9911796707
TMI Blog2001 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant accounting periods are the financial years ended on March 31, 1978, March 31, 1979 and March 31, 1980, respectively. The assessee is a limited company in which the public are not substantially interested. The Income-tax Officer disallowed the sum of Rs. 6,87,170 for the assessment year 1978-79, Rs. 8,42,610 for the assessment year 1979-80 and Rs. 8,63,054 for the assessment year 1980-81 holding that the assessee's claim under section 57(iii) of the Act was not allowable in view of the fact that the expenditure on interest had not been laid out wholly and exclusively for the purpose of making or earning such income. The Commissioner of Income-tax (Appeals) held that the disallowance had correctly been made by the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, only with a view to indirectly facilitate carrying on the activity of Ofisade Pvt. Ltd., which is a source of income. Elaborating on this submission, it was submitted that Telerad Pvt. was a manufacturing unit while the assessee-company was an investment company and hence to ensure that the manufacturing activities were carried on efficiently the unit was transferred to Ofisade Pvt. Ltd. Which was a manufacturing company. That the borrowing made by the assessee-company and the liability to pay interest on such borrowing was incurred and the assessee's claim had to be appreciated in light of the fact that the assessee fulfilled all the requirements of section 57(iii) of the Act, i.e., the expenditure was neither in the nature of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the sides we do not find any good reason to interfere with the order of the Tribunal for the following reasons: Section 57(iii) of the Act is relatable to deductions allowable against the income chargeable under the head--"Income from other sources". As to what is income from other sources is laid down in section 56 of the Act which specifically states that it is income which is not chargeable to income-tax under any of the heads specified in section 14, items A to E. Therefore, on a conjoint reading of the various provisions of the Act and applying the said provisions and the facts found by the Tribunal it is apparent that the assessee-company was not carrying on any business and thus was not having income which would fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected, because it is the consideration for transfer of shares which is payable in instalments and that too without interest. It is not as if non-receipt of consideration is a form of investment by way of interest bearing deposit; if it was so, the contention might have deserved consideration. Even otherwise, the borrowing was not for the purpose of investment by way of outstanding dues. Further more, even if for the sake of argument it is accepted that the outstanding dues would be a form of investment, yet in the face of the fact that the same was not interest bearing it cannot be said that the borrowing had been utilised for the purpose of making or earning income. On the other hand, the Tribunal has found that the source of income, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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