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Ravindra Madanlal Khandelwal,Akola vs Dcit/Acit Circle , Akola on 18 November, 2024 cites

Commissioner Of Income Tax, West Bengal ... vs Rajendra Prasad Moody, Calcutta Etc on 4 October, 1978

26. The provisions of section 57 of the Act provide allowance of interest expenditure if it is expended wholly and exclusively for the purpose of making income under the head "income from other sources". The plain natural 34 Ravindra Madanlal Khandelwal ITA no.375/Nag./2024 construction of the language of section 57(iii) of the Act, leads to the conclusions that to bring a case within that section it is not necessary that any income should in fact have been earned as a result of the expenditure. What section 57(iii) of the Act requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income. The provisions of section does not require that this purpose must be fulfilled in order to qualify, the expenditure for deduction it does not say that the expenditure shall be deductible only if any income is made or earned [CIT v/s Rajendra Prasad Moody [1978], 115 ITR 519 (SC). In the present case, the assessee has made an investment in a related company and the resultant income in the form of a dividend income, interest income or directors' remuneration fall within the head of "income from other sources". Therefore, for claiming deduction under section 57(iii) of the Act, it would be sufficient to prove that there is nexus between the income which will be earned and amount expended. In the given case, it is undisputed fact that the funds have been advanced to related concern. At this juncture it is also apropos to refer to the landmark judgment of the Hon'ble Supreme Court in S.A. Builders Ltd., 288 ITR 1 (SC) wherein it has been held that the tax authorities must not look at the matter from their own view point but that of a prudent businessman. In case, it is found that transfer of borrowed funds to a sister concern was on account of commercial expediency even if the same is interest free, the deduction claimed by the assessee cannot be disallowed. Thus, ground no. 2, raised by the assessee is allowed. It is reiterated that the 35 Ravindra Madanlal Khandelwal ITA no.375/Nag./2024 allowance of any expenditure is within the judicial periphery laid in the Act and mere non-recording in the books of account can hardly negate the claim.
Supreme Court of India Cites 19 - Cited by 413 - P N Bhagwati - Full Document

Commissioner Of Income Tax-Iv vs M/S. Dwarkadhish Investment (P) Ltd. on 2 August, 2010

4.7 Further, I humbly wish to submit the fact that any advance made to the related/sister concern out of commercial expediency is also allowable under section 36(1)(iii), section 37 and section 57(iii) of the income tax act, 1961. The landmark judgment on this issue, which explains the entire gamut of provisions is that of the Hon'ble Supreme Court in SA Builders Limited's case 288 ITR 1 (SC).
Delhi High Court Cites 17 - Cited by 181 - Manmohan - Full Document

Commissioner Of Income Tax-V vs M/S Rampur Engineering Co. Ltd. on 27 November, 2008

The section does not require that this purpose must be fulfilled in order to qual0, the expenditure for deduction it does not say that the expenditure shall be deductible only if any income is made or earned (CIT vs. Rajendra Prasad Moody (1978), Taxation 51 (3)-52, 115 ITR 519 (SC) : CIT vs. Murli Manohar (1998) IX SITC 673 (All): CIT vs. Rampur Tirnber & Turney Co. Ltd. (1981) 129 ITR 58 (All.)
Delhi High Court Cites 12 - Cited by 31 - B D Ahmed - Full Document
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