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2014 (12) TMI 135 - ITAT DELHIExpenses incurred for earning interest income on estimation basis disallowed – Nexus between earning of interest income and expenditure on estimation basis established or not – Held that:- There is a force in the argument advanced by the assessee which is supported by the documentary evidence – in Rajpath Club Limited vs. Commissioner of Income Tax [1993 (11) TMI 20 - GUJARAT High Court] it has been held that expenditure incurred by the assessee which is wholly and exclusively for the purpose of earning interest income was required to be deducted while computing income from other sources - the assessee has claimed the expenditures on estimation basis, but the same has not been fully substantiated by the assessee - But it does not mean that assessee is not entitled for any expenditure for the income earned by the assessee - It is not logically acceptable that if any person earned any income and did not incur any expenditure for earning the same - assessee has deputing their staff who used their skills mentally as well as physically to earn the income - They managed its fund for better utilization and also identify the funds from time to time for their better investment to maximizing the assessee's return - This exercise of identifying the funds is time consuming needs day to day involvement of assessee company staff and also requires allocation of resources and infrastructure. The cost attributable to involvement and was claimed as deductible against interest income on estimation basis - the other disallowances on the service charges income on gross basis - The assessee has also filed details of services charges received before the authorities expenditure attributed to the earning of service charges have been computed/allocated the assessee has also filed detail before the authority - the service charges are brought to tax under the head "Income from Other Sources" - The amount of expenditure allocated on a consistent and reasonable basis to the earning of service charges being directly related is clearly allowable - But in the present case the assessee has itself estimated the expenditure in dispute for which the assessee had not filed sufficient evidence for substantiating its claim before the Revenue Authority - assessee is entitled for some expenditure on the incomes - the AO is directed to allow 1% of expenses on account of interest income and on service charges income of ₹ 36,66,291/- on gross basis – Decided partly in favour of assessee.
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