TaxTMI 
TaxTMI 
1978 (10) TMI 133
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....investment in shares is allowable expenditure under s. 57(iii) when the shares have not yielded any return in the shape of dividend during the relevant assessment year. The preponderance of judicial opinion is in favour of the view that such interest is admissible, even though no dividend is received on the shares, but there are two High Courts which have taken a different view and hence it is necessary for this court to set the controversy at rest by finally deciding the question. Since the question is pure one of law turning on the true interpretation of s. 57(iii), it is not necessary to set out the facts giving rise to these two references in any detail. It would be sufficient to state that the assessees in these two references are brot....
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.... question, the Tribunal referred it directly for the opinion of this court. The determination of the question before us turns on the true interpretation of s. 57(iii) and it would, therefore, be convenient to refer to that section, but before we do so, we may point out that s. 57(iii) occurs in a fasciculus of sections under the heading, " F --Income from other sources ". S. 56, which is the first in this group of sections, enacts in sub-s. (1) that income of every kind which is not chargeable to tax under any of the heads specified in s. 14, Items A to E, shall be chargeable to tax under the head " Income from other sources," and sub-s. (2) includes in such income various items, one of which is " dividends ". Dividend on shares is thus ....
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....come chargeable under the head " Profits or gains of business or profession ". The language used in s. 37(1) was " laid out or expended for the purpose of the business or profession " and not " laid out or expended for the purpose of making or earning such income" as set out in s. 57(iii). The words in s. 57(iii) being narrower, contended the revenue, they cannot be given the same wide meaning as the words in s. 37(1) and hence no deduction of expenditure could be claimed under s. 57(iii) unless it was productive of income in the assessment year in question. This contention of the revenue undoubtedly found favour with the High Court but we do not think we can accept it. Our reasons for saying so are as follows. What s. 57(iii) requires i....
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....tation of s. 57(iii). It is also interesting to note that, according to the revenue, the expenditure would disqualify for deduction only if no income results from such expenditure in a particular assessment year, but if there is some income, howsoever small or meagre, the expenditure would be eligible for deduction. This means that in a case where the expenditure is Rs. 1,000, if there is income of even Re. 1, the expenditure would be deductible and there would be resulting loss of Rs. 999 under the head " Income from other sources ". But if there is no income, then, on the argument of the revenue, the expenditure would have to be ignored as it would not be liable to be deducted. This would indeed be a strange and highly anomalous result....
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....has to be construed according to its plain natural meaning and merely because a slightly wider phraseology is employed in another section which may take in something more, it does not mean that s. 57(iii) should be given a narrow and constricted meaning not warranted by the language of the section and, in fact, contrary to such language. This view which we are taking is clearly supported by the observations of Lord Thankerton in Hughes v. Bank of New Zealand [1938] 6 ITR 636, 644 (HL), where the learned Law Lord said : " Expenditure in course of the trade which is unremunerative is none the less a proper deduction, if wholly and exclusively made for the purposes of the trade. It does not require the presence of a receipt on the credit....