Search Results Page
Search Results
1 - 5 of 5 (0.19 seconds)Shew Kissen Bhattar vs The Commissioner Of Income Tax, ... on 5 March, 1973
It was urged that section 57(iii) of the Act was in much wider terms than section 9(1)(iv) of the Indian Income-tax Act, 1922, and, therefore, the decision of the Supreme Court in Shew Kissen Bhatter's case [1973] 89 ITR 61, can have no application. We find ourselves unable to accept this contention. As already observed above, the reasons which the Supreme Court has given in the context of section 9(1)(iv) of the Indian Income-tax Act, 1922, apply with equal force while considering the allowability of expenditure under section 57(iii) in a case like that of the assessee. The assessee had borrowed money to make investment in share and, therefore, while computing dividend income falling under the head "Income from other sources", the assessee can legitimately claim deduction of interest payable on such borrowed amount as expenditure under section 57(iii) of the Act. However, interest, which the assessee is required to pay on account of his failure to pay interest payable on the borrowed amount cannot be considered to be an expenditure laid out or expended wholly and exclusively for the purpose of making or earning the said income. The unpaid interest may become part of the principal amount under the principles of accountancy, but it cannot be considered to be part of the amount borrowed for the purpose of investment. What the assessee is entitled to deduct is the interest payable by him on the principal amount borrowed by him which he invested in share and not the additional interest which, because of his failure to pay the interest on due date, had been considered to be part of the loan or the amount borrowed. We, therefore, find our selves unable to accept the assessee's contention that interest paid on interest takes the colour of the interest payable on the amount borrowed, which was invested and that the nature and character of such interest is not different from the interest payable on such borrowed amount. Whether interest payable on interest is part of the same transaction and whether it becomes part of the principal amount borrowed under the principles of accountancy is of no consequence.
Income Tax Rules, 1962
Section 256 in The Income Tax Act, 1961 [Entire Act]
The Income Tax Act, 1961
1