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<h1>Interest income from fixed deposits and trust exemption: voluntary classification as other income bars exemption, appeal dismissed</h1> Trust interest earned on fixed deposit receipts was declared by the taxpayer as income from other sources and contested as eligible for trust exemption on ... Assessment of trust - interest income derived from FDRs seeked to be treated as application of income - interest income from FDRs, declared by the assessee as income from other sources - Exemption u/s 11 HELD THAT:- Faced with this situation, learned counsel’s case is that it was on account of a technical glitch that the assessee was compelled to declare its above interest income as income from other sources in the return; and, therefore, the same deserves to be treated as eligible income for the purpose of claiming section 11 exemption. The tribunal hereby see no merit in the assessee’s instant sole substantive ground once it had itself claimed the above interest income as income from other sources. Both the learned lower authorities’ respective findings stand upheld therefore. Assessee’s appeal is dismissed. Issues: Whether interest income from fixed deposit receipts (FDRs) of Rs.13,80,000 declared by the assessee as 'income from other sources' can be treated as applied income for the purpose of claiming exemption under Section 11 of the Income-tax Act, 1961 despite the assessee alleging a technical glitch in its return.Analysis: The Tribunal examined the assessees' position that the interest income was declared as income from other sources due to a technical glitch and thus ought to be treated as applied income eligible for exemption under Section 11. The Tribunal noted that the assessee itself had disclosed the interest as income from other sources in the return and that both lower authorities on examination declined to treat the amount as application of income under Section 11. Having considered the factual disclosure and the findings of the lower authorities, the Tribunal found no merit in the contention that the declared classification could be disregarded on the basis of a technical glitch.Conclusion: The claim to treat the interest income as applied income for Section 11 exemption is rejected; the decision of the lower authorities is upheld and the appeal is dismissed (against the assessee; in favour of Revenue).
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