2016 (5) TMI 1470

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.... 3,02,269/-. The Firm has made these FOR with bank as a margin money against opening of imported letter of credit. These FDR's were incidental to and for purpose of carrying on business of the firm and not made for any investment purpose. Further these FDR's were made out of credit facilities availed from Bank and the firm has earned lower interest as compared to interest paid on Bank borrowing, so netting should be done between interest paid and interest received and after netting if there was no interest income, nothing could be reduced from profit & gains of business. Hence addition of claim made by Learned Assessing officer is unwarranted, unjustified and bad in law." 3. Brief fact of the case is the assessee is partnership f....

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....assessee has earned bank interest which is not derived from the industrial undertaking but from the fixed deposits deduction u/s 80IC cannot be allowed on this and further it is also not eligible for netting off. 6. We have carefully considered the rival contentions. The assessee has claimed that the interest income earned by him on FDRs are linked with the business of the assessee and therefore they should be netted off with interest expenditure incurred by the assessee. Most of the fixed deposit receipts are for the purposes of obtaining bank guarantee for the purposes of the business of the assessee. As Ld. CIT (A) has himself held in para no 8 that Interest earned on FDR placed as margin money for securing letter of credit from bank.....