1987 (4) TMI 6

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....y her. The Income-tax Officer found that out of the loans, real investment was for a sum of Rs.1,250 only. He disallowed the claim to the extent of Rs. 10,279 on proportionate basis. According to him, this claim could not be admitted under section 57(iii) of the Income-tax Act, 1961. Assessee's first appeal to the Appellate Assistant Commissioner was rejected. The Appellate Authority relied upon the ratio of the decision of the Bombay High Court in Bai Bhuriben Lallubhai v. CIT [1956] 29 ITR 543 and dismissed the appeal. In further appeal before the Tribunal, the claim of the assessee was reiterated by contending that expenditure under the head of payment of income-tax and wealth-tax and annuity deposits should have been taken as revenue ....

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....achandran for the assessee that unless the claim comes within the purview of section 57(iii) of the Act, it would not be admissible as a deduction. That section as far as relevant provides: "The income chargeable under the head 'Income from other sources' shall be computed after making the following deductions, namely:-..... (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income : ...... .." In order that the claim for the deduction could be sustained, it was for the assessee to satisfy the Income-tax Officer that the loan, interest in respect of which is claimed as deduction, was laid out or expended wholly and exclusively ....

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....e heads specified in section 14, items A to E, shall be chargeable to tax under the head 'Income from other sources ' and sub-section (2) includes in such income various items, one of which is ' dividends'. Dividend on shares is thus income chargeable under the head 'Income from other sources'. Section 57 provides for certain deductions to be made in computing the income chargeable under the head 'Income from other sources ' and one of such deductions is that set out in clause (iii), which reads as follows: ...... The expenditure to be deductible under section 57(iii) must be laid out or expended wholly and exclusively for the purpose of making or earning such income ...... " In the said decision, this court clearly indicated that (page 5....