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Issues:
1. Deduction under section 80M on dividend income. 2. Apportionment of expenses between dividend income and interest income. 3. Deemed business expenses under section 37(1). 4. Alternate submissions for apportioning expenses. 5. Professional tax attribution to dividend income. 6. Comparison with relevant legal precedents. Analysis: 1. The case involved a dispute regarding the deduction under section 80M of the Income-tax Act, 1961 on the gross dividends received by the assessee-company. The Assessing Officer had apportioned deductible expenses between dividend income and interest income based on the proportion of each income to the total income. The assessee contended that 60% deduction under section 80M should be allowed on the entire gross dividend income of Rs. 15,039, challenging the lower authorities' decision to allow it on a reduced amount of Rs. 14,630. 2. The Tribunal analyzed the provisions of section 80AA of the Act, which mandates that the deduction under section 80M should be computed with reference to the income by way of dividends as per the provisions of the Act. The expenses claimed by the assessee were scrutinized, and it was observed that the assessee failed to provide a clear bifurcation of expenses for earning dividend income and interest income. Consequently, the Tribunal rejected the assessee's contention that the entire amount should be deductible against dividend income. 3. The assessee argued for deeming the expenses as business expenses under section 37(1) of the Act, contending that no expenses were attributable to dividend income due to the nature of their business activities. However, the Tribunal dismissed this argument, emphasizing that the expenses incurred were routine in nature and essential for maintaining the corporate structure, thus deeming them as expenses for earning both interest and dividend income. 4. The Tribunal addressed the alternate submissions presented by the assessee for apportioning expenses, rejecting both proposals. The first submission regarding the option to attribute expenses to interest income only was dismissed, emphasizing the necessity to bifurcate expenses for each type of income. The second submission, attempting to allocate specific amounts of expenses to dividend income, was also rejected as the method of allocation was deemed unfair and unreasonable. 5. The contention regarding professional tax attribution to dividend income was also dismissed by the Tribunal, stating that the tax was levied on all companies engaged in professions or trades, irrespective of their income sources, thus rejecting the argument that no portion of the tax was attributable to dividend income. 6. The Tribunal compared the case with various legal precedents cited by the assessee, highlighting the distinctions in the facts and circumstances of those cases. The Tribunal concluded that the principles established in those cases were not applicable to the current scenario, leading to the confirmation of the lower authorities' decision. Ultimately, the appeal was dismissed, upholding the order of the Commissioner (Appeals).
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