Bank fixed-deposit interest not deductible under section 80P, but only net interest after related must be excluded

Interest on fixed deposits with a bank was treated as not deductible under section 80P(2)(d) under binding jurisdictional precedent, but related expenditure had to be considered so the Assessing Officer could first compute the net interest income and exclude only that net amount from the deduction claim.

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Issues: Whether interest income earned on fixed deposits with a nationalized bank is deductible under section 80P(2) of the Income-tax Act, 1961, and whether only the net interest income after deducting related s is to be excluded from the deduction claim.

Analysis: The issue was treated as covered against the assessee by binding jurisdictional precedent holding that interest earned from investment made in any bank is not deductible under section 80P(2)(d). At the same time, the Tribunal accepted that expenditure incurred for earning such income has to be taken into account, and the Assessing Officer must first determine the net interest income from such investment before excluding it from the deduction under section 80P(2).

Conclusion: Interest on fixed deposits with a bank is not deductible under section 80P(2), but the Assessing Officer must compute the net interest income after allowing related expenditure for the limited purpose of exclusion.

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