Case Law Details
Narayan Industries Vs ACIT (ITAT Delhi)
Held that interest earned out of the fixed deposit made from the surplus funds being not connected to the manufacturing activity and do not form an integral part of the profits derived from industrial unit is not eligible for deduction
Facts-
The appellant is a partnership firm engaged in the business of manufacturing and export of home furnishings items like quilts, bedspreads, cushion covers, etc. The appellant during the assessment proceedings claimed deduction under section 80IC for the interest income earned from fixed deposit pledged to avail overdraft facility.
The appellant received interest of Rs. 6,58,683/- and incurred bank interest and commission charges of Rs. 33,14,931/- which included interest on overdraft facility. The appellant argued that interest expenditure on overdraft facility availed exceeded interest income on fixed deposit pledged to avail such facility. There was, thus, no interest income effectively earned by the appellant and therefore, interest income was not required to be excluded for computing profit eligible for deduction under section 80-IC of the Act.
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