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1 - 10 of 12 (0.52 seconds)Section 24 in The Income Tax Act, 1961 [Entire Act]
Maharajadhiraja Sir Kameshwar Singh vs Commissioner Of Income-Tax, Bihar And ... on 25 October, 1960
The contrary view expressed by the Patna High Court in Maharajadhiraj Sir Kameshwar Singh v. Commissioner of Income-tax may now be examined. The assessee had acquired certain shares in a company, which he treated as an investment. He made a contribution to the trustees for debentures in the company for the expenses of litigation against the U. P. Government, who revoked their undertaking to purchase the company, as a going concern and pressed for its winding up. The assessee claimed that the contribution was for the purpose of safeguarding his interest in the shares of the company. The department and the Tribunal did not allow the expenditure on the ground that the company had ceased to pay dividends. The assessee also claimed deduction under section 12(2) of interest paid on overdrafts obtained for payment of income-tax (both Central and agricultural), payment of land revenue and cess, and payment of call moneys on shares in companies which were found to be new and which had not declared dividends. The Patna High Court held that no deduction was permissible in respect of contribution to litigation expenses and of interest on overdrafts for payment of call moneys on shares in companies which were new and which had not declared dividends mainly on the ground that the expenses were not incurred for making or earning the income. There are no doubt observations in the judgment indicating that the absence of income is presumptive proof of the character of the expenses as not being incurred for the sole purpose of making or earning income. With respect, we disagree.
Section 66 in The Income Tax Act, 1961 [Entire Act]
Ormerods (India) Private Ltd. vs Commissioner Of Income-Tax, Bombay ... on 27 October, 1958
The assessees, who were partners in a firm, borrowed Rs. 2,50,000 each for the firm and purchased shares in a company. During the relevant accounting year, they did not receive any dividends but each had to pay the sum of Rs. 6,688 as interest on the money borrowed. The assessees claimed that the amount so paid by each of them was expenditure deductible under section 12(2) of the Act and should be set off under section 24(1) against their income under other heads. The High Court held that the assessees were so entitled. There is no discussion of the question involved for decision in that case, as the learned judges found themselves completely in agreement with the view of the Bombay High Court in Ormerods (India) Private Ltd. v. Commissioner of Income-tax.
Section 9 in The Income Tax Act, 1961 [Entire Act]
Section 10 in The Income Tax Act, 1961 [Entire Act]
The Income Tax Act, 1961
Eastern Investments Ltd vs Commissioner Of Income-Tax,West ... on 4 May, 1951
In the decisions cited above, reference has been made to the decision of the Supreme Court in Eastern Investment Ltd. v. Commissioner of Income-tax. We shall now refer to that decision. The assessee was an investment company. The majority of its shares was held by C and the rest was held by the nominees of C. C died and S was appointed administrator of his estate in India. S held his shares, namely 50,000 ordinary shares, in that capacity. Money was needed by the executors of C is Great Britain and S entered into an agreement with the assessee under which the assessee agreed to reduce its share capital by Rs. 50 lakhs by taking over from S the 50,000 shares, and S on his part agreed to forgo cash payment and to receive instead debentures of the face value of Rs. 50,00,000 carrying interest at five per cent. per annum. The sanction of the High Court was obtained in due course and the agreement was fulfilled. The income-tax authorities, the Appellate Tribunal and the Calcutta High Court took view that in computing the income of the assessee, the interest paid on these debentures should not expenditure incurred for the purpose of earning the income, profits and gains of the assessee, the interest paid on these debentures should not be deducted under section 12(2) of the Act on the ground that it was not expenditure incurred for the purpose of earning the income, profits and gains of the assessee, and that even if it were so, it was not expenditure incurred solely for that purpose. The Supreme Court held that the only question that should be considered was whether the transaction was voluntarily entered into in order to facilitate the carrying on of the business of the assessee and was made on the ground of commercial expediency. The Supreme Court held that the transaction was of such a nature that it fell within the purview of section 12(2) and that the interest paid was a permissible deduction. At page 4 Bose J. referred to four principles is thus laid down :