Commissioner of Income Tax vs Aparajitha Finance Company Ltd.

Chitra Venkataraman, J.—Following are the substantial questions of law raised by the Revenue in respect of the assessment years 1990-

1991 and 1992-1993:

Whether in the facts and circumstances of the case, the Tribunal was right in holding that the interest on the borrowed money utilised for the

investment in shares cannot be set off against the dividend income u/s 80 M of the Income Tax Act?

Whether in the facts and circumstances of the case, the Tribunal was right in holding that because the investments in shares were made as per

Reserve Bank guidelines, it should be treated as a business activity?

Learned Counsel appearing for the Assessee before this Court had fairly pointed out that the said issues are covered by the decision of this

Court reported in Commissioner of Income Tax Vs. Balika Finance Co. Ltd., , to which one of us is a party, wherein it had been held that the

deduction under 80M of the Income Tax Act, 1961, has to be worked out after taking into account the interest on the borrowed capital for the

purpose of computation.

Applying the said decision to the facts of the cases, the questions are answered in favour of the Revenue. The Tax Case appeals are allowed.

No. costs.