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TMI Blog2014 (2) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in law in holding that the appellant was not entitled to deduction under Section 57(iii) of the Income Tax Act, 1961 in respect of the interest of Rs.13,49,356/- incurred on borrowed funds utilized for making investment in shares on which no dividend was received and the purported findings of the Tribunal in that behalf are arbitrary, unreasonable and perverse?" Mr. Khaitan, learned senior advocate appearing for the appellant assessee submitted that the question is covered by a judgment of the Apex Court in the case of CIT Vs. Rajendra Prasad Moody, reported in 115 ITR 519. He added that the Tribunal did, in fact, notice the judgment, but erred in understanding the true nature and purport thereof. In the aforesaid judgment, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt on the credit side to justify the deduction of an expense'." Mr. Khaitan submitted that the fact that the assessee borrowed money for the purpose of making investment in shares is not in dispute. The interest paid or incurred by the assessee is also not in dispute. The expenditure on account of interest was a proper expenditure under section 57 of the Income Tax Act, but the same has been disallowed by the Assessing Officer on the ground that investment cannot be said to have been made for earning dividend. The learned Tribunal endorsed that view of the Assessing Officer and reversed the views expressed by the CIT (Appeal). The case of the assessee has always been that : "The assessee tried to explain out that it purchased the share of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no reason why this Court should interfere with the views expressed by the Tribunal. We have considered the rival submissions advanced by the learned Advocates appearing for the parties. The provisions contained in sections 56 and 57 of the Income Tax Act are to be read together. Section 56 provides for income from other sources, and section 57 provides for allowable deduction. Mr. Khaitan rightly contended that the expenditure on account of interest was a proper expenditure allowable under section 57. The reason which found favour both with the Assessing Officer and the Tribunal was that the investment was not for the purpose of earning dividend. It could not be followed as to how can it be said that earning of dividend can be the sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of personal use of the directors, under section 38(2), does not appear to have been passed upon application of mind. The question of personal use might have arisen if the vehicle had been used for the business of the assessee. The vehicle has not been used for the business of the assessee at all. On the contrary, the vehicle has been hired out. The assessee, in return, is making profit. Therefore, the directors or any director of the assessee company is not likely to get any opportunity to use the car. The car was in the use of the hirer. When the director had no opportunity to use the car, the question of disallowing any part of depreciation on account of directors' personal use appears to be altogether misconceived. Therefore, the se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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