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2016 (7) TMI 1550 - ITAT KOLKATADeduction u/s 80IB - interest earned from fixed deposits, which is normally treated as income from other sources and not business income - HELD THAT:- As regards Ground No.1, the ld. representatives of both the sides have agreed that the issue involved therein relating to the assessee’s claim for deduction under section 80IB in respect of interest earned from Fixed Deposits kept with Bank as margin money is squarely covered in favour of the assessee by the decision of the Hon’ble Calcutta High Court in assessee’s own case for A.Y. 2003-04 [2014 (7) TMI 1313 - CALCUTTA HIGH COURT] wherein a similar claim of the assessee for deduction under section 80IB in respect of interest income has been allowed. CIT(Appeals) al lowing the claim of the assessee for deduction u/s 80IB in respect of interest income. Ground No. 1 is accordingly dismissed. Disallowance u/s 14A - HELD THAT:- It is observed that the disallowance made by the Assessing Officer under section 14A on account of expenditure incurred by the assessee in relation to the earning of exempt income is sustained by the CIT(Appeals) to the extent of ₹ 24,996/- being 1% of the exempt dividend income. The disallowance under section 14A prior to the introduction of Rule 8D w.e.f. 2008-09 has to be done on some reasonable basis and as agreed by the ld. representatives of both the sides, this Tribunal has taken a consistent view that the disallowance u/s 14A to the extent of 1% of the exempt dividend income is fair and reasonable. No infirmity in the impugned order of the CIT(Appeals) restricting the disallowance of ₹ 5,00,000/- made by the AO u/s 14A being 1% of the exempt dividend income and upholding the same, we dismiss Ground No. 2 of the Revenue’s appeal .
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