Cost of funds deductible against interest income from co-op & scheduled banks

Mudur Vyavasaya Seva Sahakari Sangha Ltd Vs ITO (ITAT Bangalore)

In the case of Mudur Vyavasaya Seva Sahakari Sangha Ltd Vs ITO (ITAT Bangalore), the issue revolves around the tax treatment of interest income received from cooperative banks and scheduled banks. The assessee contends that the entire interest income should not be taxed as income from other sources under section 56 of the Income Tax Act, 1961. Instead, they argue that the cost of funds used to generate this income should be allowable as an expense under section 57(iii).

The primary contention of the assessee is

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