TMI Blog2018 (1) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated or available with the company, provided the interest-free funds were sufficient to meet the investments. In the case at hand, Mr.Suresh Kumar fairly conceded that the said decision holds the field as on date. In view of the above and considering the issue at hand, we are of the view that the respondent assessee is held entitled to benefit of the aforesaid presumption and accordingly, the questions proposed do not give rise to any substantial question of law. The impugned order does not call for interference and accordingly the appeal need not be entertained. - Income Tax Appeal No. 1225 of 2015 - - - Dated:- 28-11-2017 - A. S. Oka And A. K. Menon, JJ. Mr. Suresh Kumar for the Appellant Mr. Madhur Agarwal a/w. Mr. A. K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer observed that the assessee claimed deduction under Section 80M of the Act in the sum of ₹ 8,68,32,079/-. The amount represented the deductible component of dividend declared and paid by the company in the sum of ₹ 17,97,83,298/-. The Assessing Officer queried the respondent as to why the dividend income should not be taken as net income and then deduction be allowed in view of the provisions of Section 80AA. 3. For ease of reference it would be useful to reproduce provisions of Section 80M which has been since omitted with effect from the Finance Act 1st April, 2014 : 80M. Deduction in respect of certain intercorporate dividends -- (1) Where the gross total income of a domestic company, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the gross amount of such dividends 4. The assessee contended that they had several bank accounts some of which had overdraft facilities and in these accounts business proceeds are regularly deposited, as a result the balances in these accounts fluctuate and are sometimes in the negative (due to overdrawing) depending on withdrawals. It was contended that no segregation could be made for calculation of net dividend as per Section 80AA. 5. The Assessing Officer did not accept this contention. He observed that the assessee had borrowed from IDBI on 24th September, 1994 which money was used to buy UTI units. Severals of the entries indicated co-relation with money borrowed and investment made. The assessee contended that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax free securities it has to be presumed that investment was made by the assessee would be out of the interest free funds available with the assessee. 7. In the instant case, the assessee is paid interest in pursuance of the agreement which fact has not been properly considered by the Assessing Officer or the first Appellate Authority. The Tribunal observed that there was no basis in presuming that the assessee had made investment in the UTI units from borrowed funds. As far as the issue pertaining to deduction under section 80M was concerned, the Tribunal followed decision of the Co-ordinate Bench of the Chandigarh in the case of Punjab State Industrial Goods and Industrial Development Corporation Ltd. and decided the ground in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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