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Section 57(iii) of the Income-tax Act, 1961 - Income from other sources - Deductions - Assessee raised loan against fixed deposits for purpose of constructing a house - Whether excess of interest paid by him over interest received by him from said fixed deposits was an allowable deduction under section 57(iii) - Held, no Facts The assessee raised loan from bank against fixed deposits held by him. He paid Rs. 3,800 in excess of interest received by him. The assessee's claim for deduction of this amount under section 57(iii) was disallowed by the ITO and the Tribunal upheld the ITO's order. On reference: Held Interest was not paid for the purpose of keeping or maintaining the earning of fixed deposit interest but was paid on the amount of loans taken for constructing the house. The motive of the assessee that he took loans on his fixed deposits in order to save them and to maintain his interest income was irrelevant. He had an option to incur the said expenditure. It depended upon his own personal consideration. It was not compulsory. His option had no connection with the earnings of interest from the fixed deposits. It could not be said that the interest was paid wholly and exclusively for the purpose of keeping and maintaining the income of interest therefrom. Accordingly, the Tribunal was justified in disallowing the assessee's claim. Cases referred to CIT v. H.H. Maharani Shri Vijaykuverba Saheb of Morvi [1975] 100 ITR 67 (Bom.), Seth R. Dalmia v. CIT [1977] 110 ITR 644 (SC),State Bank of Travancore v. CIT [1986] 158 ITR 102 (SC), Bai Bhuriben Lallubhai v. CIT [1956] 29 ITR 543 (Bom.), CIT v. Mrs. Indumati Ratanlal [1968] 70 ITR 353 (Guj.), Smt. Padmavati Jaykrishna v. CIT [1975] 101 ITR 153 (Guj.) and Padmavati Jaykrishnav. CIT [1981] 131 ITR 653 (Guj.). K.C. Bhandari for the Applicant. B.R. Arora for the Respondent. ORDER Chandra, J. - This is a reference under section 256(1) of the Income-tax Act, 1961 ('the Act') made by the Tribunal, Jaipur, on the request of the assessee to answer the following questions of law, namely: "1. Whether the learned Appellate Tribunal is correct in not holding that assessee's interest earning capital of Rs. 2,71,000…

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