Law:

Section:

Section 57 of the Income-tax Act, 1961 - Income from other sources - Deductions - Assessee-mill during relevant assessment year did not have any business activity as its manufacturing activity did not start in that year - However, during that year, assessee had certain interest income from investments and claimed deduction of expenses incurred for maintenance of office and for planning of construction, etc., from interest income - Whether since expenditure incurred on maintenance of office and for planning of construction did not fall under any of sub-clauses of section 57, such expenditure could not be allowed as deduction from interest income - Held, yes A.N. Mahajan for the Applicant. JUDGMENT 1. Income-tax Appellate Tribunal, Allahabad has referred the following question of law under section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court:- "Whether on the facts and in the circumstances of the case the Tribunal was legally justified in allowing various expenses against the income from other sources?" 2. Briefly stated the facts giving rise to the present reference are as follows:- The respondent is a co-operative sugar mill. During the assessment year in question it did not have any business activity as the manufacturing activity did not start in this year. It was in the process of erection/construction. The funds, which it received were invested and it had interest income from those investments. The respondent had incurred expenses for the maintenance of office and for the planning of construction etc. The Income-tax Officer did not allow any…

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