TaxTMI 
TaxTMI 
1967 (12) TMI 23
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....s deduction under section 12 of the Income-tax Act, 1922 ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 9,422 credited to the account of the assessee in the books of account of Regal Cinema Ltd., East Africa, has been rightly included in the income of the assessee and subject to tax ? " The material facts as appearing from the statement of the case are these. The assessee is a shareholder and director of Ratlam Straw Board Mills (Private) Limited, Ratlam. He holds 225 shares of Rs. 1,000 each. He had borrowed Rs. 20,000 from Abdul Hussain Ismailji in December, 1953, and deposited that amount with the company in two installments on January 19, 1954, and February 1, 1954. He had borrowed another sum of R....
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....Tribunal is correct. What was in contest before the income-tax authorities was whether the assessee had borrowed any money, as claimed by him, for investing in shares of the company. It was not in dispute that money was invested solely for the purpose of making or earning income, profits or gains. The department, however, contended that, since there was no income from the investment in the shape of dividends, interest paid on money borrowed for making the investment could not be allowed. The Tribunal did not accept that contention and stated : "We agree with the assessee's submissions. We have been following the decision of Ormerods (India) Private Ltd. v. Commissioner of Income-tax in other cases that came up before the Tribunal. There is....
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....cated in Maharajadhiraj Sir Kameshwar Singh v. Commissioner of Income-tax and Madanlal Sohanlal v. Commissioner of Income-tax. In our opinion, all that section 12(2) requires is that the expenditure should be incurred solely for the purpose of earning income or making profits or gains, that it is not required that it should be fruitful and that interest found to have been paid on money borrowed for investing in shares in a company is a legitimate deduction under section 12(2) of the Act. In the instant case, there is income from which the expenditure is deductible. We should not, however, be regarded as expressing any opinion about a case where there is no income. In regard to the second question, we are of opinion that it could not have ....