Ramaswami, J. - (1.) The following three questions have been referred at the instance of the revenue : "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the benefit under ss. 80K and 80M of the IT Act, 1961, should be granted with reference to the gross dividend income without deducting proportionate management expenses "
(2.) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in deleting the addition to Rs. 7, 02, 054, representing the appreciation in the value of shares investments held by the assessee, made by the ITO under the second part of r. 5(b) of Sch. I to the IT Act, 1961 "
(3.) Whether, the interpretation given by the Tribunal to r. 5(b) of Sch. I to the IT Act, 1961, is valid and justified " The second and third questions are covered by the decision in CIT v. Motor and General Insurance Co. Ltd. and in the light of that judgment, we have to answer these questions in the affirmative and against the revenue, and it is answered accordingly. Therefore, there is no need to set out the facts relating to the same. 2. So far as the first question is concerned, we need notice only few facts. The assessee is a general insurance company. In respect of the asst. yr. 1969-70 they claimed relief both under ss. 80K and 80M of the IT Act, 1961 (hereinafter referred to as 'the Act'). The ITO rejected the claim. However, on appeal, the AAC, following a Tribunal's order in respect of the same assessee for the asst. yrs. 1963-64 and 1964-65, held that the assessee would be entitled to the rebate on the entire dividend income and not merely the net dividend income as computed under the provisions of the Act. This view was accepted by the Tribunal on a further appeal. It may be mentioned, by the time the Tribunal took up the matter for consideration, the decision in CIT v. Madras Motor and General Insurance Co. Ltd. relating to the same assessee in respect of the asst. yrs. 1963-64 and 1964-65 was available, and following that judgment, confirmed the view of the AAC. At the instance of the revenue, the above question has been referred. 3. Though the question referred covers both the sections, it is necessary to deal with s. 80K of the Act separately. So far as s. 80M is concerned, it is now covered by the decision of the Supreme Court in Distributors (Baroda) (P) Ltd. v. Union of India and in view of that judgment, we have to hold that the Tribunal was not correct in holding that the benefit under s. 80M of the Act should be granted on the gross dividend income without deducting the proposed management expenses. Accordingly, the question relating to s. 80M of the Act is answered in favour of the department. The difficulty arises only in respect of the benefit under s. 80K of the Act.;