2018 (2) TMI 1753 - AT - Income Tax

Deduction u/s 80P(2) - qualification of interest income earned on fixed deposits with nationalized bank for deduction - Held that - Issue in dispute is squarely covered against the assessee by decision in the case of State Bank of India Vs. CIT 2016 (7) TMI 516 - GUJARAT HIGH COURT wherein held that interest earned from investment made in any bank is not deductible under section 80P(2)(d). In this view of the matter, we dismiss the appeal of the assessee. However, any expenditure incurred by the assessee for earning such income could be allowed to it. In other words, the ld.AO has to determine the net interest income earned by the assessee on such investment with bank, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. - Decided partly in favour of assessee for statistical purpose.

Summary

The Appellate Tribunal ITAT Ahmedabad ruled that interest income from fixed deposits with a nationalized bank does not qualify for deduction under section 80P(2) of the Income Tax Act. The appeal of the assessee was partly allowed for statistical purpose. The decision was based on a precedent set by the Honorable jurisdictional High Court.