Law:

Section:

Section 80L, read with section 57 of the Income-tax Act, 1961 – Deductions – Interest on securities, dividends, etc. – Assessment year 1970-71 – Whether for purpose of granting relief under section 80J, expenditure allowed under section 57(iii) should not be taken into consideration- Held, yes Words and phrases : Expression ‘dividends' as occurring in section 80L(1)(iv) of the Income-tax Act, 1961 FACTS The assessee had realized during the relevant period, dividends from certain Indian companies. In order to earn that income he had borrowed money and he had to pay interest on the borrowed money during that period. The assessee claimed relief under section 80L to the extent of Rs. 3000 as he had realized from Indian companies amount exceeding Rs. 300. The ITO allowed the expenditure under section 57(iii) but did not grant relief under section 80L on the ground that the expenditure allowed under section 57(iii) exceeded the total dividends realized. The AAC affirmed the order of the ITO. The Tribunal, however, allowed the appeal of the assessee and granted relief under section 80L. On reference : HELD Section 80L provides that where the gross total income of an assessee, being an individual, a HUF or an AOP includes income by way of dividends from any Indian company, there shall, in accordance with and subject to the provisions of the said section, be allowed in computing the total income of the assessee, a deduction to the extent of Rs. 3,000 when such income exceeds Rs. 3,000 and, when it is less than Rs. 3,000, to the extent of the whole of such income. It was obvious that in the instant case the gross total income of the assessee included income by way of dividends from Indian companies and that it exceeded Rs. 3,000. This fact itself was sufficient for claiming relief under section 80L since there is no further qualification incorporated in that section or in any other provision of the Act to claim the relief. The amount of expenditure allowable under section 57(iii ) cannot be taken into consideration in this connection as it is nowhere provided that for purposes of granting relief under section 80L the net realisation by way of dividend, after deducting…

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