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TMI Blog1986 (11) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... 48,59,614. Out of this income a sum of Rs. 8,86,771 related to dividend income on the original holding and the balance of Rs. 39,74,743 was dividend income received on the holding account of Karamchand Thappar Sons Ltd. For the purpose of computing relief on dividend income under s. 80M, the ITO estimated the expenditure relatable to the earning of dividend income of Rs. 8,86,771 at Rs. 10,000. Expenses for earning dividend income in respect of Karamchand Thapper and Sons Ltd, were estimated at Rs. 4 lakhs. To this amount the ITO added a further sum of Rs. 1,47,946, which according to him was the amount of interest paid on borrowed capital utilised for purchasing of shares. In this way the total expenditure in respect of Karamchand Thappe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs for Karamchand Thappar Sons Ltd and Rs. 10,000 for Modern Agencies Ltd. Still feeling aggrieved, the assessee came up in second appeal before the Tribunal. 4. All the grounds in this appeal are directed against the order of the CIT(A) regarding the expenses which are to be deducted for computing deduction under 80M. Here it may be pointed out that ground No. 3 which states that the CIT(A) went wrong in disallowing a sum of Rs. 1,47,940 out of interest paid for purchasing shares has not been pressed before us. This ground is accordingly rejected and the order of the CIT(A) on this particular point is upheld. The remaining grounds relate to the order of the CIT(A) directing the ITO to re-compute the deduction under s. 80M taking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of purchasing shares, no other expenditure is relatable to the earning of dividend income. It was thus urged that the CIT(A) was wholly in error in directing the ITO to re-compute the deduction under s. 80M taking the collection expenses at Rs. 50,000. 6. Ld. departmental representative has, on the other hand, fully supported the order of the CIT(A). 7. We have considered the rival contentions as also the facts on record. In view of s. 80AA inserted by the Finance (No.2) Act, 1980 with retrospective effect from 1st April, 1968, deduction under s. 80M has to be computed with reference to the income by way of dividend as computed in accordance with the provisions of the IT Act, 1961 and not with reference to the gross amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of allowing deduction under s. 80M. We are also of the view that such an expenditure also falls under cl. (iii) of s. 57. Under this cl. (ii) of s. 57 any expenditure not being in the nature of capital expenditure, laid out or expended wholly and exclusively for the purpose of making or earning dividend income is allowable as a deduction under s. 57. In this clause the legislature has simultaneously used the words 'working and earning' in relation to the income in respect of which the expenditure has been incurred. If we interpret the language of this clause in the manner desired by Shri Roy, it would lead to startling results. Evidently, different meaning has to be assigned with the words 'making and earning'. Not only the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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