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2022 (10) TMI 594 - AT - Income TaxDeduction of expenditure from income taxable under the head "From Other Sources" - Car Lease rental income - CIT(A) restricted the expenses to the extent of income so earned - HELD THAT:- Section 57(iii) of the Act is in line with section 37 (1) of the Act which in general (subject to its Explanation) makes available deduction of any expenditure, not being expenditure of the nature described in sections 30 to 37 of the Act and not being in the nature of capital expenditure or personal expenses of the assessee, expended wholly and exclusively for the purposes of the business or profession while computing the income chargeable under the head 'profit and gains of business or profession'. Thus, as per the mandate of section 57 (iii) of the Act, it is necessary that the primary motive of incurring such expenditure should be directly relatable to the earning of income falling under the head 'income from other sources'. In the present case it is beyond doubt that depreciation, interest on loan, repairs and maintenance expenses as well as insurance expenses were directly relatable to the earning of lease rental which was shown by the assessee under 'income from other sources'. A plain reading of section 57 (iii) of the Act would lead one to the conclusion that it does not say that the expenditure shall be deductible only if any net positive income is made or earned. Therefore, there can even be a negative income/loss u/s. 57(iii) of the Act. Therefore, by this reasoning also, CIT(A) was incorrect in directing that the amount of deduction should be restricted to the income earned. Accordingly, on an overall view of the facts of the case and in view of our discussion in the preceding paragraphs, we are of the considered view that the Ld. CIT(A) was legally wrong in restricting the disallowance to the quantum of lease rental earned. While allowing the appeal of the assessee, we direct the AO to allow the impugned expenditure claimed in full. Appeal of the assessee stands allowed.
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