Section 80P(2)(d) deduction denied for nationalized bank interest, but related proportionate expenditure allowed.

Interest received from a nationalized bank was held not to qualify for deduction under section 80P(2)(d), following the jurisdictional High Court decision relied on in the order but on the facts presented before the Tribunal. The assessee's deduction claim was therefore denied to that extent. Expenditure having a proximate nexus with earning that interest was, however, held allowable on a proportionate basis. The result was partial relief: the deduction on bank interest was disallowed, while the related expenditure claim was accepted.

---

---

Issues: (i) Whether interest received from a nationalized bank was eligible for deduction under section 80P(2)(d); and (ii) whether the proportionate expenditure relatable to earning such interest was allowable.

Issue (i): Whether interest received from a nationalized bank was eligible for deduction under section 80P(2)(d).

Analysis: The Tribunal followed the jurisdictional High Court decision relied upon in the order, but distinguished the present factual position and held that interest earned from a nationalized bank did not qualify for deduction under section 80P(2)(d). The claim was therefore not accepted to that extent.

Conclusion: The issue was decided against the assessee.

Issue (ii): Whether the proportionate expenditure relatable to earning such interest was allowable.

Analysis: The Tribunal held that expenditure having proximate nexus with the earning of the interest income could be allowed on a proportionate basis.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The appeals were disposed of by sustaining the disallowance of deduction on interest from the nationalized bank while granting relief for the related proportionate expenditure, resulting in partial success for the assessee.

---