2019 (6) TMI 43

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he ld. Commissioner of Income Tax (Appeals) - 20, New Delhi [hereafter the CIT (A)] erred in dismissing the ground of appeal that the assessment is bad in law inter alia because any valid notice u/s 143 (2) of the Income Tax Act, 1961 (hereafter the Act) was neither issued nor served within the limitation period provided by proviso to section 143 (2) of the Act. 2 The ld. CIT (A) erred in upholding the disallowance of deduction of Rs. 2,61,488 u/s 80IB of the Act in respect of interest on fixed deposits made for pledging to open letter of credit and to obtain bank guarantee. Without prejudice and alternatively: the ld. CIT (A) erred in upholding not setting off of Rs. 10,45,953 being interest on FDR, which were purchased from the OD acc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....on 80-IB of the Act on these receipts also. Since immediate source of interest is depositing (FDRs) which is not the business, so the interest income cannot be held to be derived from the industrial undertaking. Consequently, AO made addition of Rs. 2,61,488/- on account of excess claim of exemption under section 80-IB of the Act. 3. Without prejudice and alternatively assessee claimed setting off of Rs. 10,45,953/- being interest on FDRs which was purchased from the OD Account against the interest paid to the bank on the OD Account. 4. AO assessed the total income of the assessee at Rs. 3,39,05,870/-. 5. Assessee carried the matter by way of an appeal before the ld. CIT (A) Who has partly allowed the appeal. Feeling aggrieved, the asses....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....T by relying upon the decision cited as Conventional Fastners vs. CIT - 2018-TIOL-20- SC-IT, CIT vs. Jyoti Apparels - (2008) 166 taxman 343 (Delhi) and CIT vs. Mereena Creations 330 ITR 199 (Delhi). 11. Assessee has come up with a specific submission that FDRs have been purchased from the cash credit account maintained with the banks and during the year under assessment, assessee firm has paid Rs. 3,12,39,400/- as interest on these cash credit accounts and as such interest earned on fixed deposits on banks should be set off from/against the amount paid to the bank on account of interest in the cash credit accounts. 12. We are of the considered view that when assessee has purchased the FDRs from the cash credit accounts on which it has pai....