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Judgment
All these tax case references are at the instance of Revenue and the questions of law referred to us are more or less common. The question of
law referred to us in TC No. 176 of 1985 reads as under :
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the tax deducted at source on the interest income
from Ceylon should not be included as the assessee''s income liable to Indian Income Tax ?
Question of law referred to us in TC No. 177 of 1985 reads as under :
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the tax deducted at source on the interest income
from Ceylon should not be included as the assessee''s income liable to Indian Income Tax ?
The question of law referred to us in TC Nos. 253 and 254 of 1985 reads as under :
Whether, on the facts and the circumstances of the case, the Tribunal was right in holding that only the net interest income from Indian Overseas
Bank, Colombo, after deduction of tax deducted at source should be included in the assessee''s case and not the gross interest ?
The only point that arises in all the tax cases is whether the tax deducted at source on the income from Ceylon should not be included as the
assessee''s income liable to Income Tax. The ITO held that in the case of a resident, the income that accrues or arises to him outside India is
chargeable to Income Tax and therefore the gross interest income should be included. But, on the assessee''s appeal, the CIT(A) held that only the
net interest income should be included in the assessee''s total income. The view of the CIT(A) was confirmed by the Tribunal in various orders
passed in the assessees'' cases and the Revenue has come before us challenging those orders and obtained references and the Tribunal has stated
separate cases and referred the questions of law set out above.
Mr. C. V. Rajan, learned counsel for Revenue, brought to our notice a decision of this Court in the case of A.F.W. Low Vs. Commissioner of
Income Tax, , wherein this Court held that :
The gross dividend alone should be regarded as having accrued or arisen or even received by the assessee, and only the gross dividend income
should be included in the assessee''s taxable income"".
Learned counsel appearing for the respondent assessees, has not seriously disputed that the above decision of this Court will apply to the facts of
the case.
Since the point raised in all the tax cases is covered against the assessee by the decision in A. F. W. Low vs. CIT (supra), following the said
decision, we hold that the Tribunal was not correct in holding that the tax deducted at source on the interest income should not be included as
assessee''s income liable to Income Tax. The order of the Tribunal is not in conformity with the above said decision of this Court. Accordingly, we
answer all the questions of law referred to us in all the tax cases in the negative and in favour of the Revenue. However, in the circumstances of the
case there will be no order as to costs.