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TMI Blog1994 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot claim any relief under section 80J as there was no part of the dividend which is attributable to the profits and gains derived from the company from the ship in respect of which the company is entitled to a deduction under section 80J ? " The assessee is a shareholder of Dempo Steamships Ltd. (for short, referred as " the company "). In his assessments for the assessment years 1968-69 to 1970-71, the assessee claimed exemption on dividends received by him from the company under the provisions of section 80K of the Income-tax Act, 1961 (for short, " the Act "). The said exemption was claimed on the basis of a provisional certificate issued by the Income-tax Officer assessing the company under section 197(3) of the Act. The Income-tax Officer allowed the claim in the original assessments. Later on, the Income-tax Officer realised that excessive relief was given to the assessee and the income chargeable to tax had escaped assessment. Assessments for all these years were reopened under section 147(b) of the Act. The Income-tax Officer then held that the dividend received by the assessee from the company during each of the said assessment years was taxable and accordingly inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of dividends attributable to profits and gains from new industrial undertakings or ships or hotel business. The portion of section 80K of the Act, relevant for this reference, reads as under : " 80K. Where the gross total income of an assessee, being-- (a) the owner of any share or shares in a company, or (b) a person who is chargeable to tax under this Act on the income by way of dividends on any share or shares in a company owned by any other person, includes any income by way of dividends paid or deemed to have been paid by the company in respect of such share or shares, there shall, subject to any rules that may be made by the Board in this behalf, be allowed, in computing his total income, a deduction from such income by way of dividends of an amount equal to such part thereof as is attributable to the profits and gains derived by the company from an industrial undertaking or ship or the business of a hotel, on which no tax is payable by the company under this Act for any assessment year commencing prior to April 1, 1968, or in respect of which the company is entitled to a deduction under section 80J for the assessment year commencing on the 1st day of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly (we have referred to " ship " only and not to industrial undertaking or hotel business as the shares are of a steamship company in the present case) " where the gross total income of an assessee includes any profits and gains derived from a ship to which this section applies ". Section 80B(5) defines " gross total income " to mean the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A or under section 280-O of the Act. Section 80A(2) lays down that the aggregate amount of the deductions under Chapter VI-A of the Act shall not, in any case, exceed the gross total income of the assessee. Section 80K provides for a deduction from an assessee's income from dividends. The amount of deduction is equal to such part thereof as is attributable to the profits and gains derived by the company from a ship (in this case) in respect of which the company was entitled to a deduction under section 80J. The word " attributable " emphasises the character of income eligible for relief and also determines the quantum of deduction admissible. The word " attributable " in section 80K ensures that where only a part of the profits of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the assessee-shareholder that he was entitled to relief under section 80K of the Act. Sections 80J and 80K cannot be interpreted in isolation or viewed separately from the entire schedule in Chapter VI-A starting from section 80A of the Act. Though the company had commercial profits as per profit and loss accounts in all these years, the income assessed was nil in view of the unabsorbed development rebate of earlier years. There were no assessable profits and gains derived by the company from the ship in these assessment years and, as such, no part of the dividend actually received by the assessee-shareholder could be said to be attributable to the profits and gains derived by the company from the ship. On a plain grammatical interpretation of section 80K, we are of the view that when there were no assessable profits and gains derived by the company from the ship in the course of the previous years relating to the assessment years under consideration, relief under section 80K for these assessment years was rightly not granted. In our view, what section 80K contemplates is the ascertainment of the portion of the dividends received by the shareholders from a company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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