9911796707
TMI Blog2013 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of deduction under Section 80M of the Income Tax Act, 1961 (for brevity 'IT Act'). The identical questions of fact and law arise in these appeals filed under Section 260A of IT Act and therefore, taken up together for disposal. 2. For convenience, facts are taken from the ITA No. 50 of 2012, relating to the assessment year 1994-1995. The respondent assessee declared total taxable income of Rs. 13,45,07,470/- for the said Assessment Year. 3. The respondent-assessee claimed deduction under Section 80M of the IT Act, on the 'gross dividend' of Rs. 87,50,490/- received by it. The Assessing Officer (AO) noted that as per Section 80AA of the IT Act, deduction under Section 80M is admissible on the quantum of 'net dividend' received duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not on the amount of financial expenses, to the tune of Rs. 6,66,035/- vide order dated 26.12.2007 (Annexure A-IV). CIT(A) accepted the appeal partly, restricting disallowance to the extent of Rs. 1 lac, taking into account similar amount of disallowance to the assessee for the assessment year 2002-03. The Revenue filed appeals before ITAT which determined the disallowance for different years at Rs. 1 lac for assessment year 1994-95; Rs. 1.5 lacs for 1995-96 and Rs. 2 lacs for each of the assessment years 1997-98 and 2000-01. Accordingly the appeals were disposed of. Against the order of ITAT dated 30.08.2011 (Annexure AVI) and the order of CIT(A) dated 01.02.2010 (Annexure A-V), the Revenue has preferred these appeals. 6. Revenue has pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act, and forming part of the gross total income, and not with reference to the full amount of dividend received by the assessee. 9. In Punjab State Industrial Tribunal Development Corporation's case (supra), the Special Bench of the Tribunal held as under:- "46. (i) That deduction under s. 80M is to be allowed on net dividend income computed as per provisions of ss. 57 to 59 of the IT Act. The deduction is not to be allowed on gross dividend receipt. (ii) That net dividend income is to be computed under the head "Other sources" after deduction of expenditure incurred for purposes of earning, making or realizing dividend income. (iii) The deduction to be allowed out of dividend income are as per specified provision of the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while computing dividend income. I, therefore, direct that deduction under s. 80M be allowed to the assessee as claimed by the assessee in all the assessment years under appeal." 10. In CIT v. Metalman Auto (P) Ltd. (2011) 336 ITR 434 (P&H) AO held that for earning dividend income, the assessee must be presumed to have incurred some expenditure which had been disallowed under Section 14A. On appeal CIT (A) held that in the absence of evidence of any expenditure having been shown to have been incurred, disallowance under Section 14A was not justified. The Tribunal observed thus:- "25. Ground No. 4 is regarding disallowance under Section 14A of the Act in relation to the exempt income earned by the Assessee. In this regard, the facts are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no mistake in the order of the CIT(A). Quite clearly, the AO had only made a presumption that certain expenditures have been incurred for earning the impugned exempt incomes. Therefore, following the parity of reasoning laid down by the Hon'ble jurisdictional High Court in the case of Hero Cycles Ltd. (supra), we affirm the decision of the CIT(A) and accordingly, ground raised by the Revenue is dismissed." This Court held that for disallowance under Section 14A presumptive expenditure in the absence of actual expenditure could not be taken into account. 11. No authority taking a contrary view that the Revenue is entitled to reduce from 'gross dividend' received, the presumptive expenditure in the absence of actual expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
