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TMI Blog2022 (10) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR that the assessee incurred the expenditure to earn the total interest from the actual investment including that of nationalized bank appears to be correct. The finding of the decision in case of Abhay Co-op. Credit Society Ltd. [ 2021 (12) TMI 456 - ITAT AHMEDABAD ] is apt in assessee s case. In fact, in the present case as well the assessee had given before us the proportionate deduction to be disallowed which is reproduced in para 6 in the form of Table. Thus, we direct the AO to allow expenditure for earning such interest income after considering deduction under Section 80P(2)(c)(ii) as allowed by the CIT(A) and restrict the addition accordingly. Hence, Ground No. 2 is partly allowed for statistical purpose. - I.T.A. No. 499 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed the deduction under Section 80P of the Act and determined the income of the assessee at Rs. 2,09,120/-. 4. Being aggrieved by the assessment order, the assessee society filed appeal before the CIT(A). The CIT(A)partly allowed the appeal of the assessee. 5. As regards to Ground No. 1, the Ld. AR has not pressed the ground. Hence, Ground No. 1 is dismissed. 6. As regards to Ground No. 2, the Ld. AR submitted that the CIT(A) has not considered the facts on record that the Assessing Officer has not pointed out anywhere in assessment order about nexus of the source of the investment out of interest free fund only. The assessee submitted that the decision of Ahmedabad Tribunal in case of Balasinor Vikas Co-op. Credit Society Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,077*9.91%) 1,37,261 The Ld. AR submitted that the decision of the Hon ble Karnataka High Court in case of M/s The Totgars Co-operative Sale Society Ltd. vs. ITO (2015) ITL 1022 held that deduction u/s 57(iii) be allowed in respect of expenses proportionate to income. The Ld. AR also relied upon the decision of the Tribunal in case of Abhay Co-op. Credit Society Ltd. vs. ITO ITA No. 1551/Ahd/2019 (Ahd. Tri.). The Ld. AR prayed that the claim for deduction u/s 57 of Income Tax Act, 1961 be allowed in respect of proportionate expenses as its claim did not fall within the provisions of Section 80P(2)(a)(i) of the Act and so deduction of claim be reduced proportionately in the ratio of nationalized bank interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was treated to be income from other sources under section 56, then, the assessee can claim deduction under section 57 of the Act. Therefore, we direct the AO to allow expenditure for earning such interest income. In other words, the ld. 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 excl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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