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TMI Blog2020 (3) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... amount for the purpose of 80P(2)(a)(i) - Since interest income earned by the assessee was treated to be income from other sources under section 56, then, the assessee can claim deduction under section 57 - we direct the AO to allow expenditure for earning such interest income. AO has to determine the net interest income earned by the assessee after giving set off expenditure, and only thereafter that net income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. Grounds of appeals of the assessee are partly allowed for the statistical purpose. - Stay Petition Nos. 97, 98/Ahd/2020 and ITA Nos. 1550, 1554/Ahd/2019 - - - Dated:- 13-3-2020 - Rajpal Yadav , Vice President And Waseem Ahmed , Member ( A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is of the view that the expenditure relatable to earning of such interest income deserves to be set off against this income, and thereafter net interest income is to be excluded from computation of deduction admissible under section 80P(2). The assessee failed to demonstrate the direct expenditure relatable to earning of this expenditure, therefore, it claimed pro-rata expenditure. However, that argument was not allowed by the AO. On appeal, the ld. CIT(A) has allowed 5% of interest income as expenditure for earning this interest income in both these years. The assessee is aggrieved qua quantification of this 5%, and hence, is in appeal before the Tribunal in both these years. 4. With the assistance of the ld. representatives, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. Year 2014-15 S-.No. Particulars Amount (in Rs.) 1. Mehsana District Central Co-op :Bank 30,75,699 2. Development Commercial Bank (FD) 32,46,699 3. Sardar Sarovar Narmada/Nigam 6,88,193 TOTAL 70,10,591/- Accordingly, the ld. AO disallowed interest income of ₹ 67,85,644/- and ₹ 70,10,591/- for the assessment years 2013-14 and 2014-15 respectively, which was confirmed the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onalized banks. Therefore, such income will not qualify for grant of deduction under section 80P(2)(a)(i) as well as under section 80P(2)(d) because it is not from cooperative society, in view of the above judgment of Hon'ble Gujarat High Court. However, we find merit in the contention of the assessee that expenditure should be allowed in respect of interest income earned from the investments. If the component of income does not qualify for grant of deduction under section 80P(2)(a)(i), then such income should be computed on net basis; any expenditure relatable to earning of such income is to be allowed before calculating exclusion of such amount for the purpose of 80P(2)(a)(i) of the Act. Since interest income earned by the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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