Judgment

BHAGWATI, J.:- This group of appeals and Reference raises a short question of construction of Ss. 85A and 80M of the Income-tax Act, 1961 (hereinafter referred to as the present Act). The question is whether on a true interpretation of these sections, rebate of income-tax is admissible on the actual amount of dividend received by an assessee, being a company, from an Indian company, or it is confined only to the dividend income as computed in accordance with the provisions of the Act, that is, after making the deductions specified in Section 57 including deduction of the interest paid on borrowings for making the investments. The Gujarat High Court has taken a view against the assessee while a different view has been taken by the Bombay, Madras and Calcutta High Courts. The appeals are preferred by the assessee, namely, Cloth Traders (P). Ltd., againsst the judgement of the Gujarat High Court and they relate to the assessment years 1965-66 and 1966-67 when S. 85A was in force. The Reference before us have been made directly by the Tribunal under S. 257 of the Act in view of the conflict of opinion amongst the High Courts. Out of these References, three are at instance of th