Section 57(iii) deduction allowed for charitable trust income assessed as other sources without sections 11 and 12 exemption.

A charitable trust that did not claim exemption under sections 11 and 12 was assessed under the head income from other sources and sought deduction for expenditure and donations under section 57(iii). The tribunal applied the principle that, where income is brought to tax under the residual head, expenditure incurred wholly for the purpose of earning that income is deductible if it satisfies section 57(iii). It held that the absence of a claim under sections 11 and 12 did not by itself bar the deduction, and allowed the claim on the facts, setting aside the disallowance.

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Issues: Whether the assessee, a charitable trust not claiming exemption under sections 11 and 12, was entitled to deduction under section 57(iii) in respect of expenditure/donations claimed against income assessable under the head income from other sources.

Analysis: The assessee's income was assessed under the residual head, and the claim was examined on the footing that expenditure incurred for the purpose of making or earning such income is deductible under section 57(iii). Reliance was placed on the principle that where exemption under sections 11 and 12 is not claimed or available, the assessment must proceed under the Act as applicable to the income actually brought to tax, and full effect must be given to section 57(iii). Following the binding and similar precedents relied upon, the claimed deduction was held to be allowable on the facts of the case.

Conclusion: The claim for deduction under section 57(iii) was allowed and the disallowance was set aside in favour of the assessee.

Ratio Decidendi: Where income is assessed under the head income from other sources, expenditure incurred for the purpose of earning that income is allowable under section 57(iii), and the absence of a claim under sections 11 and 12 does not by itself bar such deduction.

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