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TMI Blog2013 (7) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... second part of Section 80M(1) 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 - Dividend was paid to the shareholders of the assessee before due date - second part of Section 80(1) of the Act, does not specifically postulate or prescribes the requirement that dividend distributed must match or relate to the assessment year itself - Payment of dividend in several cases may spill over and distribution can and does take in the subsequent year - Following decision of The Commissioner of Income-tax Versus M/s. Saumya Finance & Leasing Co. (P) Ltd. [2008 (1) TMI 13 - BOMBAY HIGH COURT] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. 4. Commissioner of Income Tax (Appeals) [CIT (Appeals), for short] affirmed the said view observing that the dividend distribution related to earlier years, i.e., Financial Years 1990-91 and 1991-92 and as such deduction under Section 80M of the Act was not permissible. He also recorded that the dividend of Rs.48,72,518/- was paid to the shareholders of the company by four cheques dated 31st March, 1993, which were encashed on 21st April, 1993. We record here that the CIT (Appeals) has not indicated or mentioned why the dividend distributed related to Financial Years 1990-91 and 1991-92. He has not elaborated upon the said statement. As noticed above, the order of the Assessing Officer also does not elaborate and deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, 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,-- (i) in the case of a scheduled bank or a public financial institution, or a State financial corporation or a State industrial investment corporation or a company registered under section 25 of the Companies Act, 1956 (1 of 1956), sixty per cent. of the income by way of dividends from another domestic company; (ii) in the case of any other domestic company, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), and which is a domestic company; (ii) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956); (iii) "State financial corporation" and "State industrial investment corporation" shall have the same meanings as in section 43B; (iv) "due date" means the date for furnishing the return of income under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or condition is that the dividend should have been distributed in the year in question or on or before the due date. The due date has been specified to mean the date of furnishing of return under Section 139(1) of the Act. 10. The view we have taken is supported by sub-section (2) to Section 80M. The said sub-section stipulates that where dividend was distributed in a previous year, no deduction would be allowed in respect of the said amount in any other year. In other words, the deduction is to be allowed in the year when the dividend was distributed and not in any other year. Sub-section (3) to Section 80M states that no deduction would be allowed under the said Section where dividend distributed was in respect of periods prior to 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of dividend earned and received in the said previous year. Bombay High Court dismissing the appeal of the Revenue, observed:- 5. On the bare reading of the Section it is clear that the deduction as permitted is of an amount equal to so much of the amount of income by way of dividend declared by the Company as does not exceed the amount of dividend distributed by the assessee company on or before the due date. 6. It is clearly seen that the section does not provide for the nature of the dividend distributed by the assessee company. It does not state that the nature of the dividend distributed must be for the financial year under assessment. Accepting the argument of the revenue will amount to laying down an additional restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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