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TMI Blog1982 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 72-73 the ITO computed the gross dividend received by the assessee during the relevant previous year on the shares held by him in the various companies as Rs. 9,950 and interest received by him as Rs. 6,304. The assessee claimed deduction of Rs. 21,101 as interest paid on moneys borrowed for being invested in shares from and out of which the aforesaid dividends and interest income were received, and that was allowed. The assessee also claimed deduction of Rs. 3,000 allowable u/s. 80L of the I.T. Act, 1961. The ITO, however, rejected the said claim on the ground that the net income by way of dividends and interest was a minus figure, and, therefore, there was no room for any allowance being given for a sum of Rs. 3,000 u/s. 80L of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the assessee is entitled to the deduction under section 80L of the Income-tax Act, 1961, for the assessment year 1972-73 even though the net income assessed under the head ' Dividend ' and ' Interest ' is a negative figure ? " T.C. No. 985 of 1977, involving almost similar facts, arises out of the order of the Tribunal which followed its earlier decision which is the subject-matter in T.C. No. II 86 of 1977. The decision in CIT v. Madras Motor General Insurance Co. Ltd. [1975] 99 ITR 243 (Mad) and the decision in Madras Auto Service v. ITO [1975] 101 ITR 589 (Mad), followed by the Tribunal by these cases have been referred to with approval by the Supreme Court in Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243. In CIT v. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred in earning it or less any deduction allowable under the Act and, therefore, if the particular item of income, namely, dividend from an Indian company, is included in the total income, what is exempted is dividend from Indian companies which can only mean the full amount of dividends received from an Indian company. The Supreme Court, however, in dealing with the scope of s. 80M held that the deduction permitted under that section is to be calculated with reference to the full amount of dividends received from a domestic company and not with reference to the dividend income is computed in accordance with the provisions of the Act, that the words " where the gross income of an assessee... includes any income by way of dividends from a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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