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TMI Blog1991 (2) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... me for the respective years ?" The assessee had a managing agency business which was stopped by it. During the accounting years 1977-78 and 1978-79 for which the accounting periods ended on March 31, 1978, and March 31, 1979, respectively, the only income of the assessee was the dividend which was shown under the head "Other sources". For the assessment year 1978-79, the assessee claimed deduction of a total expenditure of Rs. 15,087.57 and for the assessment years 1979-80, it claimed deduction of a total expenditure of Rs. 15,541.28. The Income-tax Officer allowed deduction of 10% of the total administrative expenses for the assessment year 1978-79 and 10% of the income from other sources for the assessment year 1979-80. On appeal before the Commissioner of Income-tax (Appeals), the assessee claimed deduction of the salary paid to the managing director as well as other expenses. The contention of the assessee was accepted by the Commissioner of Income-tax (Appeals). On further appeal before the Appellate Tribunal by the Revenue, the Tribunal held that the Income-tax Officer's allowance of 10% of the total expenses for the year 1978-79 was more than fair to the assessee and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue, we are of the opinion that no error of law has been committed by the Appellate Tribunal. The only income which the assessee had for the two assessment years 1978-79 and 1979-80 is the income from dividends which comes under the head "income from other sources". In computing the income of the assessee under this head deduction has to be made for any expenditure (not being the expenditure) laid out or expended wholly and exclusively for the purposes of making or earning such income (vide section 57 of the Income tax Act). No deduction can be allowed under this section unless the expenditure is incurred wholly and exclusively for the purpose of making or earning the income. Furthermore, it should not be in the nature of capital expenditure or in the nature of personal expenses of the assessee. The only aspect which the Appellate Tribunal was called upon to consider was whether the deductions claimed represent expenditure incurred wholly and exclusively for the purpose of making or earning the income. Since the assessee was not having any business during the relevant assessment years, deduction of expenditure expended wholly and exclusively for the purpose of business does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unciated by the Supreme Court in these two decisions is, therefore, of no assistance to the assessee. The Madras High Court had occasion to consider an identical question in South Arcot Electricity Distribution Co. Ltd. v. CIT [1974] 94 ITR 469. The assessee-company in that case was carrying on the business of supplying electricity at various places in Madras State. The business was taken over by the Madras Electricity Board with effect from June 1, 1957. During the periods relevant to the assessment years 1959-60 to 1962-63, the income derived by the company consisted of interest from fixed deposits from the bank, interest paid by the Government on the compensation amount payable by the Government for taking over the assets of the company and share transfer fees. This income was assessed under the head "Income from other sources". The assessee claimed allowances for expenses relating to establishment, salaries, etc. The Income-tax Officer held that those expenses cannot be said to have been incurred entirely in the course of earning the items of income accounted for. That assessment was confirmed in appeal by the Appellate Assistant Commissioner. On further appeal, the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred are so remote that they have no connection with the earning of the interest. Learned counsel for the assessee has drawn our attention to the decision of this court in Commr. of Agrl. I. T. v. Kartikulam and Alathur Estates [1988] 169 ITR 386. Therein, this court considered the question whether the expenses incurred for professional fee for taxation work is an allowable deduction under section 5 of the Agricultural Income-tax Act. After referring to Malayalam Plantations' case [1978] 115 ITR 624, Division Bench of this court held that legal expenses incurred and classified as professional fee for taxation work is not an admissible expenditure in computing the agricultural income under section 5(j) of the Kerala Agricultural Income-tax Act which enables a person to deduct expenditure expended wholly and exclusively for the purpose of deriving the agricultural income for the purpose of assessment under the Agricultural Incometax Act. It was observed therein that once it is accepted that the language of section 5(j) of the Kerala Agricultural Income-tax Act and that of section 10(2)(xv) of the Indian Income-tax Act, 1922, are only kindred expressions, it cannot admit of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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