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Income Tax Laws – I

Notes (c) It is not a personal expenditure.
(d) It is incurred in the accounting year itself and not in any prior or subsequent year.
The section does not say that the expenditure shall be deductible only if income is made or
earned. Interest on moneys borrowed for investment in shares which had not yielded any
income was admissible as a deduction under the section.

Notes In computing the income by way of dividends of a foreign company, no deduction
will be allowed under Section 57.

13.3.2 Amounts not Deductible (Section 58)

The following amounts shall not be deducted in computing income chargeable under the head
‘Income from other sources’:
In the case of any assessee:

1. Any personal expenses of the assessee.
2. Any interest chargeable under the Income-tax Act which is payable outside India and from
which income tax has not been paid or deducted at source.

3. Any payment which is chargeable under the head “Salaries” if it is payable outside India
unless tax has been paid thereon or deducted therefrom at source.
4. Any expenditure referred to in Section 40A of Income-tax Act. Section 58(3) lays down that
in the case of a foreign company; the provisions of Section 44D will apply while computing
income under this head.

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Caution No deduction is allowed in respect of any expenditure or allowance in computing
the income by way of winnings from lotteries crossword puzzles races (including horse
races) card games and other games of any sort or from gambling or betting of any form or
nature whatsoever. The prohibition however will not apply in respect of income of an
assessee who is owner of horses maintained for running in horse races [Section 58(4)]. The
winnings are now taxed at the rate of 30%. The amount is taxable at source and it does not
matter whether amount goes to one or more recipients. Similarly the amount spent in
buying of in fructuous tickets is not deductible as the gross amount will be taxed.

Self Assessment

State whether the following statements are true or false:
11. Interest on money borrowed for investment in securities can be claimed as a deduction
under income from other sources.

12. Where a regular monthly amount is payable by an employer to a person belonging to the
family of an employee in the event of his death, i.e., ‘family pension’, a sum equal to 33 %
of the income or 20,000, whichever is less, is allowable as a deduction.
13. In computing the income by way of dividends of a foreign company, no deduction will be
allowed under Section 57.

14. 30% deduction is allowed in respect of any expenditure in computing the income by way
of winnings from lotteries crossword puzzles races, card games.

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