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TMI Blog1992 (3) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ies borrowed from outside agencies. The assessee claimed a sum of Rs. 62,819 as interest from the dividend income which is to be assessed under the head 'Income from other Sources'. The AO negatived the claim of the assessee on the ground that the motive of the assessee was to acquire controlling interest in M/s Universal Paper Mills Ltd. and that the said company was financially not sound and viable. The AO examined the accounts and assessment records of M/s Universal Paper Mills Ltd. to find out the financial position of the company. It is also observed by the AO that immediately after acquiring the shares the brother of the assessee was appointed as Managing Director of that company. Therefore, the claim of interest for deduction while c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the monies borrowed for acquiring. shares in M/s-Universal Paper Mills Ltd. particularly when no dividend has been earned by the assessee from that company. According to the learned Departmental Representative a plain reading of s. 57(iii) clearly lays down that the deduction of expenditure is to be allowed only if the same is laid out or expended wholly and exclusively for the purpose of making or earning such income. As there was no income to the assessee from M/s Universal Paper Mills Ltd. interest cannot be allowed as deduction from the dividend income earned from other companies. Thus, the Departmental Representative submits that the AO and the CIT(A) did not, commit any error in negativing the claim of the assessee towards the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) and that "purpose" must be making or earning of income. But the provision of s. 57(iii) does not lay down as a condition precedent that this "purpose" should be fulfilled by an assessee in order to enable him to claim expenditure as a deduction. This section does not say in clear terms that the expenditure will be only deductible if any income is made or earned. We find nothing in the language of s. 57(iii) to suggest that the purpose for which the expenditure has been made or incurred should and must result into some benefit or income to an assessee. The ordinary and simple construction of the language employed in s. 57(iii) irresistably leads to the conclusion that in order to bring a case within its ambit it is not necessary at all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not produce or result in any income is nonetheless a proper deduction if the same is incurred and laid out wholly and exclusively for the purpose of trade or for the purpose of earning any income or making profit. We do not think that it requires the presence of a receipt on the credit side to justify the deduction of an expense made on the debit side. In our view, therefore, the assessee, irrespective of the motive is entitled to claim deduction of the interest of Rs. 62,819 from the dividend income in respect of other companies under the head 'income from other sources' though the assessee has not earned any dividend income from M/s Universal Paper Mills Ltd. The view which we have taken is not only justified by the language employed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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