Business loan expenses remain deductible against partnership share income where the borrowing was for the same business.

Interest and litigation expenses on loans taken for business purposes remained deductible against the assessee's share of partnership profits because the loans were borrowed for the cinema business and used to advance funds to film distributors. The subsequent conduct of that business through a partnership did not change the business character of the borrowing or the related expenditure. As the assessee continued to bear the loan liability and claimed the deduction only against his share income from the firm, the expenses were allowable in computing business income.

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Issues: Whether interest and litigation expenses incurred on loans taken for business purposes were deductible from the assessee's share income from a partnership firm.

Analysis: The loans were found to have been borrowed for the assessee's cinema business and used in advancing funds to film distributors. The fact that the cinema business was later carried on through a partnership did not alter the character of the business income or the deductibility of expenses incurred for that business. Since the assessee retained the liability on the loans and claimed the deduction only against his share of partnership profits, the expenditure remained allowable in computing business income under the relevant deduction provision.

Conclusion: The interest and litigation expenses were deductible from the assessee's share income and the answer was in the affirmative, in favour of the assessee.

Ratio Decidendi: Expenditure incurred on loans taken and utilised for business purposes remains deductible against business income, including a partner's share income from a firm carrying on that business, where the liability is retained by the assessee.

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