2020 (2) TMI 1151 - SC - Income Tax

Deduction u/s 80 HHC(4B) - HELD THAT - It is not in dispute that the stated issue in reference to Assessment Year 1998-1999 has been answered by the High Court on 05.09.2008. That decision having become final will apply proprio vigore to the subject assessment year i.e. 1996-1997, in terms of the aforementioned order of the Tribunal. We order accordingly. Deduction u/s 80M - non-allocating personal and administrative and financial expenses proportionately for computing net dividend income referred to in Section 80AA - HELD THAT - It is not in dispute that thereafter the Assessing Officer completed the assessment in terms of the remand order and challenge thereto before the Tribunal has also become final. Be it noted that as regards the said claim, the High Court had observed that the issue has been answered in favour of the Revenue in Distributors (Baroda) Pvt. Ltd. vs. Union of India and Others 1985 (7) TMI 1 - SUPREME COURT . It is for the Department to consider whether the assessment done after remand and culminated with the order of the Tribunal is in conformity with the said decision of the Supreme Court or otherwise. Nothing more is required to be said as the appellant is content with the order passed by the Tribunal, which as of now has been allowed to become final by the Revenue-respondent.

Summary

Issues:
1. Interpretation of Section 80 HHC(4B) of the Income Tax Act regarding deduction of interest received from customers on belated payments.
2. Application of Section 80M for deduction without proportionate allocation of expenses for computing net dividend income.

Analysis:

Issue 1:
The High Court addressed whether the Income Tax Appellate Tribunal was justified in not reducing 90% of interest received from customers on belated payments from 'profit and gains of business' under Section 80 HHC(4B) of the Income Tax Act. The Tribunal had referred to a previous decision related to Assessment Year 1998-1999, which was answered by the High Court in 2008. The High Court ruled that the decision for 1998-1999 would apply to the subject assessment year of 1996-1997. Consequently, the issue was decided against the assessee based on the earlier judgment.

Issue 2:
Regarding the second issue, the Tribunal had remitted the proceedings to the Assessing Officer concerning the deduction under Section 80M. The Tribunal directed the Assessing Officer to calculate any disallowance based on actual expenditure incurred for earning dividend income. The Assessing Officer completed the assessment as per the remand order, and the challenge to this assessment before the Tribunal also became final. The High Court noted that the issue had been decided in favor of the Revenue in a previous Supreme Court case. The High Court directed the Department to ensure that the assessment done after remand aligns with the Supreme Court decision. The appellant accepted the Tribunal's order, which had been allowed to become final by the Revenue-respondent.

In conclusion, both civil appeals were disposed of in line with the orders in the respective companion appeals. All pending applications were also resolved accordingly.