BAI BHURIBEN LALLUBHAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference raises a fairly short and simple question.

(2.) BEFORE we examine the facts, it is necessary, first, to turn to the section itself The deduction which is permissible under Sub-section (2) of Section 12 is an expenditure incurred solely for the purpose of making or earning the income which has been subjected to tax. Therefore, in order to decide whether a deduction is permissible under Sub-section (2), we have to examine the nature of the expenditure. The purpose for which the expenditure is incurred must be in order to earn the income. The expenditure may be incurred for any commercial purpose.

(3.) NOW, let us see whether the authority cited by Mr. Mehta can put any different complexion upon the view that we have taken on the question raised in this reference. Mr. Mehta has relied on a decision of the Supreme Court reported in -- 'Eastern Investments Ltd. v Commr. of Income-tax, West Bengal', AIR 1951 SC 278 (A), and what he relies on are certain observations in the judgment of Mr. Justice Bose.