| Case ID |
44fb7527-b032-43d3-94bc-c35a37a309b3 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 1987 |
| Hearing Date |
Jan 01, 1987 |
| Decision |
The Supreme Court of India upheld the decision of the Gujarat High Court, affirming that the interest paid by the assessee on the loan taken to meet personal liabilities of income-tax and wealth-tax was not an allowable deduction under section 57(iii) of the Income-tax Act, 1961. The court emphasized that expenditures must be laid out or expended wholly and exclusively for the purpose of earning income to qualify for deductions. In this case, the loans were taken for personal obligations, and thus the interest could not be claimed as a deduction. |
| Summary |
In the case of Smt. Padmavati Jaikrishna v. Additional Commissioner of Income Tax, the Supreme Court addressed the issue of whether interest paid on loans taken for personal liabilities could be deducted under section 57(iii) of the Income-tax Act, 1961. The court found that the loans were primarily for personal obligations, including the payment of income-tax and wealth-tax, rather than for generating income. The ruling reinforced the principle that only expenses incurred wholly and exclusively for the purpose of earning income are eligible for deductions. This case serves as a significant precedent in tax law, clarifying the conditions under which deductions can be claimed and emphasizing the necessity for a direct connection between expenditure and income generation. Taxpayers should take note of this ruling to ensure compliance with tax regulations and optimize their tax liabilities. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
R.S. PATHAK, C.J.,
RANGANATH MISRA,
K.N. SINGH
|
| Lawyers |
Not available
|
| Petitioners |
Smt. Padmavati Jaikrishna
|
| Respondents |
Additional Commissioner of Income Tax
|
| Citations |
1987 SLD 3177,
(1987) 166 ITR 176
|
| Other Citations |
Smt. Padmavati Jaykrishna v. CIT [1975] 101 ITR 153,
Bai Bhuriben Lallubhai v. CIT [1956] 29 ITR 545,
CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC),
Eastern Investments Ltd. v. CIT [1951] 20 ITR (PLSC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
57(iii)
|