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TMI Blog1968 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... of which Shri Atma Ram Modi is the karta. His income was derived partly from the profits on his share in two registered partnership firms, known as Bhimraj Banshidhar Daltonganj, on the one hand, and Bhimraj Banshidhar (Construction), on the other. The assessee's share out of the profits of the said two firms for the assessment year 1963-64 was given as Rs. 24,359. This figure was not challenged. But the assessee claimed a deduction of Rs. 3,400 for the maintenance and depreciation of his motor car, which, according to him, was used wholly and exclusively for the purposes of his business. The Income-tax Officer and the Appellate Assistant Commissioner disallowed this claim relying mainly on sub-section (3) of section 67 of the Act, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred wholly and exclusively for the purpose of carrying on the business of the firms. The most important question of law which arises for consideration is whether the enumeration of interest in section 67(3) of the Act as a permissible deduction would, by necessary implication, exclude any other deduction where the income of the assessee consists of his share in the profits of a partnership firm of which he is a partner. It was contended by Mr. Tarkeshwar Prasad that no such inference by necessary implication can arise and that, apart from the provisions of section 67(3) of the Act, it was open to the assessee to claim deduction under section 37(1) also if he could show that the conditions for the eligibility of that claim are either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er deduction under section 10(2)(xv), because " ...... the true profits and gains of the assessee must be ascertained from the point of view of commercial expediency and commercial accounting. If, therefore, the assessee was able to establish in this case that the expenditure claimed by him was incurred as a matter of commercial expediency and for the purpose of earning profits from the partnership business, the assessee would be entitled to claim the deduction of the amount under section 10(2)(xv) of the Income-tax Act (old Act) or under the general principle laid down by the Privy Council in Commissioner of Income-tax v. S. M. Chitnavis ". It was, however, contended by Mr. Singh for the department that the aforesaid decision will no l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm, be deducted from the share, but no other deduction shall be allowed in respect of the said share. " But, when the Bill passed through the Select Committee stage, the underlined words, viz., it no other deduction shall be allowed in respect of the said share ", were omitted (see the Bill as passed by the Select Committee published in the Gazette of India, Extraordinary, dated the 10th August, 1961, at pages 677/103 and 677/104). Thus, the history of the legislation shows that, though the framers of the Bill first desired that the only permissible deduction should be of interest as indicated in sub-section (3) of section 67 and, with a view to make that intention absolutely clear, inserted the words " but no other deduction shall be al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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