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1 - 10 of 13 (0.21 seconds)Continental Construction Ltd vs Commissioner Of Income-Tax, Central-1 on 15 January, 1992
6. It has to be brought in mind that there is a distinction between the monies borrowed for purchase of shares to be held as stock in trade and the monies borrowed for the purchase of shares to be held as investments. In the former case, the interest on borrowings has to be allowed as the business expenditure under section 36(1)(iii). While in the latter case, the interest is allowable as deduction under section 57(iii), while computing the income from dividend under the head "income from other sources". Therefore as a consequence thereof, the gross amount of dividend has to be allowed as deduction under section 80M in the former case, while in the latter case the deduction under section 80M has to be allowed on the net dividend income. In this connection, it is useful to refer two decisions of the Supreme Court. The first decisions is in the case of Western States Trading Co. (P.) Ltd. v. CIT [1971] 80 ITR 21 (SC), wherein it has been held as under :
Mafatlal Industries Ltd. And Ors. vs Union Of India (Uoi) And Ors. on 19 December, 1996
3. The learned Departmental Representative has assailed the order of the CIT(Appeals) by submitting that the decision of the CIT(A) is contrary to the judgment of the Hon'ble Supreme Court in the case of Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120/22 Taxman 49. According to him the expenditure on account of interest on borrowings has to be adjusted against the dividend income irrespective of the intention of the assessee. It was further submitted by him as an alternate contention that at least the interest paid by the assessee should be apportioned between the business income and the dividend income on pro-rata basis. In support of this submission, he relied on the decision of the Gujarat High Court in the case of H. K. (Investment) Co. (P.)
Commissioner Of Income-Tax, Gujrat vs Cotton Fabrics Ltd. on 22 December, 1975
8. In the present case, the admitted facts as already discussed that borrowed funds were utilised for the purchase of shares as stock in trade. Therefore, the interest was deductible under section 36(1)(iii). While computing the dividend income the interest payment could not be allowed as deduction under section 57(iii). Therefore, what is included in the gross total income is the gross amount of dividend and not the net dividend income. Therefore, in view of the Supreme Court decision relied upon by the learned D.R., the assessee is entitled to deduction under section 80M on the gross dividend income. The decision of the Gujarat High Court in the case of Cotton Fabrics Ltd. (supra) is squarely on the issue before us, wherein it has been held that the assessee is entitled to deduction under section 80M on the gross dividend income where the shares are purchased as stock in trade with the assistance of borrowed funds.
Commissioner Of Income-Tax, W.B. I vs National & Grindlays Bank Ltd., ... on 28 February, 1968
4. On the other hand, the learned counsel for the assessee submitted before us that the issue is squarely covered by the decision of the Gujarat High Court in the case of CIT v. Cotton Fabrics Ltd. [1981] 131 ITR 99 and decisions of the Calcutta High Court in the case of CIT v. National & Grindlays Bank Ltd. [1993] 202 ITR 559 and in the case of CIT v. Enemour Investments Ltd. [1994] 72 Taxman 370.
Commissioner Of Income Tax, Madras vs M/S. P.S.S. Investments (P) Ltd on 9 November, 1976
4. On the other hand, the learned counsel for the assessee submitted before us that the issue is squarely covered by the decision of the Gujarat High Court in the case of CIT v. Cotton Fabrics Ltd. [1981] 131 ITR 99 and decisions of the Calcutta High Court in the case of CIT v. National & Grindlays Bank Ltd. [1993] 202 ITR 559 and in the case of CIT v. Enemour Investments Ltd. [1994] 72 Taxman 370.
Commissioner Of Income-Tax vs Mahendra Sobhagchand Shah on 10 March, 1993
To the similar effect is the decision of the Bombay High Court in the case of Mahendra Sobhagchand Shah (supra). Though this decision relates to deduction under section 80K, but the principle laid down by the Bombay High Court is the same as laid down by the Gujarat High Court in the aforesaid case. The other decisions of the Tribunal relied upon by the Id. assessee's counsel also support the case of the assessee.
Commissioner Of Income-Tax, Andhra ... vs The Cocanada Bank Ltd. Kakinada on 2 April, 1965
The second decision is in the case of CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306 (SC) wherein it has been held as under :