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The Delhi Benches of the ITAT seem to be unanimous in their view that in the case of a running business the interest income is to be set of against interest expense prior to the application of exclusion clause where under 90% of other incomes are to be excluded from business profits in the computation of deduction u/s 80HHC.

In the case of Honda Siel Power Products Ltd. vs. Deputy Commissioner of Income-tax (78ITD123) the Delhi Bench held that the assessee is entitled for netting of the two interests i.e., payment of interest and receipt of interest, not only merely in the computation of deductions u/s 80HHC but even in the context of section 80I and 80HH where such deduction is to be administered on the basis of profit derived from industrial undertaking. In this case the assessee earned interest income amounting to Rs. 1,02,44,000 arising from ICDs and bill discounting which is held to be business income.

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