TaxTMI 
TaxTMI 
1983 (1) TMI 19
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....; Assessment year Amount of interest Rs. 1964-65 1,724 1965-66 3,421 1966-67 4,190 ? " Smt. Zubedabai, wife....
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....the expenditure was not " laid out or expended wholly and exclusively for the purpose of making or earning such income " as mentioned in s. 57(iii). The question referred arises out of this order of the Tribunal. Now, there could be no manner of doubt that the income was rightly claimed under the head " Other sources " under s. 56. The income under this head is to be computed after working out certain deductions under s. 57, and one type of such deduction is referred to in s. 57(iii). Two other provisions of the Act, namely, ss. 37 and 58, may be noticed to appreciate the import of s. 57(iii). Section 37 provides that while computing the income from a business or profession source, one of the permissible deductions is expenditure " laid ou....
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.... should have been allowed. It seems to us that this line of reasoning is not sound. If the argument is carried to its logical conclusion, the result would be ridiculous. Interest paid on any borrowings for discharging any statutory or commercial liability would be deductible, for it would always be possible to say that if those borrowings had not taken place, the income earning apparatus, including deposits such as these, would have to be liquidated, and that consequently would have resulted in loss of income. But in the scheme of s. 57(iii) this is not permissible. May be that the motive behind the borrowings was what was suggested. But for establishing a nexus, not the motive but the purpose is relevant. It is obvious that the interest on....