According to the provisions of Section 57(iii) of the Act, all the expenditure laid out or expended wholly and exclusively for the purpose of making or earning income has to be allowed as deduction.

The Assessing Officer noted that the assessee had earned interest amounting to Rs.1,03,23,788 on fixed deposits receipts. Out of the interest on fixed deposits receipts, the assessee claimed expenses of Rs. 46.76 lakhs which the Assessing Officer disallowed and this was confirmed by the Commissioner (Appeals).

Held, (i) that the income of the assessee fell under the head “Income from other sources”.

(ii) That there should be a nexus between the expenditure incurred and the income earned. The employee remuneration, salary, legal expenses, board meeting expenses, director sitting fees were not attributable to the interest earned from the fixed deposits. The order of the Commissioner (Appeals) was justified. (AY. 2015-16)