Sabyasachi Mukharji, J. - (1.) This reference arises out of the assessment for the assessment year 1962-63, for which the previous year is the year ending on the 31st March, 1962. The assessee is accompany mainly deriving income from dividends. The assessee filed a return of income declaring business loss of Rs. 20,905 and income from other sources of Rs. 1,76,584. The Income-tax Officer found that the gross amount of dividend amounted to Rs. 1,76,584 and allowed deduction of Rs. 21,326 being interest paid to various parties on moneys borrowed in connection with investments. The Income-tax Officer then worked out the chargeable dividend income at Rs. 1,55,258 inasmuch as the assessee was entitled to exemption under Section 89(1)(ii) (sic. 99(1)(iv), of the Income-tax Act, 1961, the Income-tax Officer worked out the gross amount of dividend income exempt under that Section at Rs. 85,201 and reduced it by a sum of Rs. 10,290, being the amount paid in so far as it was attributable to the aforesaid dividend income. The Income-tax Officer, therefore, worked out that as against the gross amount of dividend of Rs. 85,201, the assessee was entitled to exemption under Section 99(1)(iv) of the said Act only in respect of Rs. 74,911.
(2.) There was an appeal before the Appellate Assistant Commissioner. It was contended that exemption from super-tax under Section 99(1)(iv) of the Income-tax Act, 1961, was limited to the amount specified in the sub-section in so far as they were included in the total income. Since the amount of dividend exempt under Section 99(1)(iv) of the Income-tax Act, 1961, included in the income was only Rs. 74,911 as worked out by the Income-tax Officer, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer.
(3.) The assessee preferred a further appeal before the Tribunal. The Tribunal held that Section 99(1)(iv) of the Income-tax Act, 1961, conferred exemption from super-tax in respect of "any dividend received" by the assessee-company and not in respect of "any dividend income". The Tribunal, therefore, held that as the dividend received by the assessee covered by Section 99(1)(iv) was Rs. 85,201, the relief was not liable to be reduced merely because the "dividend income" after deduction of interest of money borrowed for earning the said dividend would be worked out at a lesser figure. The Tribunal, therefore, held that the assessee was entitled to relief on the whole of the amount of dividend it received and not on the said amount received by interest on money borrowed for earning the said dividend. The Tribunal, therefore, allowed the appeal.;