TaxTMI 
TaxTMI 
2005 (5) TMI 29
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....ed Commissioner of Income-tax (Appeals) was not justified in directing the Assessing Officer, to set-off the unabsorbed brought forward losses against dividend income which is chargeable to tax under section 56(2)(i) of the Income-tax Act, 1961, as income from other sources and not income from business or profession." The appeal of the Revenue was dismissed by the Income-tax Appellate Tribunal answering the issue in favour of the assessee and against the Revenue. The necessary facts are that the assessee filed a return of income declaring nil income on November 26, 1996. The case was processed under section 143(1A) and was taken up for scrutiny after issuance of notice to the assessee under section 143(2). During the relevant year, th....
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....ter and would have to be treated as business income although usual classification of such income would be dividend income taxable under the head 'Income from other sources'. 10. The ratio of the decisions of the jurisdictional High Court and the hon'ble Gujarat High Court do support the appellant's case as in those cases also receipts in question related to income arising as incidental to the stock-in-trade held by those assessees which were to be treated as business income due to the special nature of business of the assessee. Accordingly, in line with the ratio of the decision of the cases cited above, the Assessing Officer should have set-off the brought forward unabsorbed business losses against such dividend income treating it as bu....
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....brought forward. In both these cases, the court had specifically dealt with the cases of income from dividends and carry forward of losses which were permitted to be set-off against the relevant years. The contention of the Revenue that in the ordinary course set-off of unabsorbed brought forward loss will not be allowed against income from other sources of the current year has rightly been rejected both by the first appellate authority as well as the Income-tax Appellate Tribunal. This is a very well settled position of law that income from dividend would be relatable to the business activity of the assessee of the present kind and would not be an income from other sources. In the case of Snam Progetti S.P.A. v. Addl. CIT [1981] 132 ITR....
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....10(2)(vii) of the Act for the assessment year 1956-57. For part of the year, apparently, the assessee had carried on business, while for the remaining part, it has not carried on business. The High Court had denied the admissibility of the allowance to the assessee. While reversing the judgment of the High Court, the Supreme Court answered both the formulated questions whether dividend income was to be taken as income, profits and gains of the business of the company as well as set-off against losses brought forward for the earlier years in favour of the assessee. Applying the above settled principles, the Income-tax Appellate Tribunal had affirmed a finding of the Income-tax Commissioner (Appeals) that the company in the interest of its....