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TMI Blog1984 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act, 1961. The question referred runs as follows : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the sum of Rs. 3,450 be allowed as a deduction under section 57(iii) of the I.T. Act, 1961 ? " The facts are : The assessee derives income from property, dividends, interest on securities and income from busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the refund of interest to the bank by the assessee was only an application of the income earned during the assessment year. Upon appeal, the AAC accepted the contention of the assessee and allowed the deduction claimed. He held that the assessee had to prematurely terminate the fixed deposit with the object of earning income, i.e., with the object of investing the same in share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares. The assessee could invest in shares only after withdrawing the fixed deposit. While so withdrawing, he had to part with the amount of Rs. 3,450 to the bank. It was virtually a borrowal of money on payment of interest ...... So held the Appellate Tribunal. The question now is, whether the interest repaid to the bank is an allowable expenditure under s. 57(iii) of the I.T. Act ? Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money for the purpose of investment in shares. The assessee, instead of borrowing money for the purpose of investment in shares, has availed of his fixed deposit by premature termination. By reason of the premature termination, he had to return Rs. 3,450 to the bank. This liability has got a direct nexus to the earning of the dividend income. This is, therefore, not a simple case of refund of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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