Deductibility of company expenditure for statutory compliance and other sources income upheld where wholly and exclusively incurred.

A company that has not been formally struck off remains subject to statutory filing obligations and may incur expenditure to preserve its corporate status. Expenditure incurred for that purpose, and expenditure directly or indirectly connected with earning income assessed under the head "Other sources," may be examined for deduction under the applicable provision. The direction to consider allowability was upheld, and the issue was answered in favour of the assessee. The stated principle is that such expenditure is deductible if it is shown to have been incurred wholly and exclusively for the relevant purpose.

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Issues: Whether the expenditure claimed by the assessee-company, including expenditure incurred to retain its status as a company and to earn income assessed under the head "Other sources", was liable to be examined for allowability.

Analysis: A company that has not been formally struck off the register continues to have statutory obligations, including the filing of statements and returns, and may necessarily incur expenditure for that purpose as well as for preserving its corporate status. Where the assessee also derives income from other sources, expenditure incurred directly or indirectly for earning such income may fall for consideration under the applicable deduction provision.

Conclusion: The direction to examine the allowability of the expenditure was justified, and the issue is answered in favour of the assessee.

Ratio Decidendi: Expenditure incurred by a continuing company to meet statutory obligations and to earn income assessable under the head "Other sources" is capable of deduction if it is shown to be incurred wholly and exclusively for that purpose.

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