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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 ..... n disallowing the expenditure – Decided in favour of Assessee. Disallowance of depreciation on motor cars - Whether the Tribunal was justified in law in upholding the disallowance of 1/5th depreciation on motor cars hired out by the appellant by invoking Section 38(2) of the Act – Held that:- The vehicle has been hired out - the vehicle is not used for the business of the company. The vehicle has been used for the purpose of earning money by way of hiring charges – thus, the order disallowing any part of the depreciation on account of personal use of the directors, under section 38(2), does not appear to have been passed upon application of mind - When the director had no opportunity to use the car, the question of disallowing any part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting and the interpretation of s.57(iii) cannot be different. The deduction of the expenditure cannot, in the circumstances, be held to be conditional upon the making or earning of the income. It is true that the language of s.37(1) is a little wider than that of s.57(iii), but we do not see how that can make any difference in the true interpretation of s.57(iii). The language of s.57(iii) is clear and unambiguous and it has to be construed according to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst NAV of Rs.8.63 as the said company owned an immovable property at 7, Loudon Street, Kolkata the value of which was much higher than the book value. Mr. Khaitan also drew our attention to a judgment of this Court in the case of CIT Vs. Model Manufacturing Co. (P) Ltd. reported in 122 ITR 767 wherein the following view was taken. We add that even if the motive of the assessee might have been to obtain control of another company, the consequent purchase of shares may still be treated as investment and the concurrent purpose of the assessee could well have been that of earning further income by acquiring the control of the other company . Mr. Khaitan, therefore, contended that the views of the learned Tribunal are clearly erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng income from other sources. What is an income from other sources has not been put into any straight jacket formula. Even the legislature has not attempted to define the words expressly. Income from other sources is a very wide term. The legislature has advisedly expressed without prejudice to the generality of the provision . Therefore, there was no reason why a proper expenditure should have been disallowed only because the investment was not made for the purpose of earning dividend. There is no finding that the investment was made otherwise than for the purpose of making an income. We are, as such, of the opinion that both the Tribunal and the Assessing Officer were wrong in disallowing the expenditure. Accordingly, the question is ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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