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2024 (3) TMI 1150 - AT - Income TaxIncome from other sources - Deduction of interest expenditure - direction of the CIT – A in restricting the deduction to the extent of income earned of term deposit - whether the expenditure of interest is laid out or expended wholly and exclusively for the purpose of making or earning such income is required to be tested - HELD THAT:- Undoubtedly the assessee has earned bank interest of Rs. 41 lakhs. According to section 57 of the income tax act, assessee is entitled to deduction under section 57 (iii) of any other expenditure which is not in the nature of capital expenditure which is laid out or expended wholly and exclusively for the purpose of making or earning such income. Same has been verified and decided by the coordinate bench in case of assessee for assessment year 2013 – 14 till 2015 – 16 [2020 (11) TMI 326 - ITAT MUMBAI]. Further the direction of the CIT – A in restricting the deduction to the extent of income earned of term deposit is also not in accordance with the decision of the coordinate bench wherein in case of Mr. Ashwin Mehta [2019 (11) TMI 1450 - ITAT MUMBAI] wherein against the interest receipt of ₹ 1,801,778/– the coordinate bench has granted the deduction of ₹ 21,969,050/–. Thus we direct the learned assessing officer to allow the claim of the assessee of deduction of interest expenditure. Accordingly, ground is allowed. Charge of interest u/s 234B - HELD THAT:- The proviso to section 209 (1) has been inserted with effect from 1 April 2012. Therefore if any income of the assessee on which tax is deductible, the interest under section 234B shall not be chargeable prior to 1 April 2012. AO is directed to compute the interest in accordance with the law as it was prevailing for assessment year 2006 – 07. Accordingly ground number 3 of the appeal is allowed with above direction.
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