COMMISSIONER OF INCOME TAX, WEST BENGAL III, CALCUTTA vs RAJENDRA PRASAD MOODY, CALCUTTA ETC.

The Supreme Court interpreted Section 57(iii) of the Income Tax Act, 1961, holding that interest on borrowed funds for share investments is deductible even if no dividends are received during the assessment year. The Court emphasized that the purpose of the expenditure must be to earn income, and it is not necessary for any income to have been actually earned to qualify for deduction. The Tribunal's decision to allow the deduction was upheld, rejecting the Revenue's argument that income must be generated for the expenditure to be deductible.