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2016 (10) TMI 996 - AT - Income TaxAllowability of deduction u/s 80IAB on the interest - netting off of interest expenses against the interest income - Held that:- The interest income received by the assessee is inextricably linked with the business of the Assessee and is therefore eligible for deduction u/s.80IAB of the Act more so when interest income has been taxed as business income and not as “income from other sources” by the Revenue meaning thereby that the income from interest being business income has accepted by Revenue. We are of the view that the interest income is eligible for deduction u/s 80IAB of the Act. Further we also find that while deciding the issue of netting off of interest expenses against the interest income, ld.CIT(A) has allowed netting of interest income against interest expenses for the reason stated by ld.CIT(A) in his order. In such a situation the netting off of interest income against the interest expenses also does not require interference. We thus allow this ground of the Assessee. Disallowance u/s.14A - Held that:- In the present case, it is an undisputed fact that the assessee has earned exempt income of ₹ 33,01,981/- and the disallowance u/s.14A r.w.s.Rule 8D has been worked out at ₹ 4,19,65,021/- which is about 1270 times the exempt income and thus the disallowance u/s.14A of the Act worked out by the AO is much more than the income liable to tax. Considering the facts of the present case in the light of the decision of Hon’ble Delhi High Court in the case of Joint Investments (P.) Ltd. vs. CIT (2015 (3) TMI 155 - DELHI HIGH COURT ) and in the absence of any contrary binding decision pointed out by Revenue, we are of the view that the disallowance as worked out by the AO is not warranted. We therefore direct that the disallowance u/s.14A in the present case be restricted to ₹ 33,01,981/-, being the exempt income, earned by the assessee. Thus, this ground of assessee is allowed.
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