https://www.taxtmi.com/caselaws?id=169462 Interest on borrowings was held not deductible under section 12(2) of the Income-tax Act, 1922 where the loans were used for household expenses, purchase of jewellery, and payment of advance tax. The governing test stated was whether the expenditure had a real nexus, direct or indirect, with earning the fixed-deposit income and was incurred solely for that purpose. Borrowings for personal outgoings did not satisfy that nexus, and choosing to borrow instead of using existing funds did not convert a personal expense into income-earning expenditure. The advance-tax borrowing likewise did not qualify, as it was directed to meeting a statutory liability and only incidentally related to the income. en-us Thu, 21 Apr 1955 00:00:00 +0530 Tue, 21 Apr 2015 14:20:01 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=169462 Interest on borrowings was held not deductible under section 12(2) of the Income-tax Act, 1922 where the loans were used for household expenses, purchase of jewellery, and payment of advance tax. The governing test stated was whether the expenditure had a real nexus, direct or indirect, with earning the fixed-deposit income and was incurred solely for that purpose. Borrowings for personal outgoings did not satisfy that nexus, and choosing to borrow instead of using existing funds did not convert a personal expense into income-earning expenditure. The advance-tax borrowing likewise did not qualify, as it was directed to meeting a statutory liability and only incidentally related to the income. Case-Laws Income Tax Thu, 21 Apr 1955 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=169462