With effect from AY 2010-11 Interest received on enhanced Compensation is taxable in the year of Receive and deduction equal to 50% of such interest income is allowed u/s 57. This deduction is for exp. Incurred for getting enhance compensation and interest , this is ad-hoc deduction thus we can take direct benifit of 50% irrespective of actual exp. Incurred (means no effect of exp. Done or not or exp. higher or lower then 50 % ) Hope your query resolve now .