TMI Blog2014 (1) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... eking to withdraw a deduction granted u/s 80-M was found not valid - section 115-O(5) did not restrict the allowability of a claim u/s.80-M – Following Castle Investments & Industries Ltd. v. ITO [2008 (7) TMI 598 - BOMBAY HIGH COURT] - Decided in favour of Assessee. - ITA No. 793/Mum/2012 - - - Dated:- 20-2-2013 - DINESH KUMAR AGARWAL AND SANJAY ARORA , JJ. For the Appellant : Farrokh V. Irani. For the Respondent : Pravin Kumar. ORDER:- PER : Sanjay Arora This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals)-2, Mumbai ('CIT(A)' for short) dated 14.11.2011, dismissing the assessee's appeal contesting its assessment for the assessment year (A.Y.) 2003-04 u/s.143(3) of the Income-tax Act, 1961 ('the Act' hereinafter) vide order dated 30.11.2010. 2.1 It would be relevant to recount the background facts of the case. The assessee, a public sector company, filed its return of income for the year on 17.11.2003, which was taken up for being subject to the verification procedure under the Act. The profit and loss account for the year, filed along with, was found to contain a provision for Rs.40 crore toward the proposed fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dividend distributed by the company (on or before the due date for filing of return as specified u/s. 139(1)), section 115-O seeks to subject the dividend declared or distributed by the company on or after 01.04.2003 to tax. There was, thus, no conflict between the two, even as the distribution-tax had been paid with reference to the dividend paid after 31/3/2003, having been paid on 10.10.2003. The impugned assessment was framed, disallowing the deduction u/s.80-M, allowed earlier, stating that the assessee had not objected to the same during the reassessment proceedings. 2.2 In appeal, the assessee repudiated the said charge in the assessment order before the first appellate authority. The assessment was assailed both on ground of jurisdiction as well as on the merits of the disallowance. The assessee, however, did not find favour with the ld. CIT(A). In his view inasmuch as the deduction u/s.80-M had been wrongly allowed by the A.O., i.e., without considering the provision of s. 115-O, it was not a case of change of opinion. On merits, sub-section (5) to section 115-O clearly provided that no deduction under any provision of the Act was to be allowed to the company or sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 4.1 The reassessment proceedings in the instant case being with reference to the assessment u/s. 143(3), initiated after the expiry of four years from the end of the relevant assessment year, the same could only be, by virtue of proviso to section 147, where the income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment for the relevant assessment year. The assessee having raised a specific charge in its respect before the first appellate authority (vide Ground No. 1(b) before him), the same ought to have been answered by him, which unfortunately is not the case. The assessee had disclosed all the primary facts in relation to its deduction u/s.80-M. In fact, we find that the A.O. has incorrectly considered it to be a claim for exemption of income and, accordingly, effected a disallowance at Rs. 21 lakh, invoking section 14A of the Act qua the deduction claimed and allowed u/s.80-M. There has been thus, and clearly, a deliberation at the end of the A.O. in the matter. No doubt, there is nothing to suggest consideration of the applicability or otherwise of section 115-O (5) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x u/s. 115-O, which (per s. 115-O(5)) bars any deduction on the relevant amount, either to the company or its shareholder, is on the dividend paid out. Speaking in the context of the present case, the deduction u/s. 80-M, though limited to Rs. 40 crore, is in respect of the dividend of Rs. 113.87 crore received by the assessee-company, and which has by itself nothing to do with the dividend declared, distributed or paid by the assessee-company, which alone could be a subject-matter of tax u/s. 115-O(1), and being after 01/4/2003, has in fact suffered tax there-under. There is thus no overlap between deduction u/s. 80-M and tax u/s. 115-O(1) in the instant case, so that a deduction under the former could not be withdrawn with reference to the latter. Herein lies the basic fallacy of the Revenue's case, so that it is not maintainable even ex facie, even as claimed by the ld. AR before us. The matter may be examined in another manner as well. The dividend of Rs. 40 crore paid by the company to the Central Government, and with reference to which deduction u/s.80-M stands claimed and allowed, has been received by it only during the f.y. 2002-03. The charge of additional income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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