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2013 (11) TMI 1703 - ITAT, MUMBAIRestriction of disallowance of interest expenses to the dividend income - Disallowance of Dividend income in business income - Considered attributable to ‘income from other sources’ - Limitation of deduction u/ s.80M - Application of CUP method instead of transaction net margin method (TNMM) - HELD THAT:- Only 90% of the net amount of any receipt of the nature mentioned in clause (i) of Explanation (baa) which is actually included in the profit of the assessee is to be deducted from the profits of the assessee for determining “profit of the business” of the assessee under Explanation (baa) to section 80 HHC of the Act. Deduction under section 80M is to be allowed on net dividend income computed as per provisions of section 57 to 59; shares held by the assessee company being capital investment and not stock-in-trade, dividend could only be assessed under the head “other sources” and only expenditure referred to in section 57 could be deducted to arrive at net dividend and, therefore, proportionate management expenses or interest or other expenses could not be deducted while computing dividend income for the purpose of allowing deduction u/s.80M. Accordingly, Court declined to interfere in the relief granted by Ld. CIT(A) and Revenue’s appeal is dismissed. Decision in this case of ACG Associated Capsules Pvt. Ltd. vs. CIT 343 ITR 89 [2012 (2) TMI 101 - SUPREME COURT] and Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 1TR 1 (SC) [1976 (11) TMI 1 - SUPREME COURT] In the result, the appeal filed by the assessee is partly allowed and appeal filed by the Department is dismissed.
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