TMI Blog2005 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross dividend while granting relief u/s 80M?" - We answer both questions referred to us in the negative, i.e., in favour of the Revenue and against the assessee - - - - - Dated:- 30-9-2005 - Judge(s) : V. C. DAGA., A. S. AGUIAR. JUDGMENT The judgment of the court was delivered by V.C. Daga J.-This reference under section 256(1) of the Income-tax Act, 1961 (the "Act" for short), is at the instance of the Revenue, arising out of the order in I.T.A. No.2848/Bom/1984 dated November 16,1987 passed by the Income-tax Appellate Tribunal, Mumbai ("the Tribunal" for short) for the assessment year 1975-76 whereby the following substantial questions of law have been referred for the opinion of this court: "(1) Whether on the facts and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequently, he denied the assessee's claim under section 80M. The Commissioner of Income-tax (Appeals) ("the CIT(A)" for short), in the appeal filed at the instance of the assessee, granted partial relief. The Commissioner of Income-tax (Appeals) worked out the interest attributable to the investment in shares at Rs. 3,22,528 payable on a sum of Rs. 25,59,020, being the borrowed funds utilised for acquisition of shares in M/s. Killick Nixon Ltd. and M/s. British Burma Petroleum Ltd. The balance interest was allowed by the Commissioner of Income-tax (Appeals) under section 36(1)(iii) on the ground that the interest was admissible as a deduction under section 36(1)(iii) of the Act being payment in respect of sums borrowed for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of dividend received by the assessee. He, thus, submits that the question raised in the case of the assessee, once again, is no more open for debate. He further submits that the aforesaid judgment of this court in the case of the assessee, for the assessment year 1968-69, has become final and conclusive and, therefore, it would not be reasonable or proper for this court to take a contrary view in the case arising out of the order meant for the subsequent assessment year 1975-76. Per contra, learned counsel appearing for the respondent-assessee urged that the amount of interest paid on the overdraft and the expenses incurred to earn the income, related to the business of trading in shares, have to be allowed as deduction in computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondent-assessee. Apart from the above, the main business of the respondent-assessee herein is not to deal in shares and stocks but to manufacture drums and barrels. Thus, the case of the assessee is fully covered by the ratio of the decision of the Supreme Court in the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120 wherein it has been held that deduction under section 80M(1) of the Act has to be calculated with reference to the amount of dividend computed in accordance with the provisions of the Act forming part of the gross total income, i.e., after deducting interest paid on monies borrowed for earning such income, and not with reference to the full amount of dividend received by the assessee. At this juncture, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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