NDLI: Smt. Padmavati Jaikrishna Vs. Addl. Commissioner of Income Tax, Gujarat Ahmedabad

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Deduction-Claim for Expenditure incurred should be wholly and exclusively for purpose of earning income-Assessee to satisfy Income Tax Officer
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Income Tax Act, 1961 (43 of 1961)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Income Tax Act, 1961-Section 57(iii)-Deduction-Claim for-Expenditure incurred should be wholly and exclusively for purpose of earning income-Assessee to satisfy Income Tax Officer. The assessee, assessed as an individual, derived income from "other sources" in the shape of interest, dividends etc. in the assessment year 1966-67 she claimed deduction of Rs,26,986 being interest paid on loans taken by her, under s. 57(iii) of the Income Tax Act, 1961. The Income Tax Officer found that out of the loans real investment was Rs.1,250 only. He disallowed the claim of Rs.10,275 on proportionate basis. The Appellate Assistant Commissioner relying upon the ratio of the decision in Bai Bhuriben Lallubhai v. Commissioner of Income-tax, Bombay North Cutch and Saurashtra, [1956 ITR (XXIX) 543] dismissed the appeal of the assessee. Before the Tribunal the assessee contended: (1) that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted and (2) that the assessee instead of liquidating the investments which was return-oriented, found it commercially expedient and viable to raise a loan Instead of disturbing the investments and, therefore, the claim became admissible. The Tribunal rejecting the contentions and dismissing the appeal observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business. On reference, the High Court held that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental and that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and, therefore, did not come under s. 57(iii) of the Act.
Judge	Honble Mr. Justice Ranganath Misra
Neutral Citation	1987 INSC 123
Petitioner	Smt. Padmavati Jaikrishna
Respondent	Addl. Commissioner Of Income Tax, Gujarat Ahmedabad
SCR	[1987] 2 S.C.R. 1167
Judgement Date	1987-04-22
Case Number	656

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