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2018 (12) TMI 601 - AT - Income TaxNot allowing deduction u/s. 80P(2)(a)(i) in respect of MSEB commission income and interest received on FDRs with bank - Held that:- Hon’ble Bombay High Court in CIT VS. Asian Cable Corporation Ltd. ( [2003 (3) TMI 87 - BOMBAY HIGH COURT] after applying the provisions of section 80AB, has held that deduction under s. 80-O should be allowed with reference to net receipts and not on gross receipts. It, ergo, becomes palpable that the eligible amount for deduction can be the 'income’ and not the 'gross receipts’ from the specified source. Since the amount of gross receipt from MSEB commission in this case is less than the amount of expenses incurred for earning such commission and deduction has been separately allowed by the AO in respect of such expenses, there can be no distinct deduction u/s. 80P because of the negative income earned by the assessee from this activity. Therefore, countenance the view point of the first appellate authority on this point. The second component of the disallowance of deduction is interest received by the assessee on FDR with IDBI bank amounting to ₹ 3,01,034/-. Here again, it is noticed that the assessee earned interest income of ₹ 3,01,034/-. As per assessee’s own version given to the authorities, it incurred cost of funds at ₹ 3,32,967/- for earning such interest income. Once again, it is clear that the deduction for a sum of ₹ 3,32,967/- has been allowed by the AO. The amount of gross interest income, being less than the amount of expenses incurred, cannot entitle the assessee to qualify for separate deduction u/s. 80P on the amount of gross interest received. Approve the view taken by the CIT(A) on this score. Expenses incurred against earning of MSEB commission and cost of funds incurred against the interest received on FDRs should be allowed as deduction - Held that:- In this regard, it is observed that the CIT(A) has categorically noticed that the assessee was allowed deduction for these two expenses. It would be just and fair if the AO verifies the assessee’s contention for allowing deduction of these two expenses. In case, the deduction is found to have been allowed for these two sums, then there is no scope for allowing any further deduction. In case, the finding of the ld. CIT(A) is found to be wanting, then the deduction should be allowed to the extent of expenses incurred, namely, ₹ 1,50,000/- and ₹ 3,32,967/-.
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