Law: Income Tax Act, 1922

Section: 12,12(1),(2)

(a) Income tax Act (XI of 1922)---S. 12 (1) & (2) Application and scope of S. 12 (1) (2) Sub. section (2) is corollary and subservient to subsection (l) Necessary conditions to attract operation of S. 12 t I), held. Would be: (i) that there must be some sort of income or profits and gains : (ii) that it should be includable in assessee's total income ; and iii) that such income should be taxable. (b) Income tax Act (XI of 1912) Ss. 12(1) & (2) "Income includes loss Concept Held, there must be something for computation of profit or loss loss cannot be com¬puted without there being any receipt and expenditure Object of investment should be to earn profit which object may or may not be achieved Where there was no receipt whatsoever, there was no ques¬tion of any computation and, therefore, neither any profit nor any loss could be worked out. (c) Income tax Act (XI of 1922) Ss. 12 (1) (2) & 10 (2) C. B. R. Circular No. 10 of 1967, doted 1 8 1967 Assessee a salaried person obtaining loan from Bank for purchase of shares Interest Admisssibility of interest paid capital borrowed for purchase of shares, held. was dependent on earning of income from that source Where no income was declared by assessee from other sources any expenditure so claimed could not be allowed under S. 12 (l) Assessee not being taxed under S. 10. interest under S. 10 (2) (iii), held further, could not be allowed C. B. R. Circular No. 10 of 1967, dated 1 8 1967 being against law would have no legal effect. Ormerods (India) Private Ltd. v. C. I. T. (1959) 36 I T R 329 ; Chhail Behari Lal v. C. I. T. (1960) 39 I T R 696; Maharajadhiraj Sir Kamnshwar Singh v. C. I T. (1957),32 I T R 377; K. Appa Rao v. C, I.T. Madras (19621 46 I T R 511; P. V. Muhammad Ghouse v. C, I.T. Madras (1963) 49 I T R 127 ; Eastern Investments Ltd. v. C. I. T. (19511 20 I T R 1; Moore v. Stewarts and Eloyds Ltd. (1 906) 6 Tax Case 501 ; 1915 A C 443 ; Madanlal Sohanlal v. C, I.T. Calcutta (1963) 47 I T R t; C, I.T. v. Basant Rai Takhat Singh (1953) I I T R 197 and Circular of C. B. R. No. 10 of 1967, dated 1st August, 1967 ref. Madanlal Sohanlal v. C. I. T. Calcutta (19631 47 I T R 1 fol. ORDER This is an appeal…

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