Section 57(iii) of the Income Tax Act

Income-tax Act, 2025: s.93

Section 57(iii) falls under section 57 of the Income-tax Act, 1961, which corresponds to section 93 (Deductions) of the Income-tax Act, 2025.

Read section 93 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 57(iii) is CIT v. Rajendra Prasad Moody (115 ITR 519), cited in 386 of the 716 judgments on BharatTax that turn on this section.

Leading authorities on Section 57(iii)

CIT v. Rajendra Prasad Moody
115 ITR 519 · 1978 · Supreme Court
386
citing judgments

For deductions under Section 57(iii) relating to "Income from Other Sources," an expenditure is allowable if it is laid out wholly and exclusively for the purpose of making or earning such income, even if no income is actually earned in that previous year.

Shambhu Investment (P) Ltd. v. CIT
263 ITR 143 · 2003 · Supreme Court
181
citing judgments

Income derived from letting out property along with incidental use of furniture, fixtures, and common facilities is assessable as 'income from house property' and not 'business income' when the prime object is merely to let out and not to exploit the property as a business asset.

Totgars Co-operative Sale Society Ltd. v. ITO
58 Taxmann.com 35 · 2015 · High Court
114
citing judgments

When a co-operative society earns interest on deposits with scheduled banks, this income is assessable under "Income from other sources" (Section 56), and the society is entitled to deduct related administrative and proportionate expenses under Section 57 to tax only the net interest income.

Chelmsford Club v. CIT
243 ITR 89 · 2000 · Supreme Court
100
citing judgments

Income arising from mutual activities carried out by clubs or associations solely among their members is not assessable for income tax, as it does not constitute income from a trade or business due to the principle of mutuality.

CIT v. V.P. Gopinathan
248 ITR 449 · 2001 · Supreme Court
66
citing judgments

Interest paid on a loan taken against the security of a fixed deposit cannot be set off against or reduced from the interest income earned on that fixed deposit. The Income-tax Act does not permit such netting.

Punjab Stainless Steel Inds v. CIT
324 ITR 396 · 2010 · High Court
66
citing judgments

This case establishes that merely having sufficient interest-free own funds does not automatically prevent interest disallowance on interest-free advances; the assessee must affirmatively prove the business or commercial expediency of such advances.

79 Taxman 378/216 ITR 548 (Bom.) 4. CIT v. Macbrout Engineering (P.) Ltd.
52 Taxmann.com 219 · 2014 · High Court
43
citing judgments

If the Revenue accepts the Tribunal's decision for earlier years without challenge, it cannot assail the same decision in subsequent years, provided the facts are similar.

CIT v. Amritaben R. Shah
238 ITR 777 · 1999 · High Court
37
citing judgments

Expenditure incurred to acquire controlling interest in a company, rather than to earn dividend income, is not allowable as a deduction under section 57(iii) as it is in the nature of capital expenditure.

BSES Rajdhani Power Ltd. v. PCIT
399 ITR 228 · 2017 · High Court
30
citing judgments

Revision under Section 263 is justified when the Assessing Officer fails to consider a significant portion of a claim, such as depreciation, leading to an erroneous assessment that is prejudicial to the revenue.

CIT v. Rampur Timber & Turnery Co. Ltd.
129 ITR 58 · 1981 · High Court
28
citing judgments

Expenditure incurred for the purpose of earning income is deductible under Section 57(iii) even if no income is actually earned. The earning of income is not a pre-condition for allowing the deduction.

Judgments on Section 57(iii)

Piramal Corporate Services Ltd, Mumbai vs. DCIT Cir 7(1), Mumbai

ITA 1284/MUM/2014[2010-11]Status: DisposedITAT Mumbai20 Jul 2016AY 2010-11

Bench: S/Sh.Joginder Singh & Rajendraआयकर आयकर अपील अपील संसंसंसं./I.T.A./1284/Mum/2014,िनधा"रण िनधा"रण वष" वष" /Assessment Year: 2010-11 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S. Piramal Enterprises Ltd. Dcit-Circle-7(1), (Now Known As Piramal Corporate Services Ltd.) Aayakar Bhavan, M.K. Road,New Marine Piramal Tower, Peninsula Corporate Park, Lines, Mumbai-400020. Vs. Ganpatrao Kadam Marg, Lower Parel(W) Mumbai-400013. Pan:Aaacj 5669 H (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri Sanjay Bare-Dr Assessee By: S/Shri Yogesh Thar & Manthan Shah –Ar.S सुनवाई क" तारीख / Date Of Hearing: 19.05.2016 घोषणा क" तारीख / Date Of Pronouncement: 20.07.2016 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 क" अिधिनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा लेखा सद"य लेखा लेखा सद"य सद"य राजे"" सद"य राजे"" राजे"" केकेकेके अनुसार राजे"" अनुसार अनुसार Per Rajendra, Am- अनुसार Challenging The Order Dt.30.12.2013 Of Cit(A)-13,Mumbai The Assessee Has Filed The Present Appeal. Assessee –Company, Engaged In The Business Of Providing Various Consultancy Services Like Management Consultancy Services, Corporate Strategy Services To Its Group & Is Also Making Investment In Other Companies. It Filed Its Return Of Income 13.10.2010, Declaring Total Income At Rs.15.29Crores .The Assessment Order U/S.143(3) Of The Act, Was Passed On 31.12.2012, Determining The Total Income Of The Assessee At Rs. 19.67 Crores.

For Appellant: S/Shri Yogesh Thar and Manthan Shah –AR.sFor Respondent: Shri Sanjay Bare-DR
Section 10(34)Section 143(3)Section 14ASection 254(1)Section 36(1)(iii)

DCIT 3(2), Mumbai vs. Indiabulls Wholesale Services Ltd, Mumbai

In the result the appeals of the revenue stand dismissed and the appeal of the assessee is allowed

ITA 6081/MUM/2014[2010-11]Status: DisposedITAT Mumbai30 Jun 2016AY 2010-11

Bench: Shri Shailendra Kumar Yadav, Jm & Shri Rajesh Kumar, Am आयकर अपीऱ सं./I.T.A. No.1165/Mum/2014 (ननधधारण वषा / Assessment Year : 2008-09) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Retail Service Ltd, Tax-7(1), Room No.622, (Formerly Knows As Pyramid Vs. Aayakar Bhavan, Retails Ltd, Now Known As M K Road, M/S Store One Retails India Mumbai-400020 (Ltd),11Th Floor, Indiabulls Finance Centre, Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aadcp5164C आयकर अपीऱ सं./I.T.A. No.5732/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) बनधम/ M/S Indiabulls Wholesale Dy.Commissioner Of Income Tax- 3(2), Services Ltd, Vs. Aayakar Bhavan, M-62 & 63, 1St Floor, M K Road, Connaught Place, Mumbai-400020 New Delhi-110001 आयकर अपीऱ सं./I.T.A. No.6081/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Wholesale Tax-3(2), Services Ltd, Vs. Room No.674, 6Th Floor, 14Th Floor, Aayakar Bhavan, Indiabulls Finance Centre, M K Road, Tower No.1, Plot No.612-613, Mumbai-400020 Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aabci7129N अपीऱार्थी ओर से / Revenue By Shri Javed Akhatar प्रत्यर्थी की ओर से/ Assessee By S/Shri Jitendra Sangvi & Amit Khatiwalla

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 56Section 57

Indiabulls Wholesale Services Ltd, New Delhi vs. DCIT Cir 3(2), Mumbai

In the result the appeals of the revenue stand dismissed and the appeal of the assessee is allowed

ITA 5732/MUM/2014[2010-11]Status: DisposedITAT Mumbai30 Jun 2016AY 2010-11

Bench: Shri Shailendra Kumar Yadav, Jm & Shri Rajesh Kumar, Am आयकर अपीऱ सं./I.T.A. No.1165/Mum/2014 (ननधधारण वषा / Assessment Year : 2008-09) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Retail Service Ltd, Tax-7(1), Room No.622, (Formerly Knows As Pyramid Vs. Aayakar Bhavan, Retails Ltd, Now Known As M K Road, M/S Store One Retails India Mumbai-400020 (Ltd),11Th Floor, Indiabulls Finance Centre, Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aadcp5164C आयकर अपीऱ सं./I.T.A. No.5732/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) बनधम/ M/S Indiabulls Wholesale Dy.Commissioner Of Income Tax- 3(2), Services Ltd, Vs. Aayakar Bhavan, M-62 & 63, 1St Floor, M K Road, Connaught Place, Mumbai-400020 New Delhi-110001 आयकर अपीऱ सं./I.T.A. No.6081/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Wholesale Tax-3(2), Services Ltd, Vs. Room No.674, 6Th Floor, 14Th Floor, Aayakar Bhavan, Indiabulls Finance Centre, M K Road, Tower No.1, Plot No.612-613, Mumbai-400020 Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aabci7129N अपीऱार्थी ओर से / Revenue By Shri Javed Akhatar प्रत्यर्थी की ओर से/ Assessee By S/Shri Jitendra Sangvi & Amit Khatiwalla

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 56Section 57

DCIT Cir 7(1), Mumbai vs. Indiabulls Retail Service Ltd, Mumbai

In the result the appeals of the revenue stand dismissed and the appeal of the assessee is allowed

ITA 1165/MUM/2014[2008-09]Status: DisposedITAT Mumbai30 Jun 2016AY 2008-09

Bench: Shri Shailendra Kumar Yadav, Jm & Shri Rajesh Kumar, Am आयकर अपीऱ सं./I.T.A. No.1165/Mum/2014 (ननधधारण वषा / Assessment Year : 2008-09) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Retail Service Ltd, Tax-7(1), Room No.622, (Formerly Knows As Pyramid Vs. Aayakar Bhavan, Retails Ltd, Now Known As M K Road, M/S Store One Retails India Mumbai-400020 (Ltd),11Th Floor, Indiabulls Finance Centre, Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aadcp5164C आयकर अपीऱ सं./I.T.A. No.5732/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) बनधम/ M/S Indiabulls Wholesale Dy.Commissioner Of Income Tax- 3(2), Services Ltd, Vs. Aayakar Bhavan, M-62 & 63, 1St Floor, M K Road, Connaught Place, Mumbai-400020 New Delhi-110001 आयकर अपीऱ सं./I.T.A. No.6081/Mum/2014 (ननधधारण वषा / Assessment Year : 2010-11) Dy.Commissioner Of Income बनधम/ M/S Indiabulls Wholesale Tax-3(2), Services Ltd, Vs. Room No.674, 6Th Floor, 14Th Floor, Aayakar Bhavan, Indiabulls Finance Centre, M K Road, Tower No.1, Plot No.612-613, Mumbai-400020 Elibhinstone Road (W), Mumbai-400013 स्थधयी ऱेखध सं./ Pan : Aabci7129N अपीऱार्थी ओर से / Revenue By Shri Javed Akhatar प्रत्यर्थी की ओर से/ Assessee By S/Shri Jitendra Sangvi & Amit Khatiwalla

Section 143(1)Section 143(2)Section 143(3)Section 14ASection 56Section 57