EXPRESS NEWSPAPERS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following three questions have been referred to this court for its opinion by the Income-tax Appellate Tribunal under s. 256(1) of the I.T. Act, 1961, at the instance of the assessed.

(2.) THE assessee in this case is a wholly owned subsidiary company of M/s. Indian Express Newspapers Bombay (Private) Ltd. For the assessment year 1966-67, corresponding to the previous year ended December 31, 1965, it submitted a return of income declaring Rs. 9,54,768 as the total income. THE ITO, however, computed the total income at Rs. 14,49,874, being the income derived from interest on securities, house property, business, dividends, income from other sources and capital gains. While computing the total income, the ITO, inter alia, disallowed (1) expenditure on repairs of Rs. 8,208, (2) municipal tax of Rs. 20,436, and (3) ground rent of Rs. 5,447. THE ITO disallowed the above three it ems following his finding given in the earlier assessment year 1965-66.

(3.) IN the course of this assessment, the ITO restricted the rebate on donations to 10% of the total income as reduced by the dividend income which was exempt from tax under s. 85A of the I.T. Act, 1961, (hereinafter referred to as the "Act"). On appeal, the AAC upheld the order of the ITO. The matter was taken to the Tribunal by the assessee, contending that s. 85A comes under Chap. VII whereas the rebate to be granted fall under s. 88 which comes under Chap. VIII and therefore, there is no justification for restricting the rebate to 10% of the total income as reduced by these dividend income and that, therefore, the rebate on donation should be allowed on the entire amount of donation at 271/2/. Before the Tribunal, the Revenues supported the orders of the authorities below on this aspect. The Tribunal, however, accepted the view of the AAC that the restriction under s. 88 of the Act does not refer to any income exempt from tax under any particular chapter and, therefore, the ITO's action is correct. As against that view of the Tribunal, question No. 3 has been raised.