Interest earned on the FDRs, which were given to the bank as security to avail of the credit facility, having direct nexus with manufacturing and export business is assessable as interest on FDR, should not be reduced from the business profits for computation of deduction under s 80HHC — as held by DelHC in CIT v Nectar Life Science Ltd — In favour of: The assessee.
When interest paid on borrowed funds is more than the interest received on FDR, 90% of the gross interest received from FDR should not be reduced from the business income of the assessee for computing deduction under s 80HHC.
Decided on: 20 October 2011.
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