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TMI Blog2004 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions of law referred to us in the negative, i.e., in favour of the Revenue and against the assessee - - - - - Dated:- 11-10-2004 - Judge(s) : R. K. AGRAWAL., K. N. OJHA. JUDGMENT The judgment of the court was delivered by R.K. AGRAWAL J- Income-tax Reference No. 153 of 1987 relates to the assessment year 1971-72 wherein the Income-tax Appellate Tribunal, New Delhi, has referred the following question of law under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for opinion to this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that deduction under section 80P(2)(d) of the Income-tax Act, 1961 is allowable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3,50,580 as interest on loan taken by it from various bodies. During the assessment year 1979-80 the Income-tax Officer found that payment of interest exceeded the receipts and, therefore, no separate deduction under section 80P(2)(d) of the Act can be given. In the appeal preferred by the respondents the deduction has been allowed on the gross amount. The Revenue's appeal before the Tribunal has failed. We have heard Sri Shambhu Chopra, learned counsel for the Revenue, and Sri Vikram Gulati, learned counsel for the respondent. Sri Shambhu Chopra, learned standing counsel appearing for the Revenue submitted that in view of section 80B(5) of the Act, only the net amount of the income derived by the respondent is to be allowed as deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, it is subject to the provisions of section 80AB of the Act, which was inserted by the Finance (No. 2) Act, 1980, with effect from 1st April, 1981. Section 80B(5) of the Act is of no relevance as it defines "gross total income". It does not specify as to whether deduction of the gross income or net income has to be given under Chapter VI-A of the Act. Section 80AB of the Act as it stood during the relevant period reads as under: "80AB. Where any deduction is required to be made or allowed under any section (except section 80M) included in this Chapter under the heading 'C-Deductions in respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. In the case of Cloth Traders (P.) Ltd. [1979] 118 ITR 243 the apex court has held that under section 80M of the Act the assessee is entitled to relief of the entire amount of dividend income without deduction of interest paid on borrowings in acquiring shares. It may be mentioned here that the decision in the case of Cloth Traders (P.) Ltd. [1979] 118 ITR 243 (SC) has been overruled by the apex court in the case of Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120. Notwithstanding that the decision of the apex court in the case of Cloth Traders (P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration on it." It may be mentioned here that the Legislature by the Finance (No. 2) 14 Act, 1980 had introduced sections 80AA and 80AB into the Act by the reason of the interpretation placed by the apex court upon section 80M in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC). Section 80AA was introduced with retrospective effect from April 1, 1968 and section 80AB was introduced with effect from April 1, 1981. In the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120 (SC) the retrospective effect of section 80AA was under challenge. The apex court interpreted section 80M in a manner different from that placed upon it in Cloth Traders (P.) Ltd. [1979] 118 ITR 243 (SC) and overruled the said decision. It did not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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