1976 (11) TMI 7 - HC - Income Tax

Summary

Issues involved: Interpretation of deduction under section 80M of the Income Tax Act without deducting proportionate management expenses.

Summary:
The High Court of Bombay, in a judgment delivered by Justice Tulzapurkar, addressed the question raised by the Commissioner of Income Tax regarding the application of a previous decision to the assessment year in question. The Court noted that the question framed did not directly arise from the Tribunal's order, as the Tribunal had already decided that the deduction under section 80M should be based on gross dividend income without deducting management expenses. The Court referenced previous decisions by the Supreme Court and the Bombay High Court to support this conclusion. The petitioner argued that a 1968 amendment to section 80M, which removed certain words from the provision, should change the computation of the deduction to be based on net dividend income instead of gross dividend income. However, the Court found that the purpose of the amendment, as clarified in the Finance Bill, was not in line with the petitioner's interpretation. Therefore, the Court discharged the rule with costs, maintaining that the deduction under section 80M should continue to be computed based on gross dividend income.