Law:

Section:

I. Section 85A(Now section 80M) of the Income-tax Act, 1961 - Deductions - Inter-corporate dividends - Assessment years 1966-67 and 1967-68 - Whether no amount of expenditure was deductible or no business loss was to be set off from gross amount of dividend by reference to which relief under section 85A was to be given - Held, yes FACTS I The Tribunal held that the ITO was not entitled to set off loss under the head 'Business' from the dividend income while computing the rebate under section 85A and also that he was not entitled to deduct from the gross dividend income the proportionate expenditure claimed to be allocable to the earning of dividend while calculating rebate under section 85A. On reference: HELD I In view of the decision of the Supreme Court in Cloth Traders Pvt. Ltd. v. Addl. CIT[1979] 118 ITR 243, it was to be held that no amount of expenditure was deductible or no business loss was to be set off from the gross amount of dividend by reference to which the relief under section 85A was to be given. Therefore, the Tribunal's order was justified. II. Section 80M, read with section 80AA of the Income-tax Act, 1961 - Deductions - Inter-corporate dividends - Assessment year 1969-70 - Whether in view of section 80AA, for purpose of computing relief under section 80M, proportionate expenditure allocable for earning dividend income had to be deducted from gross amount of dividend - Held, yes FACTS II The Tribunal held that the ITO was not entitled to deduct from the gross dividend income the proportionate expenditure claimed to be allocable for earning dividend income for the purpose of computing the relief under section 80M On reference: HELD II In view of section 80AA, it was be held that the Tribunal was not justified in holding that the ITO was not entitled to deduct from the gross dividend income the proportionate expenditure claimed to be allocable for earning dividend income for the purpose of computing the relief under section 80M III. Section 55 of the Income-tax Act, 1961 - Capital gains - Cost of acquisition - Assessment year 1969-70 - Assessee held certain shares of a company as on 1-1-1954 - Assessee subsequently acquired certain right…

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