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| The Tax Publishers2020 TaxPub(DT) 1491 (Mad-HC) : (2020) 421 ITR 0431 INCOME TAX ACT, 1961
Section 80-IA
Assessee, in its own business or commercial prudence, made deposit with bank and incidentally earned interest and such interest income was nothing but its regular business income and assessee was entitled to deduction under section 80-IA in respect of such interest income also since like hundreds of business decisions taken by assessee in its business, assesse might have deposited money with bank either under compulsion like maintaining margin money with bank or for opening of foreign letters of credit or for obtaining loan itself or cash credit facility or voluntary deposits of surplus funds otherwise lying idle.
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Deduction under section 80-IA - Allowability - Interest income on margin money deposited with bank -
Assessee-firm engaged in manufacture of picture positives in its industrial undertakings situated at Pondicherry claimed deduction under section 80-IA. AO re-computed amount deductible holding that interest income on margin money deposited with bank was liable to be taxed as 'income from other sources', not earned directly by any manufacturing or industrial activity of assessee and therefore, such interest income did not form part of the profits and gains of the business of assessee and no deduction under section 80-IA could be allowed in respect thereof. Held: Like hundreds of business decisions taken by assessee in its business, assesse might have deposited money with bank either under compulsion like maintaining margin money with bank or for opening of foreign letters of credit or for obtaining loan itself or cash credit facility or voluntary deposits of surplus funds otherwise lying idle. Assessee, in its own business or commercial prudence, made deposit with bank and incidentally earned interest and such interest income was nothing but its regular business income and assessee was entitled to deduction under section 80-IA in respect of such interest income also. To artificially bifurcate and dissect interest income earned by the assesse was nothing but a whimsical and the arbitrary view of AO so as to take it out of ambit of deduction available under section 80-IA, which could not be upheld.
Supported by:Arul Mariommal Textiles Ltd. v. Asst. CIT (2018) 97 taxmann.com 298 (Mad) : 2018 TaxPub(DT) 5634 (Mad-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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