1984 (8) TMI 178 - AT - Income Tax

Summary

Issues:
1. Whether only net dividend received from foreign companies should be considered as taxable income instead of gross dividend.
2. Whether the question of law proposed by the CIT should be referred to the High Court.
3. Whether the Reference Application should be dismissed or referred to the High Court.

Analysis:

Issue 1:
The case involved a dispute regarding the taxation of dividend income received from foreign companies. The assessee contended that only the net income after deduction of tax at source should be taxed, while the revenue department argued for taxing the gross amount of dividend income. The Income Tax Officer (ITO) initially rejected the assessee's claim, but the Appellate Tribunal upheld the decision of the Commissioner of Appeals (AAC) to tax only the net dividend income. The Tribunal relied on its previous order in a similar case to support its decision.

Issue 2:
The Commissioner of Income Tax (CIT) filed a reference application under section 256(1) of the Income Tax Act, 1961, seeking the Tribunal to refer a question of law to the High Court. The question raised was whether only the net dividend received from foreign companies should be considered as taxable income. The Tribunal examined the previous orders and references related to the case for the assessment years 1975-76 and 1978-79. There was a difference of opinion among the members of the Tribunal on whether the question proposed by the CIT should be referred to the High Court.

Issue 3:
The Tribunal had to decide whether to dismiss the Reference Application or refer it to the High Court. The Judicial Member (JM) and the Accountant Member (AM) had conflicting views on the matter. The JM supported the dismissal of the Reference Application based on the failure of the departmental representative to provide necessary documents. However, the AM disagreed and argued that consistency with previous references made to the High Court in similar cases required the present case to be referred as well. Ultimately, the Third Member agreed with the AM's viewpoint, stating that for consistency, the case should be referred to the High Court. The Third Member declined the department's request to expunge certain remarks made by the JM.

In conclusion, the Tribunal decided to refer the question of law proposed by the CIT to the High Court for consideration, based on the consistency with previous references and decisions in similar cases.