2024 (6) TMI 518 - AT - Income Tax

Deduction u/s 80M - documents filed that the assessee had received dividend from another domestic company and distributing the dividend to its shareholder - HELD THAT - Documents filed that the assessee had received dividend of Rs. 37,12,500/- from another domestic company and distributing the dividend amounting to Rs. 30 Lakh to its shareholder. The second part of Section 80M(1) of the Act states that in the year in which the dividend was received, the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend distributed on or before the due date. In the present case, dividend was paid to the shareholders of the assessee before due date u/s 139(1) of the Act vide cheques dated 31.03.2021 and the due date for filing return of income for the relevant assessment year was 15.02.2022. In this view, assessee is rightly within law to claim deduction u/s 80M of the Act of Rs. 30 Lakh. Appeal filed by the assessee is allowed.

Summary

Issues involved: Appeal against order u/s 250 of the Income Tax Act, 1961 for Assessment Year 2021-22 disallowing deduction u/s 80M of the Act worth Rs. 30 Lakh.

The appeal filed by the assessee challenged the order passed u/s 250 of the Income Tax Act, 1961 by the ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi dated 30.10.2023 disallowing the deduction claimed u/s 80M of the Act worth Rs. 30 Lakh. The assessee, a private limited company earning income from commission, received inter-corporate dividend and distributed dividend amounting to Rs. 30 Lakh to the shareholders during the assessment year. The question at hand was whether the assessee was entitled to claim deduction u/s 80M of the Act. The Tribunal analyzed Section 80M of the Act which allows a deduction for the amount of dividend distributed by the company on or before the due date. It was found that the dividend was paid to the shareholders before the due date for filing the return of income, thus the assessee was within the law to claim the deduction. Therefore, the appeal filed by the assessee was allowed.

In this case, the Tribunal considered the appeal filed by the assessee against the order disallowing a deduction claimed u/s 80M of the Income Tax Act, 1961. The assessee, a private limited company, had received inter-corporate dividend and distributed dividend to the shareholders during the assessment year. The Tribunal examined Section 80M of the Act which allows a deduction for the amount of dividend distributed by the company on or before the due date. It was noted that the dividend was paid to the shareholders before the due date for filing the return of income, making the assessee eligible to claim the deduction u/s 80M of the Act. Consequently, the appeal filed by the assessee was allowed.

Separate Judgement: None