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TMI Blog1987 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee under the head 'Business'. The amount of dividend of Rs. 2,29,216, which was excluded from the head 'Business', was assessed under the head 'Other sources'. After deducting an amount of Rs. 4,304 u/s. 80K, section 80M deduction of 60 percent was given on the balance of Rs. 2,24,912. 2. The CIT, on a perusal of the assessment order, was of the view that the ITO had committed a mistake prejudicial to the interests of the Revenue in view of the provision of section 80AA introduced by the Finance Act of 1980. He held that deduction u/s. 80M should have been allowed only on the net dividends and not on the gross dividends. The CIT then stated : "The assessee is a dealer in shares and for the assessment year 1981-82, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment in shares and looking to the quantum of dividend income, considerable expenditure would have been incurred for earning the dividend income. 5. We have considered the rival submissions. The dividend income may be large. The holdings may have been declared in the balance-sheet as investments. But there is a categorical finding of the CIT in an order u/s 263 that the assessee is a dealer in shares for the assessment year under consideration. Mere reliance on the manner of exhibition of assets in the balance-sheet nor the magnitude of any figures by the revenue would be sufficient to dislodge a categorical finding arrived at in an order u/s 263. viz. that the assessee was a dealer in shares. We, therefore, proceed with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be made chargeable under that head even if it is earned for business purposes, is to be worked out only for the limited purpose of computing the total income of an assessee. This decision of the Gujarat High Court was followed by the Calcutta High Court in CIT v. J. K. Industries (P.) Ltd. [1980] 125 ITR 218. It is thus clear in the case of the present assessee, though the total income of the assessee is in the course of its business, it gets part of its income from dividends and computation of that income from dividends is to be done in accordance with the provisions of ss. 56 and 57 if the IT Act. But the computation having been so done, ultimately, it still forms part of the income of the business of the assessee and it is assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure which was allowed under the head "Business". It was comprised of remuneration to Managing Director, other salary, rent travelling, conveyance, motor car expenses, Director sitting fees, legal charges for representing income-tax case, some expense on maintenance of property, etc. The aforesaid items came to over Rs. 75,000. These are all items which are clearly admissible deductions u/s. 37 of the IT Act in computing the business income. There was also a nominal amount of bank charges of only Rs. 40 which was allowed under the head 'Business income'. We do not consider on the facts of this case that there was any warrant, for making any apportionment of the expenditure which was rightly allowed u/s 37 in arriving at the surplu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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