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Section 19 of the Income-tax Act, 1961 - Income on Securities - Deductions - Assessment year 1962-63 - Whether deduction of interest on moneys borrowed for purchase of securities could not be denied on ground there was no income from interest on securities - Held, yes FACTS The ITO disallowed the assessee's claim for deduction of interest on loans taken for purchasing certain Government securities on the ground that there was no income from interest on securities in the previous year relevant to the assessment year in question. However, the assessee's claim was allowed by the Tribunal. On reference: HELD In the light of the observations of the Supreme Court in CIT v. Rajendra Prasad Mody [1978] 115 ITR 519, wherein it was held that the deduction of the expenditure could not be said to be conditional upon the making or earning of income, it was to be held in the instant case that the claim of deduction made by the assessee could not be denied on the ground that there was no income from interest on securities in the year in question. Note: The decision is in favour of the assessee. CASE REVIEW CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC) followed & relied upon. CASES REFERRED TO CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC), Philips Carbon Block Ltd. v. CIT [1982] 136 ITR 205 (Cal.) and Seth Ram Gopal Mohta v. CIT [1966] 61 ITR 303 (Punj.) B.K. Naha for the Applicant. Dr. Debi Pal and R.K. Murarka for the Respondent. JUDGMENT Suhas Chandra Sen, J.- The following question of law has been referred to us by the Tribunal at the instance of the Revenue: "Whether, on the facts and in the circumstances of the case and in view of the fact that no interest on the securities purchased by the assessee was due to it, the Tribunal was correct in law in holding that the interest paid on the moneys borrowed for the purchase of the said securities was allowable under section 19(ii) of the Income-tax Act, 1961 ?" The relevant assessment year is the assessment year 1962-63 for which the accounting period ended on December 31, 1961. In the course of assessment, the Income-tax Officer disallowed a claim for deduction of interest on account of loans taken for…

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