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TMI Blog1991 (7) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... bited the entire expenses in the profit and loss account against the gross profit derived by it from business in shares and yarn including dividends. The net interest payment debited in the profit and loss account is Rs. 25,39,000. The borrowed money on which interest payment has been made was also utilised for acquiring the shares on which dividend was earned. No separate expenses pertaining to the dividend income was bifurcated in the profit and loss a/c for computing the business income and dividend income separately. He therefore, bifurcated the amount of net interest payment towards earnings from the business and dividend income proportionate to gross profit from business and gross dividend income. The bifurcated amount of interest exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rces " under sections 56 to 58 of IT Act, 1961. It was submitted that the judgment of Hon'ble Supreme Court in the case of Distributors (Baroda) (P.) Ltd. refers only to case of investment in shares and securities and does not deal with a case of a dealer in shares and secraities. In the said judgment, the decision of the Gujarat High Court in the case of Cotton Fabrics Ltd. was neither referred nor reversed. The decision of the Gujarat High Court in the case of Cotton Fabrics Ltd. holds good for the companies which are trading in shares and securities. The contention of the assessee is squarely covered by the aforesaid judgment of Hon'ble Gujarat High Court. He also invited our attention towards the commentary by learned authors Kanga and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest was incurred for the purpose of carrying on the business of the assessee and that had to be deducted in its entirety under section 36(1)(iii) while computing the income of the assessee under the head ' profits and gains from business '. The provisions of section 80AA was introduced by the Finance (No. 2) Act, 1980 w ith retrospective effect from 1st April, 1968 as regards intercorporate dividends with a view to supercede the view taken by the Hon'ble Supreme Court in the case of Cloth Traders (P.) Ltd. Subsequently the judgment in the case of Cloth Traders was overruled by the Supreme Court in the case of Distributors (Baroda) (P.) Ltd. The Supreme Court in the later case held that section 80AA was mainly declaratory of the law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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