TMI Blog1961 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other shares owned by him. He had, however, other income which was assessable and was in fact assessed under the head other sources ; and he claimed that the interest payment should be deducted from the income from other sources before the assessable income under that head could be computed. The Income-tax Officer refused this relief on the ground: It is gathered at the time of hearing that the assessee borrowed more than a lakh of rupees from this bank for investing in shares in Subhodaya Publications, a limited concern. No income is derived from this company so far. This interest payment cannot, therefore, be allowed under 'business' as the borrowed money was not utilised for business purposes. The Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment that in computing the income under each of the heads specified under section 6 of the Act, the different incomes relating to the several activities that would fall under the same head have to be taken. But what the Tribunal has thought fit to do in this case is to ignore a loss that occurred in respect of one of the many sources which fell under this head of income on the ground that there was no income to start with from which the interest payment could be deducted. The question accordingly is whether this is the proper method of approach in computing the income under the head other sources . It has to be noticed that if there had been any income from these shares, the Tribunal apparently thought that the interest payment could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased to pay dividends since a long time, the expense was not an expenditure incurred for earning dividends in the company. On a reference to the High Court, the learned judges held that the expenditure could not have been incurred for the purpose of making or earning any income because the shares had ceased to earned dividends since a long time. We are not satisfied that this decision has any real application to the facts of the present case. What was found as a question of fact by the Tribunal was that there was no prospect of any income being received from the shares in that company. After referring to certain decisions, the learned judges proceeded to hold: ...none of these cases have any application to the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to accept instead of cash, debentures of the face value of ₹ 50,00,000 carrying interest at 5 per cent. per annum. This arrangement was entered into with the sanction of the High Court. When the assessee sought to deduct the interest paid on these debentures from his income, the claim was disputed by the department. The High Court also on a reference held that the interest payment was not an allowable item of expenditure. On further appeal to the Supreme Court their Lordships enunciated certain principles on the true construction of section 12(2). They stated that it is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned; further that it is enough to show that the money was expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction but that the purpose of the purchase was an entirely different matter, and they held that notwithstanding that no income was realised from the shares in question, the investments were made for the purpose of earning the income and that the interest paid on the loans could be set off against other income under section 24(1) of the Act. Though the question that was considered in the Bombay case referred to was one of set-off under section 24(1) of the Act it seems to us that even before the assessee can ask for a set-off it is open to him to adjust under the same head of income the various receipts and outgoings in order to arrive at the net assessable figure. In Anglo-French Textile Co. Ltd. v. Commissioner of Income-tax* ..... X X X X Extracts X X X X X X X X Extracts X X X X
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