Judgment :- R. JAYASIMHA BABU, J. The State has come up in revision against the order of the Agricultural Income-tax Appellate Tribunal which has allowed the assessee to deduct the amount of interest paid from the interest received by it during the year 1981-82 even before considering the assessee's entitlement to the amount of interest that it can properly claim as deduction under section 5(k) of the Tamil Nadu Agricultural Income-tax Act, 1955 The Agricultural Income-tax Officer had rightly observed that the income received by way of interest should have been added to the total income and the amount of interest paid only claimed as deduction to the extent permissible under law. The assessee had reported the receipt of Rs. 1, 35, 908 as interest received by it on investments and loans and a sum of Rs. 2, 09, 811.13 as interest paid. While calculating its net expenditure, it set off the interest, deducted the total amount of the interest received from the total expenditure including the amount of interest paid and claimed a sum of Rs. 4, 46, 202.02 as the net expenditure. In this process, the assessee sought to obtain for itself the benefit of the deduction of the entire amount paid as interest as a deduction Section 5(k) of the Act as it stood at the relevant time imposed a ceiling on the interest deductible under that provision. It is not open to the assessee to enlarge that amount by claiming set off of the interest earned against the interest paid and claiming the benefit under section 5(k) of the Act in respect of the balance The computation of income has first to be made and the computation of items of expenditure to be deducted separately and it is only the expenditure found to be admissible, that can be deducted from the income. The two heads cannot be mixed up even before the computation is made and a larger benefit than what the law envisages sought to be obtained by the assessee, by that process of setting off expenditure under one head against income under the same head independently of the computation of income and expenditureThe Tribunal was, therefore, in error in holding that this method of accounting adopted by the assessee was a legally permissible method Learned counsel for the assessee, however, placed reliance on the decision of this court in T.C. No. 43 of 1987 (State of Tamil Nadu v. Tvl. Panchara Estates Limited) decided on October 19, 1994. It was merely observed therein that the deduction of the interest income from the interest paid was in order. While making that observation, the court did not take into consideration the limitation of the amount of interest that can be claimed as deduction under section 5(k) of the Act. We are unable to regard that judgment as having laid down the proposition that, despite the ceiling on the amount of interest deductible under section 5(k) of the Act, a larger sum can be deducted by the assessee by merely setting off the interest earned against the interest paid even before computing the amount admissible under section 5(k) of the Act. The amount admissible under section 5(k) of the Act is the proportion to be calculated on the total amount of interest paid and not on the lesser amount arrived at after setting off the interest received against the interest paid We, therefore, set aside the order of the Tribunal and allow the revision petition. No costs.