2021 (9) TMI 290

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....ein the assessee has raised without prejudice to the grounds of appeal preferred before this Tribunal that since the assessee company is eligible for deduction u/s 80IC of the of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), the interest received by the assessee from the FD should have been netted off with interest paid since it is inextricably linked with the business of the eligible unit and as such only the net interest ought to have been considered for the purpose of deduction u/s. 80IC of the Act and relied up on the decision of this Tribunal in assessee's own case for AY 2014-15 in ITA No. 2155/Kol/2018 order dated 20.03.2021. Thereafter, the Ld. AR pointed out that the Ld. CIT(A) has erred in the impugned order by ....

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....rmed the same. 4. At the outset, the Ld. AR drew our attention to the Tribunal's order on the very same issue in assessee's own case for AY 2014-15 (supra) wherein the Tribunal has decided the issue of netting of interest income as under: "2. In the revised grounds of appeal, the assessee has challenged the action of Ld. CIT(A) in not granting deduction u/s 80IC of the Income Tax Act, 1961 (hereinafter referred to as the Act) on the interest income from fixed deposit of Rs. 20,37,345/-. According to the assessee, even if the interest income from Fixed Deposit does not qualify for the deduction u/s 80IC, still it being a business receipt should be given the benefit of netting. 3. The Ld. A.R Shri S. Jhajharia, FCA submit....

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....rst degree nexus with the profits earned from the eligible unit, still such interest should be allowed to be netted as held by the Hon'ble Gujrat High Court in the case of CIT vs. Nirma Ltd. (2014) 367 ITR 12 (Guj) and it was pointed out that the Hon'ble Gujrat High Court applied such principle in the context of section 80I, 80IA etc. and excluded only the net interest income from such deduction, so he prayed that benefit of netting should be given to assessee. 4. In the light of the aforesaid discussion, we are not repeating the same again for the sake of brevity. We note that in the revenue appeal for the same assessment year i.e. AY 2014-15 we have confirmed the action of Ld. CIT(A) in respect of claim of the assessee in respect....

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.... the mistake of the figures shown as Rs. 20,37,345/- in place of Rs. 5,52,844/-. And so the Revenue's appeal to this extend succeeds." However, the issue of netting of interest income was not before us, because the revenue appeal came up without this assessee's cross-appeal. And since this issue has come to our notice only in this appeal, in the interest of justice and fair play and as per settled principle of law, we are of the opinion that the net interest should only be brought to tax. Needless to say, the assessee in this case has claimed to have made the FDs for the purpose of procuring bank guarantee which was a condition precedent for procurement of raw material from M/s SAIL. And therefore, according to us, the interest inc....