1986 (7) TMI 83 - SUPREME COURT

Whether the assessee's dividend income from a Pakistan company was deductible against its business loss in India?

Held that:- In the first place, a perusal of the assessment orders for the two years shows clearly that the assessee did claim a set-off of the Pakistan dividend against the losses of the Indian business. In the second place, there is a duty cast on the Income-tax Officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set-off, it cannot relieve the Income-tax Officer of his duty to apply section 24 in an appropriate case.

In the result, the appeals are allowed, the judgment of the High Court is set aside and the questions referred by the Income-tax Appellate Tribunal to the High Court are answered in favour of the Revenue and against the assessee in so far that we hold that the dividend income received from the Pakistan company is deductible in arriving at the total world loss of the assessee under sub-section (1) of section 24 of the Indian Income-tax Act, 1922