Dipak Kumar Sen, J.
1. In this reference under Section 256(2) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, West Bengal-II, Calcutta, the question for determination is as follows :
'Whether, on the facts and in the circumstances of the case, theTribunal was right in holding that the Income-tax Officer was not justifiedin apportioning the total expenditure incurred by the assessee as betweenthe several heads of income and treating the appropriate portion thereof asexpenditure against the dividend income ?'
2. The assessee is New India Investment Corporation Ltd. and the assessment years involved are 1963-64, 1964-65 and 1965-66. The facts found and/or admitted are as follows :
The assessee, an investment company, deals in shares and derives income from business, interest on securities, dividend and other receipts.
3. For the assessment years in question the assessee claimed expenditure respectively of Rs. 79,560, Rs. 89,125 and Rs. 63,308. The Income-tax Officer apportioned the expenditure between the other income and the dividend income in a certain proportion and deducted the same on that basis.
4. The assessee being aggrieved preferred appeals before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner also apportioned such expenses, though in a different proportion, between the different heads of income.
5. On further appeals by the assessee the Tribunal found that as the assessee's business consisted of dealing in shares and as its entire stock of shares and securities were shown as stock-in-trade, the entire expenses incurred by the assessee related to the assessee's business in dealing in shares. The business income of the assessee being made up of profit or loss on share dealings and dividends the gross income would have to be reduced by the entire expenditure to determine the net income. Following the decision of the Supreme Court in the case of Commissioner of Income-tax v. Indian Bank Ltd. : 56ITR77(SC) , the Tribunal held that as the dividend income constituted a part of the business profit of the assessee, though it may be charged for purposes of income-tax under a specific head as provided by the Act (namely, income from other sources), the expenditure incurred in the course of an indivisible trade could not be bifurcated or apportioned.
6. No one appeared on behalf of the assessee at the hearing. Learned counsel for the revenue has pointed out the relevant sections of the relevant Act which, in our opinion, covers the question in its entirety.
7. Section 14 of the Income-tax Act, 1961, provides as follows :
'Heads of income.--Save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income :
B.--Interest on securities.
C.--Income from house property.
D.--Profits and gains of business or profession.
F.--Income from other sources.'
Section 56 of the Act is as follows :
'Income from other sources.--(1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head 'Income from other sources' if it is not chargeable to income-tax under any of the heads specified in Section 14, items A to E.
(2) In particular, and without prejudice to the generality of the provisions of Sub-section (1), the following income shall be chargeable to income-tax under the head 'Income from other sources', namely :
(i) dividends;....' Section 57 of the Act reads as follows:
'Deductions.--The income chargeable under the head 'Income from other sources' shall be computed after making the following deductions, namely :--
(i) in the case of dividends, any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend on behalf of the assessee;.....
(iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income.'
8. From these sections it will clearly appear that dividend has to be computed as income from other sources separately from income from business or profession. In computing such income expenditure not in the nature of capital expenditure but laid out or spent wholly or exclusively for the purpose of making or earning such income has to be ascertained and apportioned.
9. The decision of the Supreme Court in the case of Indian Bank Ltd. : 56ITR77(SC) relied on by the Tribunal has, in our opinion, very little relevance in the facts of the instant case. In the case before the Supreme Court there was no question of computing income under different heads. The income was computed under a single head but a part of the income was tax-free. There the revenue sought to apportion expenditure against tax-free income which was held to be erroneous.
10. For the reasons stated above we answer the question referred to us in the negative and in favour of the revenue.
11. There will be no order as to costs.
C.K. Banerji, J.