S.C : Having regard to the definition of ‘gross total income’ under s. 80B(5) whether, on the facts ‘and in the circumstances of the case, the Tribunal was justified in allowing deduction under s. 80K on the gross dividend income without taking into account deduction for interest paid on moneys borrowed specifically for investment in shares ?

Supreme Court Of India

CIT vs. P.K. Jhaveri

Sections 57, 57(iii), 80B, 80B(5), 80K

S. Ranganathan, N.D. Ojha & J.S. Verma, JJ.

Tax Reference Case No. 2 of 1979

6th November, 1989

Counsel Appeared

S.C. Manchanda, Senior Advocate, (K.P. Bhatnagar & Miss A. Subhashini, Advocate, with him), for the Applicant : None appeared for the Respondent.

BY THE COURT:

This is a reference, at the instance of the CIT, Bombay, to this Court under s. 257 of the IT Act, 1961, (“the Act”), by the Tribunal. It is not necessary to set out the facts at length since the question referred has already been decided by this Court subsequent to the reference.

The question that has been referred to us reads as follows :

“Having regard to the definition of ‘gross total income’ under s. 80B(5) whether, on the facts ‘and in the circumstances of the case, the Tribunal was justified in allowing deduction under s. 80K on the gross dividend income without taking into account deduction for interest paid on moneys borrowed specifically for investment in shares ?”

The question posed has been answered in the negative by the decision of this Court in Cambary Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 and in the case of Distributors (Baroda) P. Ltd. vs. Union of India (1985) 47 CTR (SC) 349 : (1985) 155 ITR 120. It may be mentioned that the statutory provisions have also been subsequently modified by the insertion of s. 80AB w.e.f. April 1. 1981.

In view of the above decisions, the question reference to is answered in the negative and in favour of theappellant. The Tribunal will dispose of the case conformably to this judgment under s. 260 of the Act.

There will be no order as to costs. Question answered in the negative.

[Citation :181 ITR 79]

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