Dividend tax treatment for insurance company: rebate applies to the full gross dividend paid, not dividend net of management expenses.

Dividend exemption provisions are construed to grant rebate on the full gross dividend paid to shareholders, not on dividend reduced by proportionate management expenses. The court rejects reading the term "assessable" from the Fifth Schedule into section 99(1)(iv), holding that making one exemption subject to another does not alter the terms of the first exemption. The statutory scheme aims to prevent double taxation of corporate dividends and to encourage intercorporate investment; accordingly, relief under sections 85, 85A and 235 applies to the gross amount of dividends paid and entitles the assessee to rebate on the gross dividend.

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Issues: Whether dividends received by a company from Indian companies are exempt under section 99(1)(iv), section 85A, section 85 and section 235 of the Income-tax Act, 1961 on the gross amount of dividends or only on the net amount after deduction of proportionate management expenses.

Analysis: The statutory phrases at issue"any dividend received by it" and "any income by way of dividends received by it"are unqualified and refer to the full amount of dividends as received. The opening words of section 99(1) referring to "amounts which are included in his total income" and the Fifth Schedule do not alter the clear meaning of clause (iv). Precedents construing similar exemption language treat dividends or interest "receivable/received" as the gross amounts and reject reading deductions for general management expenses into the exemption. The purpose of the provisionspreventing double taxation of the same dividendsupports treating the exemption as applying to the gross dividend. Provisions that refer to dividends "paid" to shareholders (sections 85 and 235) further reinforce that the exemptible amount is the dividend as declared or paid, not a net figure after general expenses.

Conclusion: The relief under section 99(1)(iv), section 85A, section 85 and section 235 of the Income-tax Act, 1961 is to be calculated on the gross amount of dividends received and not after deducting any proportionate management expenses.

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