2023 (12) TMI 1326

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..... kept with scheduled banks; only the net interest income can be taxed u/s 56 of the Act (i.e., the interest income reduced by the administrative expenses and other proportionate expenses to earn the said income). We restore the matter to the AO. AO is directed to calculate the cost of funds for earning the interest income which has to be assessed u/s 56 of the Act and allow the same as deduction u/s 57 of the Act. Appeal filed by the assessee is allowed for statistical purposes.
SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER For the Assessee : Ms. Sunaina Bhatia, CA For the Revenue : Shri. Ganesh R Ghale, Advocate, Standing Counsel ORDER PER GEORGE GEORGE K, VICE PRESIDENT: This appeal at the insta .....

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..... he Tribunal. Though the assessee has raised several grounds (21 grounds), during the course of hearing, the limited submission of the learned AR was to allow the cost of funds for earning the interest income which is assessed as 'income from other sources'. 5. The learned Standing Counsel supported the orders of the AO and the CIT(A). 6. I have heard the rival submissions and perused the material on record. Assessee had earned interest income of Rs. 18,48,817/- on account of investments with co-operative banks / scheduled banks. The limited prayer of the assessee before the Tribunal is to allow the interest cost as a deduction under section 57 of the Act for earning interest income which is to be assessed under the head 'income from other .....

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..... administrative expenses incurred by the assessee. 12. Accordingly, we answer the question of law and hold that the Tribunal was not right in coming to the conclusion that the interest earned by the appellant is an income from other sources without allowing deduction in respect of the proportionate costs, administrative expenses incurred in respect of such deposits. In the result, we pass the following: ORDER (i) Appeals are allowed in part. (ii) Order of the Tribunal in disallowing deduction in respect of cost of funds and proportionate administrative and other expenditure in respect of funds placed in deposit is set aside. (iii) All other contentions urged by the parties are kept open. (iv) Matter is remanded to the adjudicatin .....

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