COMMISSIONER OF INCOME-TAX Vs. HARRISONS MALAYALAM LTD

JUDGEMENT

(1.) The Revenue is in appeal against the orders of the appellate authorities reversing the disallowance of a claim; by the assessing officer.

(2.) The assessee is an investment company, doing business in shares and debentures. For the assessment year 1992-93, the assessee had dividend income from the shares which were retained and not sold during the year. Though the assessee returned the said dividend income under the head "other sources", at the time of assessment, the assessee claimed for setting off of the carried forward business loss to the extent it could not be set off against profits and gains of the business; against such dividend income. In fact, the claim of the assessee was that the dividend income obtained by the assessee during the year ought to be considered as profits and gains of the business, since the dividend was directly attributable to the business of the assessee, i.e., derived from the shares which ought to have been considered as stock-in-trade of the assessee. The assessing officer disallowed the claim primarily on the basis that such income was returned under the head "other sources" and the same was derived from investments and not stock-in-trade.

(3.) The first appellate authority, relying on the decisions of the Hon'ble Supreme Court in Investment Ltd. v. C.I.T., 1970 77 ITR 533 and Western States Trading co. P. Ltd. v. C.I.T., 1971 80 ITR 21and also the decision of the Delhi High Court in C.I.T. v. R.Dalmia, 1974 96 ITR 463, reversed the disallowance and held that the dividends on shares would form part of income from business. The Tribunal concurred with the first appellate authority.