1984 (7) TMI 111

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.... L A/c disclosed the only receipts by way of dividends and shares amounting to Rs. 2,27,213 and interest on fixed deposit of Rs. 8,924. As against this, it had incurred liability for interest on borrowings to the extent of Rs. 96,125 and other miscellaneous expenditure amounting to Rs. 33,260. 2. In the return of income filed before the ITO, the assessee declared the dividend income at Rs. 1,31,088 by deducting the amount of interest on borrowing of Rs. 96,125 out of the gross dividend amounting to Rs. 2,27,213. It however, claimed relief under s. 80M of the IT Act in respect of the entire dividend of Rs. 2,27,213. In the assessment made under s. 143(3) of the IT Act, the ITO granted relief under s. 80M of the IT Act at the rate of 60 pe....

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....T(A)'s order on the ground that the CIT(A) had failed to appreciate and ought to have held that the assessee bring and investment company, the interest paid by it was a business expenditure allowable under the head 'business income' the interest paid by the assessee being a business expenditure, deduction under s. 80m was allowable on gross divided income without making any adjustment of the interest expenditure and for an investment company the decision in the case of Cotton Fabrics and in the case of Laxmi Agents lay down the correct legal position in respect of the assessment of dividend income. The assessee prayed that the deduction under s. 80M be allowed on the gross dividend income. 5. The ld. representative for the assessee argue....

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.... Rs. 1,13,088. This income has correctly been arrived at by deducting from the gross dividend the interest paid on the borrowings for the purchase of the shares. The ITO has accepted this position while calculating the relief admissible under s. 80M as required under s. 80AA of the IT Act. It is not clear how the assessee could have been aggrieved by the order of the ITO in this respect and how an appeal lay before the CIT (A) and yet the CIT (A) had entertained the appeal and granted relief to the extent of the interest on fixed deposits which was the only other item of income earned during the year. The assessee has filed a further appeal before the Tribunal objecting to the grant of relief under s. 80M only to the extent of net dividend ....