Ajit K. Sengupta, J. - (1.) This is a reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1962-63. The assessee company was doing business in tea and gunnies. It had also started business in purchase and sale of shares during the previous year. It was also having income from managing agency commission and allowances, dividend, etc. The Income-tax Officer apportioned the expenses totalling Rs. 3,26,963 under the various sources of income in the same proportion as the gross income from those sources. In this way, Rs. 92,726 was allocated against the dividend income amounting to Rs. 2,10,455. The dividend income was thus reduced to Rs. 1,17,729 and the rebate under Section 235 was worked out on the basis of the gross dividend income less proportionate expenses deducted therefrom.
(2.) The assessee was aggrieved by the assessment order of the Income-tax Officer and, therefore, went up in appeal before the Appellate Assistant Commissioner in which among other grievances raised was the grievance against the action of the Income-tax Officer in deducting proportionate expenses against the dividend income and determining the rebate under Section 235 on the basis of gross dividend less proportionate expenses deducted therefrom. The Appellate Assistant Commissioner, however, on both of these points agreed with the Income-tax Officer and refused to interfere.
(3.) The assessee went on appeal before the Tribunal. Following the various decisions of the Supreme Court and the Calcutta High Court, the Tribunal held that there was no justification for deducting from the gross amount of the dividend proportionate expenses for arriving at the net dividend income. Accordingly, the Tribunal held that the rebate under Section 235 would be available on the gross amount of the dividend without deducting therefrom the proportionate expenses.;