Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 883 - HC - Income TaxDeduction u/s 57(iii) - Tribunal justification in holding that on the borrowings in question, the appellant was neither entitled to claim any deduction under Section 57(iii) nor for a deduction u/s 36(1)(iii) - HELD THAT:- Sec 57(iii) of the Act mandates that income chargeable under the head 'income from other sources' shall be computed after making a deduction of any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income. Section 57(iii) of the Act does not require that the expenditure incurred is deductible only if expenditure has resulted in actual income. As long as the purpose of incurring expenditure is to earn income, the expenditure would have to be allowed as a deduction under Section 57(iii) of the Act. Under Section 57(iii) of the Act a nexus between the expenditure and income has to be ascertained. The assessee was therefore, entitled to deduction under Section 57(iii) of the Act. The tribunal exceeded its jurisdiction in disallowing the entire interest expenditure and the power of the tribunal is limited to passing of the order in respect of subject matter of the appeal. Thus substantial question of law is answered and is held that assessee is entitled to claim deduction under Section 57(iii) of the Act. Whether the appellant had failed to prove its contention in the alternative that he borrowings in question were made for business purposes? - Whether Tribunal has not been justified in making the observations that the deduction as claimed was not allowable not only in excess of interest expenditure over interest earned, but also the entire interest expenditure incurred on the borrowings in question? - The second and third substantial questions of law are answered in the affirmative and in favour of the assessee.
|