Law:

Section:

Section 57 read with sections 56 and 14 of the Income-tax Act, 1961 - Income from other sources - Deduction - Assessment years 1963-64 to 1965-66 - Whether dividend has to be computed as income from other sources separately from income from business or profession and in computing such income expenditure not in nature of capital expenditure but laid out or spent wholly or exclusively for purpose of making or earning such income has to be ascertained and apportioned - Held, yes FACTS The assessee, an investment company, dealt in shares and derived income from business, interest on securities, dividend and other receipts. The ITO apportioned the expenditure claimed by the assessee between the other income and the dividend income in a certain proportion and deducted the same on that basis. On appeal, the AAC also apportioned such expenses, though in a different proportion, between the different heads of income. On further appeals, the Tribunal found that as the assessee's business consisted of dealing in shares and as its entire stock of shares and securities were shown as stock-in-trade, the entire expenses incurred by the assessee related to the assessee's business in dealing in shares and that the business income of the assessee being made up of profit or loss on share dealings and dividends the gross income would have to be reduced by the entire expenditure to determine the net income. On reference: HELD Dividend has to be computed as income from other sources separately from income from business or profession. In computing such income expenditure not in the nature of capital expenditure but laid out or spent wholly or exclusively for the purpose of making or earning such income has to be ascertained and apportioned. Therefore, the ITO was justified in apportioning the total expenditure incurred by the assessee as between the several heads of income and treating the appropriate portion thereof as expenditure against the dividend income. Note : The case was decided in favour of the revenue. JUDGMENT Dipak Kumar Sen, J.-In this reference under section 256(2) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, West Bengal-II, Calcutta,…

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