Interest on Loan

Not at all. It will not allowed. Divindend income is exempt so no exp. allowed against that income.

and interest shall also not allowed against interest on FD.

Under Income Tax Act, only those exp. allowed against income which r incurred to earn that income. So, if take loan and make FD of that then interest shall allowed but not in this case.

Here, u can claim interest against income u earn from using Loan.

 NO DEDUCTION WOULD BE ALLOWED U/S 57 AS YOU CANNOT CLAIM DEDUCTION OF EXPENSE WHICH RESULTS INTO EXEMPTED INCOME BUT IF THE DIVIDEND U/S 2(22)e HAS BEEN RECIEVED THEN YOU CAN CLAIM DEDUCTION U/S 57

here it not allowed, i sure. u first read section 57, prateek. U r wrong and i know what is 2(22)(e)

Here, it is not apply, first read question properly, apply logic.