2011 (6) TMI 961 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the deduction claimed u/s 80-M of the Income-tax Act, 1961 for Assessment Year 2003-04 based on dividends received by a private limited company dealing in shares and securities.

Details of the judgment:

1. Issue of deduction u/s 80-M:
- The company claimed a deduction of &8377; 7,50,00,000/- u/s 80-M against the dividend income received, which was paid before the due date of filing the return.
- The Assessing Officer disallowed the claim citing section 115-O(5) of the Act, as the dividends declared by the company were already taxed u/s 115-O(1).
- The CIT(A) upheld the disallowance.
- The company contended that since dividends were distributed before the due date of filing the return, they were entitled to the deduction u/s 80-M.
- It was argued that the provisions of section 115 of the Act were not applicable for the year under consideration.

2. Judgment and reasoning:
- The Tribunal referred to a similar case and held that deduction u/s 80-M is allowable to the assessee on dividends received against which interim dividends were paid.
- The Tribunal reversed the CIT(A)'s order and directed the Assessing Officer to allow the deduction as claimed by the assessee.

3. Additional case reference:
- Another similar issue was raised by an assessee in a separate case, and based on the reasoning provided in the previous case, the Tribunal reversed the CIT(A)'s order and directed the Assessing Officer to allow the deduction u/s 80-M.

4. Final decision:
- Both appeals by the assesses were allowed, and the order was pronounced on June 30, 2011.

This judgment clarifies the eligibility of a private limited company to claim deduction u/s 80-M of the Income-tax Act, 1961 based on dividends distributed before the due date of filing the return, despite the dividends being taxed under a different section of the Act.