1998 (9) TMI 5

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..... tween the income from the business and income from dividends and that this is fully adjustable against business income only ? 2. Whether, the Income-tax Appellate Tribunal was correct in law in holding that for the purpose of deduction under section 80M, it was the gross dividend income that should be considered, especially in view of the decision of the Supreme Court in the case of the Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120 ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law and on facts in confirming the order of Commissioner of Income-tax (Appeals) ?" The abovesaid three questions are referable to the assessment year 1987-88. An applicatio .....

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..... rther appeal was preferred to the Income-tax Appellate Tribunal. Before the Tribunal it was contended that the deduction under section 80M was available to be worked out on the gross dividend without reducing interest paid on borrowings and other expenses. The Tribunal relied on its own earlier order for the assessment year 1981-82 in the case of this very assessee and upheld the plea of the appellant-assessee. The aggrieved Revenue sought for reference which has been refused as already stated hereinabove. Learned senior standing counsel for the Revenue submitted that the view taken by the Tribunal was erroneous and runs in conflict with the law laid down by the Supreme Court in Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 I .....

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..... me or net dividend income by working out the same by reducing the pro-rata interest paid by the assessee from the gross dividend income is certainly a question of law. At this stage, we are not expressing any opinion on the merits of the issue ; we are simply forming an opinion (i) whether the question sought to be referred is a question of law, and (ii) whether it arises from the order of the Tribunal. On these two questions we find ourselves in agreement with the submission of learned senior standing counsel for the Revenue. However, the suggested question No. 3 is merely an inferential one depending on the answer to questions Nos. 1 and 2. The petition is allowed. The Tribunal shall draw Lip a statement on the facts of the case and ref .....

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