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TMI Blog1967 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(1) of the Income-tax Act, 1922, or under section 256(1) of the Income-tax Act, 1961. Each of 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 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-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or earning income. The assessee paid wealth-tax as owner and on the value of the totality of his assets. That has nothing to do with his making or earning income from such assets. The production of income from the assets appears to be wholly unconnected with the payment of wealth-tax. This view of ours, as we think, receives support from a parity of reasoning in Kumbakonam Electric Supply Corporation Ltd. v. Commissioner of Income-tax and Travancore Titanium Products Ltd. v. Commissioner of Income-tax. These cases no doubt, are related to section 10(2)(xv), but what fell for decision in them was the scope of the words " any expenditure ... laid out or expended wholly and exclusively for the purpose of such business, profession or vocation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was as an owner on its net worth and not as a trader and for the purpose of carrying on its business. It is true that the concluding words of section 10(2)(xv) are wider in their scope than those of section 57(iii). But, for purposes of answering the references before, viz, that can make no difference : because, in the case. of both the provisions, the question of deductibility of an expenditure depends on the scope of the words " purpose of " which provide the link between the expenditure and the carrying on of business in the one case or making or earning income in the other. But Mr. Swaminathan for the assessee strenuosly pressed before us, Raja Probhat Chandra Barua v. Commissioner of Income-tax, Eastern Investments Ltd. v. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the appellant to income-tax in respect of the income derived from his zamindari, his income, profits and gains from that source should be coited after making proper allowance in respect of the jama assessed and paid." A perusal of the judgment of the Privy Council shows that in taking that view it was persuaded to think that payment of the jama was a condition of the landholder holding the estate. Apart from that, it seems to us that the nature and incidefinite of the jama have no relation to those of wealth-tax under the of the Wealth-tax Act. Further, the landholder paid the jama in that capacity and also was charged to tax on income received by him from the tate which he held as a landholder. Commissioner of Income-tax v. Jagannat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds (Buenos Aires) Ltd. v. Taylor-Goodby the English Court of Appeal held that a foreign tax charged annually on percentage of capital was a permissible deduction as the tax was incurred wholly and exclusively for the purpose of the assessee's trade. The basis for this view appears to be that payment of such tax was a condition precedent to the carrying on of the assessee's business in Argentina. As we mentioned earlier, we find it difficult to hold that the wealth-tax was paid by each of the assessees in these cases as incidental to making or earning of income. In a sense it may be that in order to preserve the total net assets, the assessee has to pay wealth-tax and that without such assets there can be no question of making or earning th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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