Law:

Section:

Section 19 of the Income-tax Act, 1961 [Corresponding to section 8 of the Indian Income-tax Act, 1922] - Interest on securities - Deductions - Assessment years 1953-54 and 1954-55 - Assessee purchased certain debentures of a company with funds partly borrowed from bank - During relevant assessment years, assessee received no interest on these debentures but paid interest to bank - Whether assessee was entitled to deduction of aforesaid interest against interest income received from other debentures - Held, no FACTS On 23-5-1949, the assessee purchased certain debentures of a company. The price of the debentures was paid by the assessee partly from the funds available with him and partly from a loan taken by him from the bank. For the assessment years in question, the assessee received no interest on the aforesaid debentures. He, however, paid interest to the bank on the money which had been borrowed. The assessee derived income from some other debentures. The assessee claimed deduction of interest paid against the income from other debentures. The ITO disallowed the assessee's claim. However, on appeal, AAC allowed the deductions claimed by the assessee. On appeal by the department, the Tribunal set aside the decisions of the AAC and upheld the order of the ITO. On reference : HELD The use of the word "such" before "interest" in the proviso to section 8 of 1922 Act necessarily refers to the interest receivable on the securities. Therefore, only a reasonable sum expended for the purposes of realising the interest can be deducted and it follows that if no interest is realised the assessee could not claim deduction of any expenses for such realisation. Thus the intention clearly is to allow deduction only when there has been income by way of interest on the securities. The words "in respect of any interest payable on money borrowed for the purpose of investment in the securities" immediately follow the provision relating to expenses incurred for the purposes of realising interest. The same meaning, therefore, should normally be attributed to these words, namely, that such interest paid on borrowed capital would be deductible only if there is receipt of interest.…

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