TMI Blog1992 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... g year. The assessee claimed deduction of this amount under section 80P(2)(d) of the Act. It has been laid down in the said provision that in respect of any income by way of interest or dividend derived by the co-operative society from its investments with any other co-operative society, the whole of such income will be liable to be deducted in computing the total income of the assessee. In the original assessment order, the ITO had allowed deduction of Rs. 2,23,402 on the ground that this amount represented income by way of interest derived by the assessee society from its investments with the other co-operative society named above. 2. The CIT, Baroda, initiated proceedings under section 263 of the Act as he was of the view that interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give effect to the order of the Commissioner passed under section 263 of the Act. The same submissions as were made before the Id. Commissioner were made before the ITO. According to the ITO since interest income was assessable under the head income from other sources, interest expenditure, whatever its nature, will be allowable as deduction from such interest income and that interest expenditure would not be allowable as deduction as business expenditure. He accordingly deducted Rs. 1,43,419 which represented interest paid by the assessee, from Rs. 2,80,529 and allowed deduction of Rs. 1,37,110 under section 80P(2)(d) of the Act. 4. The assessee filed appeal before the Dy. CIT(A) who directed the ITO to allow deduction of Rs. 2,80,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of income of that nature as computed in accordance with the provisions of the Act (before making any deduction under Chapter VI-A) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. 8. In plain terms, what has been laid down in the said provision is that net income, and not gross income, was allowable as deduction under section 80P(2)(d) of the Act. However, the question still remains as to in what manner the net income is to be computed. As already stated, under section 80P(2)(d) what is allowable as deduction is income by way of interest from investments with any other co-operative society. The question, therefore, would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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