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TMI Blog2010 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... vidends from another domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends from another domestic company as does not exceed the amount of dividend distributed by the first mentioned domestic company on or before the due date. (2) Where any deduction, in respect of the amount of dividend distributed by the domestic company, has been allowed under subsection (1) in any previous year, no deduction shall be allowed in respect of such amount in any other previous year. Explanation - For the purposes of this section, the expression "due date" means the date for furnishing the return of income under subsection (1) of section 139." 3. For the purposes of these proceedings it is an admitted position before the Court that the assessee received a dividend income of Rs.5,59,02,672/- The dividend income which was received by the assessee company was in respect of the holdings of the assessee in other corporate entities. The assessee also declared and distributed an interim dividend on 26th March, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 148 in which the assessing officer furnished the following reasons for his belief that the income of the Petitioner chargeable to tax for Assessment Year 2003-04 has escaped assessment within the meaning of Section 147. The assessee having raised objections, the assessing officer by an order dated 16th December, 2009 rejected the objections inter alia with the following observations: "The contention of the assessee that notice had been issued on a mere change of opinion is not correct. The issues involved as mentioned in the recorded reasons is that, the assessee claimed deduction u/s.80M of the Act in respect of dividend distributed by the assessee company, wherein the assessee failed to pay additional incometax as per provisions of section 115-O within the stipulated time. Since the assessee has not complied the provisions of section 115-O of the Act, then the deduction u/s.80M is not allowable to the assessee." 6. Counsel appearing on behalf of the assessee has challenged the notice under Section 148 on the following grounds : Firstly, it was urged that the assessing officer has no reason to believe that income had escaped assessment. Under Section 80M the assessee was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for Assessment Year 2003-04 had escaped assessment. 8. Section 80-M was part of the Income Tax Act 1961 during the course of Assessment Year 200304. Section 80M applies where the gross total income of a domestic company includes any income by way of dividend from another domestic company during the previous year. In such a case, in computing the total income of the domestic company which is in receipt of dividend from another company, a deduction is allowable of an amount equal to the income received by way of dividend. However, Section 80-M imposed a ceiling on the extent of deduction that can be claimed by stipulating that this should not exceed the amount of dividend distributed by the company on or before the due date. The due date under the explanation is the date for the furnishing of the return of income under sub section (1) of Section 139. 9. In the present case the admitted facts are that (i) The assessee company had received a dividend of Rs.5.59 Crores during Assessment Year 2003-04 which was declared in the computation of total income; (ii) The assessee had distributed an interim dividend of Rs.4.48 Crores on 26th March, 2003 and an amount of Rs.1.13 Crores on 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a judgment of a Division Bench of this Court in German Remedies v. Deputy Commissioner of Income Tax [(2006) 285 ITR 26 (Bom).] delivered by one of us, Shri Justice J.P. Devadhar, this Court held that though the power to reopen a concluded assessment under Section 147 is wide, the power cannot be exercised mechanically or arbitrarily. This Court held that even after the introduction of the concept of deemed escapement of income by explanation 2 to Section 147 with effect from 1st April, 1989 the belief that income had escaped assessment must be a prudent belief and not a mere change of opinion. This Court held that an assessment order passed after detailed discussion cannot be reopened within a period of four years from the end of the relevant assessment year unless the assessing officer has reason to believe that due to some inherent defect in the assessment the income chargeable to tax has been under assessed or assessed to a lower rate or excessive relief is granted or excessive loss or depreciation allowance or any other allowance under the Act has been computed. In the subsequent judgment of the Supreme Court in CIT v. Kelvinator of India Ltd.[5 (2010) 320 ITR 561 (SC).] the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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