1984 (8) TMI 174 - AT - Income Tax

Summary

Issues:
1. Whether only the net dividend received from foreign companies and not the gross dividend should be taken as the taxable incomeRs.
2. Whether the question of law proposed by the Commissioner of Income-tax arises out of the order of the Tribunal and should be referred to the Madras High CourtRs.

Analysis:
1. The case involves a dispute regarding the taxation of dividend income received from foreign companies. The assessee contended that only the net income after deduction of tax should be taxed, not the gross income. Initially, the ITO taxed the gross amount of dividend income, but on appeal, the AAC directed to tax only the net dividend. The Tribunal upheld the AAC's decision, citing a similar decision in a previous case. The Tribunal emphasized that only the net dividend should be taxed, not the gross dividend, based on their earlier ruling.

2. The Commissioner sought to refer a question of law to the High Court regarding the taxation of net vs. gross dividend income. The Judicial Member proposed to dismiss the reference application, arguing that the department failed to provide necessary documents and substantiate their contentions. However, the Accountant Member disagreed, stating that since the Tribunal had referred a similar matter to the High Court in a previous case of the assessee, consistency required referring the present case as well. The Third Member agreed with the Accountant Member's view, emphasizing the need for consistency in referring the question of law to the High Court.

3. The Third Member declined the department's request to expunge certain remarks made by the Judicial Member, stating it would exceed the jurisdiction as a Third Member. The case was directed back to the Bench for further proceedings based on the decision to refer the question of law to the High Court for resolution.