9911796707
TMI Blog1983 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. In the present case, the assessee is a private company by name Express Newspapers Private Ltd., Madras. Its total income for the assessment year 1972-73 for purposes of income-tax assessment was Rs. 35,60,820. In the relevant previous year, the assessee had derived dividend income of Rs. 2,47,315. For computing the assessee's chargeable profits under the Surtax Act, the assessee claimed that from the total income of Rs. 35,60,820 the dividend income of Rs. 2,47,315 must be deducted. The ITO did not do so. On appeal, however, the AAC granted the assessee's claim for deduction. While doing so, however, the Asst. Commissioner directed the ITO to apply r. 2(i)(a) of the First Schedule to the Surtax Act. The net result of the AAC's order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading. The rule in the First Schedule provides that while income-tax payable by the assessee on its total income will go in " reduction " of the total income to be taken into account for the purpose of computation of chargeable profits, from the income-tax which enters into the reckoning as part of that " reduction ", must be excluded the proportionate income-tax payable on the dividend income. The crucial words of r. 2(i)(a) are in the following terms: ".. ... after excluding from such amount the amount of income-tax, if any, payable by the company in respect of any income referred to in... clause (viii) of rule 1..." The income referred to in cl. (viii) of r. 1 is the dividend income. Rule 2(i)(a) thus speaks of the amount of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of dividend income is not a positive figure of Rs. 2,47,315 or any lesser positive figure, but loss of Rs. 8,97,320 after setting off the dividend income against interest. As the AAC pointed out, " the entire gross dividend income of Rs. 2,47,315 must be taken to have been more than absorbed by a negative income by way of net interest computed at Rs. 11,44,635 under other sources". The position, therefore, is undeniable that in the circumstances of the assessee's case, no part of the dividend income of Rs. 2,47,315 has borne income-tax or could have borne income-tax in any amount. Rule 2(i)(a) of the First Schedule to the Surtax Act, as we earlier said only refers to income-tax, " if any ", payable on the dividend income. It is true th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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