Law: Income Tax Ordinance, 1979

Section: 23(1)(vii)(xviii)

(a) Income Tax Ordinance (XXXI of 1979)--- ----S.23(1)(vii) & (xviii)---Deduction of interest---Admissibility. The deduction of the interest is admissible if the capital borrowed is spent for the purposes of business or profession. However, under clause (xviii), two further conditions have been added namely, that such expenditure should not be in the nature of capital expenditure, or personal expenses and secondly it should be expended wholly and exclusively for the purposes of such business. Thus, the purpose for which such expenditure is made appears to be sine qua non for the admissibility of the deduction of interest. (b) Income Tax Ordinance (XXXI of 1979)--- ----S. 23(1)(vii) & (xviii)---Expenditure incurred for the purposes of business--¬Conditions. An expenditure shall be deemed an expenditure incurred for the purposes of business: (i) If it is incurred by an assessee for the purposes of carrying on of the business; and (ii) if it is not incurred for the purposes of acquiring a capital asset or obtaining an enduring benefit; and (iii) if it is incurred as a part of an integrated scheme of business. However, it has to be kept into consideration that the use of the expression 'wholly and exclusively' further restricts the scope of the expenditure. Assam Bengal Cement Company Ltd. v. CIT (1955) 27 ITR 34; CIT v. Gurinder Singh (1982) 133 ITR 300; CIT v. New Central Jute Mills; (1979) 118 TTR 1005; Tata Hydroelectrica[ Agency v. Commissioner of Income Tax (1937) 5 ITR 202; Metro Theatre Company v. Commissioner of Income Tax (1946) 14 ITR 638 and Commissioner of Income Tax v. Sandesh Ltd. 1993 PTD 425 ref. (c) Income-tax--- ---"Capital expenditure" and "revenue expenditure" and "revenue expenditure"---Broad principles distinguishing the two summarised. Banarsidas Jagan Nath ((1947) 15 ITR 185) quoted. (d) Income Tax Ordinance (XXXI of 1979)---S.23(1)(vii) & (xviii)---Assessee, an individual deriving his income from running a restaurant, claimed under provisions of S.23(1)(vii) or 23(1)(xviii) of the Ordinance, deduction of payment of an interest on loan used for the purposes of acquiring the possession of the premises on hire-purchase basis in…

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