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JUDGMENT Veeraswami, J.- These tax cases raise a common question as to whether, on the facts and in the circumstances, the claim for deduction of wealth-tax paid by the assessee as an admissible expenditure is lawful. The revenue as well as the Tribunal negatived the claim and the references have come before us under section 66(1) of the Income-tax Act, 1922, or under section 256(1) of the Income-tax Act, 1961. Each of the assessees as an individual received dividend income and interest in the relative previous year and paid wealth-tax in a certain sum on his holding of the stock. The sum paid as wealth-tax was sought to be deducted from the income that comprised of dividends and interest, as an allowable expenditure under section 57(iii) of the Income-tax Act, 1961, but unsuccessfully before the revenue. The Tribunal relied on Kumbakonam Electric Supply Corporation Ltd. v. Commissioner of Income-tax [1963] 50 ITR 809, and dismissed the assessee's appeal in each case. That was of course a case under section 10(2)(xv) in which a Division Bench of this court was of opinion that wealth-tax paid on the net wealth of the company there was not an allowable expenditure in computing its taxable income. The assessee in each case as an individual was charged to income-tax under the head "other sources". In computing his net income chargeable to tax, he will be entitled to allowance of any expenditure not being in the nature of capital expenditure, laid out or expended wholly and exclusively for the purpose of making or earning such income. The point is whether the wealth-tax paid by each of the assessees on the net value of the stock held by him is such expenditure. Though the question is by no means capable of an easy answer, we have come to the conclusion that the wealth-tax paid is not an expenditure of that character. In order an expenditure to come within the ambit of section 57(iii), it must satisfy the tests which obviously suggest themselves from the language employed by that provision. The expenditure should be laid out or incurred wholly and exclusively and should be for the purpose of making or earning such income. It should be connected with, in the sense it…

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