues Involved:
1. Validity of assessment due to notice under section 143(2) of the Income Tax Act not being issued within the limitation period.
2. Disallowance of deduction under section 80IB for interest on fixed deposits.
3. Setting off interest on fixed deposits against interest paid to the bank on the OD account.
4. Charging of interest under sections 234D and 244A of the Act.

Issue 1: Validity of Assessment Notice:
The appellant contested that the assessment was invalid as no valid notice under section 143(2) of the Income Tax Act was issued within the limitation period. However, the CIT (A) upheld the assessment. The Tribunal did not provide specific adjudication on this ground as it was general in nature.

Issue 2: Disallowance of Deduction under Section 80IB:
The appellant claimed a deduction under section 80IB for interest earned on fixed deposits. The AO disallowed this deduction as the interest income was not considered business income. The appellant sought to set off the interest earned on fixed deposits against the interest paid to the bank on the OD account. The Tribunal found that the interest earned on fixed deposits, purchased from the OD account, could be set off against the interest paid to the bank on the cash credit account. Relying on the rule of consistency and supporting evidence from bank statements, the Tribunal ruled in favor of the appellant, allowing the deduction under section 80IB.

Issue 3: Setting off Interest on Fixed Deposits:
The appellant argued for setting off the interest on fixed deposits against the interest paid to the bank on the OD account. The Tribunal agreed with the appellant's contention, stating that the interest earned on fixed deposits could be set off against the interest paid on the cash credit account. The Tribunal emphasized the rule of consistency and upheld the appellant's right to set off the interest amounts.

Issue 4: Charging of Interest under Sections 234D and 244A:
The appellant raised concerns regarding the charging of interest under sections 234D and 244A of the Act. The Tribunal deemed this issue consequential and did not provide specific findings.

In conclusion, the Tribunal allowed the appeal filed by the assessee, ruling in favor of setting off the interest earned on fixed deposits against the interest paid to the bank on the OD account. The judgment was delivered on May 29, 2019, by the Tribunal consisting of Vice President Shri G.D. Agrawal and Judicial Member Shri Kuldip Singh.

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