Law:

Section:

Section 57(iii) of the income-tax act, 1961-Income from other sources-Deductions-Assessee, whose sole activity was letting of stables, claimed deductions towards expenditure on audit fees, establishment charges, filing fees, maintenance of building, legal fees, etc., under section 57(iii)-Whether tribunal was justified in effecting partial disallowance, without examining each and every item of expenditure to ensure that there was either nexus between expenditure incurred and income earned, or that expenses incurred were for maintaining source of income so that they were deductible, or that expenses were incurred for keeping alive corporate nature of assessee, so that they were not allowable-Held, no [matter remanded to tribunal] Facts The assessee, a private limited company, earned income only by way of rents from stables let out and claimed deduction under section 57(iii) for expenses towards audit fees, establishment charges, filing fees, maintenance of building, etc. The ITO disallowed the claims on the ground that none of the expenses claimed was attributable to the earning of the income. On reference : Held If there is a nexus between the expenditure incurred and the income earned, the assessee would be entitled to deduct such expenditure under section 57(iii). The assessee is also entitled to deduct such expenses incurred for maintaining the source of income. But he is not entitled to claim deduction in regard to expenses required for the purpose of keeping the corporate nature of the assessee or keeping the company alive. There must be a close scrutiny of each and every item claimed by the assessee for the purpose of deduction. It is necessary to examine whether there has been a connection or a nexus between the expenditure incurred and the income earned and whether any other expense is necessary for maintaining the source of income. It is only such expenditure that could be allowed under section 57(iii ) and no other. In the instant case, the Tribunal had not considered every item claimed by the assessee under section 57(iii). In view of the infirmity in the order of the Tribunal, the question referred could not be answered and the matter was remanded…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492