COMMISSIONER OF INCOME TAX Vs. NEW GREAT INSURANCE CO. LTD.
HIGH COURT OF BOMBAY
COMMISSIONER OF INCOME TAX
New Great Insurance Co. Ltd.
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S.P. Kotval, J. -
(1.) The judgment in this Income Tax reference shall also govern the disposal of I.T. Reference No. 9 of 1971 and I.T. References No. 97 of 1971. These three reference involve the same point and substantially raise the same question. They were also argued together.
(2.) The respondents in each of the these three references are insurance companies doing general insurance business and each of these companies derived an income which consists of dividends arising out of their investments. These dividends are received from Indian companies. The short question is whether the dividend income received by the three respondent -companies is wholly exempt from super -tax either under the provisions of Sec. 99(1)(iv) (as it then stood) of the Income Tax Act, 1961, or under Sec. 85A of the said Act. In Income Tax Reference No. 9 of 1971, the respondent -assessee has also claimed exemption under the provisions of Sec. 85 and Sec. 235 of the same Act in respect of dividend income. In each of the cases the department has claimed that exemption no doubt can be allowed but not upon the full amount of the dividend received by each company but only on the net dividend earned, that is to say, after the deduction of proportionate expenses of management from the total amount of the dividend.
(3.) In the Income Tax Reference No. 60 of 1971, in the case of the New Great Insurance Co. Ltd., the total income, the total expenses and the total dividend received in the account year which is the calendar year 1962 (assessment year 1963 -64) were as under :
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