Desai J. - In our opinion, the Rule must stand discharged.
2. Mr. Joshi has submitted that an arguable question of law arises inasmuch as the point has been decided in favour of the Department by the judgment of the Gujarat High Court in Additional Commissioner of Income-tax, Gujarat vs . Cloth Traders (P.) Ltd., : 97ITR140(Guj) . It is, however, to be appreciated that the Division Bench of the Gujarat High Court in that decision was dealing with Section 85A (as it then stood) of the Income-tax Act, 1961, the language of which materially differs from the two sections which we are considering viz. sections 80K and 80L of the said Act. As the observations of the Gujarat High Court indicate, considerable reliance has been placed on the second part of the section (85 A), which contemplates the rate of tax which is chargeable on total income. Such wording is not to be found in the two sections under our consideration (80k and 80L) which allow for a straight deduction.
3. In our view the language of two sections which were considered by the Tribunal and which arise for our consideration in this application viz. sections 80K and 80L is quite clear and the answer to the question must be regarded as self evident. It was submitted by Mr. Joshi that in the instant case after considering the deduction as would be available to the assessee under section 57(3), there would be no dividend income component of the gross total income of the assessee from which the assessee would be entitled to have further deductions under these two sections viz. sections 80K and 80L. It is important, however, in this connection to note that both in section 80A(1) as well as in section 80B (5), the deduction contemplated under section 57(3) has not been mentioned. The former provision refers only to deduction specified in sections 80C to 80U, whereas section 80B (5), excludes only the deductions under Chapter VI A or under section 280(o) and does not mention the deduction available to the assessee under Section 57(3) of the Act.
4. We are fortified in our view by a decision of this Court in Commissioner Income-tax vs . New Great Insurance Co. Ltd., : 90ITR348(Bom) , of the Calcutta High Court, as also in Commissioner of Income tax vs . Darbhanga Marketing Co. Ltd., : 80ITR72(Cal) . In the latter case the Department had desired to deduct from the dividend income in respect of which deduction was claimed of an amount of Rs. 21,326/-which was said to be the interest paid to various parties on moneys borrowed in connection with investments in shares. The contention of the Department in the Bombay case was that proportionate management expenses which were attributable as dividend income had to be deducted from the dividend income before granting to the assessee the deduction claimed in respect thereof. The Departments contentions in both the cases were rejected by the High Court concerned.
5. Lastly, it may be mentioned that the submission as was formulated in this Court by Mr. Joshi is not reflected in the question which is sought to be referred to us.
6. In the result, the Rule will stand discharged with costs.