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2021 (12) TMI 456 - AT - Income TaxDisallowing claim u/s 80P(2)(a)(i) - assessee has earned income from the investment made with nationalized bank - CIT(A) has held that society would be allowed to claim expenses under section 57 to the extent of 5% of the impugned interest income - HELD THAT:- We find merit in the contention of the assessee that expenditure should be allowed in respect of interest income earned from the investments. If the component of income does not qualify for grant of deduction under section 80P(2)(a)(i), then such income should be computed on net basis; any expenditure relatable to earning of such income is to be allowed before calculating exclusion of such amount for the purpose of 80P(2)(a)(i) of the Act. Since interest income earned by the assessee was treated to be “income from other sources” under section 56, then, the assessee can claim deduction u/s 57 of the Act. Therefore, we direct the AO to allow expenditure for earning such interest income. In other words, the ld.AO has to determine the net interest income earned by the assessee after giving set off expenditure, and only thereafter that net income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. Grounds of appeal of the assessee are thus partly allowed for the statistical purpose.
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