ca final dt pm pg 8.19 (question no 9)

hi

as u know that dividend received from indian company is exempt from tax under section 10(34) of income tax act, only condition is that the indian company has paid dividend distribution tax on it. so this income is exempt in ur hand and you need not deduct interest on loan from this income, as the income is exempt, the interest also not deductible. 

but the dividend received from foreign company is taxable in ur hand and u can deduct interest on loan from this income ( but as per my personal opinion- u can deduct interest on that part, which u can invest in foreign company for investment only)- u can not claim deduction of interest on that amount, which u invest in indian company.

so ,as per section 57, u can claim it as expenses proportionate basis