2008 (1) TMI 53

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....rest received by it on fixed deposits which were pledged with the Bank of Rajasthan for obtaining the loan. 3.It appears to us that the matter is fully covered by the decision of this court in CIT v. Shri Ram Honda Power Equip [2007] 289 ITR 475 and that no substantial question of law arises. 4. In paragraphs 35 and 36 of the above decision, this court has considered two categories of fixed deposits taken by the assessee. The first category is fixed deposits taken by the assessee for the purposes of parking of its surplus funds. The second category is fixed deposits that have been taken by the assessee for mandatorily keeping the monies with a bank for the pur poses of availing of credit facilities, etc., for its export business. This cou....

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....passed in the case of the assessee. 7. The second question that would arise, as a result of the decision of this court, is whether the deduction claimed by the assessee on the interest d from these fixed deposits can be adjusted against the interest paid by the assessee to the Bank of Rajasthan in view of Explanation (baa) to 80HHC of the Income-tax Act, 1961. 8  In paragraph (ix) of the decision rendered by this court under the heading "Conclusions", it has been held as follows "Where, as a result of the computation of profits and gains of business and profession, the Assessing Officer treats the interest receipt as business income, then deduction should be permissible, in terms of Explanation (baa) of the net interest, i.e., the g....