Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following questions of law have been referred to this court for the assessment year 1972-73 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Section 52(2) of the Income-tax Act, 1961, had no application and could not be invoked? (2) Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in holding that the approval of the Inspecting Assistant Commissioner in this case was not given in accordance with law? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Rs. 18,675 was incurred by the assessee wholly and exclusively to earn its income and as such the Tribunal was right in holding that this amount was a deductible expenditure?"
(2.) The first question is now concluded by the decision of the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597. Following the said decision we answer the first question in the affirmative and in favour of the assessee. In view of our answer to the first question, the second question does not call for any answer. We, therefore, decline to answer the second question.
(3.) The only question that remains to be considered is the third question. The facts relating to the third question are that the Income-tax Officer disallowed certain expenses claimed by the assessee while computing the income from other sources. Total expenses claimed by the assessee amounted to Rs. 22,384. Out of the above, the Income-tax Officer allowed Rs. 3,145 (a portion of salary) under the head "Property" and another sum of Rs. 490 (being interest) under other sources and disallowed the balance of Rs. 18,675 as expenses not spent wholly and exclusively for the purpose of earning the interest income of Rs. 76,075 assessed under " other sources ". The disallowed expenses are as under : JUDGEMENT_94_ITR199_1993Html1.htm;