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2018 (11) TMI 1918 - AT - Income TaxClaim of deduction on account of Provident Fund - CIT (A) upheld the action of the AO on the ground that the assessee has not got approved the Provident Fund approved from Chief CIT/Pr.CIT, so any approval granted by the Provident Fund Commissioner is not relevance as per provisions of section 36(1)(iv) - HELD THAT:- We find that the perusal of the definition given in section 2(38) of the Act as above shows that a provident fund which has been or continues to be recognized by the Chief Commissioner or the Commissioner in accordance with the rules contained in Part A of the Fourth Schedule is said to be a "recognized provident fund" as per the first limb of the definition given in section 2(38). As per the second limb of the definition, a recognized provident fund also includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The definition given in section 2(38) thus is an inclusive definition and as per the second limb of the said definition which is independent of the first limb, it includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The condition of recognition of the fund by the Chief Commissioner or Commissioner as stipulated in the first limb is consciously absent in the second limb which clearly depicts that such recognition is not a condition precedent for a provident fund established under a scheme framed under the Employees' Provident Fund Act. 1952 to be a "recognized provident fund" within the meaning of section 2(38) - We, therefore, observe that Section 2 (38) of the Act, itself specifically provides a Provident Fund established under a Scheme framed under the Employees' Provident Fund Act, 1952 to be a recognized Provident fund there is no reason for the claim of the assessee to be denied. In view of this matter, respectfully following the above decision and decision cited therein of Hon`ble High Courts, this grounds of appeal is allowed in favour of the assessee. Addition of interest received from other than co-operative societies and thereby not granting the proportionate deduction of expenses as claimed by the assessee - HELD THAT:- We find that that CIT (A) viewed that interest expenses has been claimed against business income and same stands allowed is not logical as the said business income is exempt under section 80P of the Act. Therefore, on the logic of disallowance of interest expenses u/s. 14A as against exempt income the expenses for income from other source as shown under the head interest income is also required to be allowed. We find that in case Shree Dhansobhavak Co-operative Credit Society Ltd. [2018 (8) TMI 2098 - ITAT AHMEDABAD] have held that proportionate interest expenses are allowable from interest income. In view of this matter, we delete the addition in which interest expenses component is also included. Accordingly, Ground No. 2 of appeal is allowed.
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