TMI Blog1984 (7) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... , 31-3-1968 and 31-3-1969, respectively. In this case also, the ITO had come to the conclusion that Mr. Gautam Sarabhai was not the employee of the said company. He, therefore, came to the conclusion that the remuneration received by the assessee was taxable under the head 'Income from other sources'. The AAC, Ahmedabad, confirmed that decision and the matter was carried before the Tribunal. The Tribunal held that the assessee was an employee of Karamchand Premchand (P.) Ltd. It was, therefore, held that the remuneration received by the assessee in each year was taxable as income from salaries and not income from other sources. The assessee had made contributions to a recognised provident fund as the director of the said company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aries', the assessee's contribution to the provident fund would be includible in the hands of the assessee subject to rule 6(a) of Part A of the Fourth Schedule to the Act for the assessment years 1968-69 and 1969-70. Similarly, interest on contribution amounting to Rs. 3,807 for the assessment year 1969-70 was also held to be includible in the hands of the assessee subject to rule 6{b) of Part A of the Fourth Schedule to the Act. The Tribunal further held that since there was no income chargeable under the head 'Salaries' for the assessment year 1967-68, the question of inclusion of the employer's contribution in the hands of the assessee did not arise for that year. 2. So far as the employer's contribution to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atau v. ITO [IT Appeal No. 1602 (Ahd.) of 1971-72 decided on 21-11-1974], held that the aforesaid amount of Rs. 13,938 was not includible in the hands of the assessee. Another item was that the ITO disallowed the interest to the extent of Rs. 4,043 on the ground that borrowed funds to the extent of Rs. 82,800 were utilised for the purchase of shares of Bag House (P.) Ltd. and no income had been earned on these shares. The AAC allowed the deduction of the said interest of Rs. 4,043. The Tribunal, following the decision of the Bombay High Court in Ormerods ( India) ( P.) Ltd. v. CIT [1959] 36 ITR 329, confirmed the order of the AAC allowing the assessee's claim with regard to the aforesaid interest of Rs. 4,043. The Commissioner submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and in the circum stances of the case, the Tribunal was right in law in holding that the interest on the accumulated balance of the provident fund was includible in the hands of the assessee subject to rule 6(b) of Part A of the Fourth Schedule to the Income-tax Act, 1961? 6. Whether, on the facts and in the circum stances of the case, the reimbursement of medical expenses by Karamchand Premchand (P.) Ltd. to the assessee is not assessable in the hands of the assessee for the years under reference? 7. Whether, the Tribunal was right in law in holding that the amount of Rs. 13,938 received by the assessee from the several discretionary trusts as the beneficiary (in the assessment year 1969-70) was not assessab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that as the amount was invested in shares of a company from where dividend was not likely to come, the borrowing for the purpose of purchasing such shares and interest paid thereon, should not be allowable as deductions. The AAC, for good reasons, came to a different conclusion. Before the AAC, it was argued that there was no material on record for the ITO to come to such a conclusion about the limited company. Therefore, so far as the ITO was concerned, no material was placed in regard to Bag House (P.) Ltd. The fact remained that the master did purchase shares of that particular company. He did borrow money for the purpose and paid interest. Those were the admitted facts. Now that merely because Bag House (P.) Ltd. did not make profit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the purpose of making or earning income. The section does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction: it does not say that the expenditure shall be deductible only if any income is made or earned. Where the assessee borrowed monies for the purpose of making investment in certain shares and paid interest thereon during the accounting period relevant to the assessment year but did not receive any dividend on the shares purchased with those monies: Held, accordingly, that the interest on monies borrowed for investment in shares which had not yielded any dividend was admissible as a deduction under section 51(iii) of the Income-tax Act, 1961, in computing its income from dividend u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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