1987 (10) TMI 114

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....ctions as claimed by the assessee under the head 'Business'. The amount of dividend of Rs. 2,29,216, which was excluded from the head 'Business', was assessed under the head 'Other sources'. After deducting an amount of Rs. 4,304 u/s. 80K, section 80M deduction of 60 percent was given on the balance of Rs. 2,24,912. 2. The CIT, on a perusal of the assessment order, was of the view that the ITO had committed a mistake prejudicial to the interests of the Revenue in view of the provision of section 80AA introduced by the Finance Act of 1980. He held that deduction u/s. 80M should have been allowed only on the net dividends and not on the gross dividends. The CIT then stated : "The assessee is a dealer in shares and for the assessment year 19....

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....ing investment in shares and looking to the quantum of dividend income, considerable expenditure would have been incurred for earning the dividend income. 5. We have considered the rival submissions. The dividend income may be large. The holdings may have been declared in the balance-sheet as investments. But there is a categorical finding of the CIT in an order u/s 263 that the assessee is a dealer in shares for the assessment year under consideration. Mere reliance on the manner of exhibition of assets in the balance-sheet nor the magnitude of any figures by the revenue would be sufficient to dislodge a categorical finding arrived at in an order u/s 263. viz. that the assessee was a dealer in shares. We, therefore, proceed with reference....

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....ead should be made chargeable under that head even if it is earned for business purposes, is to be worked out only for the limited purpose of computing the total income of an assessee. This decision of the Gujarat High Court was followed by the Calcutta High Court in CIT v. J. K. Industries (P.) Ltd. [1980] 125 ITR 218. It is thus clear in the case of the present assessee, though the total income of the assessee is in the course of its business, it gets part of its income from dividends and computation of that income from dividends is to be done in accordance with the provisions of ss. 56 and 57 if the IT Act. But the computation having been so done, ultimately, it still forms part of the income of the business of the assessee and it is ass....