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TMI Blog2014 (1) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case. The assessee, a public sector company, filed its return of income for the year on 17.11.2003, which was taken up for being subject to the verification procedure under the Act. The profit and loss account for the year, filed along with, was found to contain a provision for Rs.40 crore toward the proposed final dividend as well as the corresponding dividend distribution tax at Rs. 512.50 lakhs (PB pg. 1). The return being filed manually, the challan for the payment of dividend to the account of the Central Government, at the proposed sum of Rs. 40 crore (on 10/10/2003), as also for the payment of the additional income-tax on distribution of dividend, at the applicable rate of 12.5% of the dividend (plus surcharge @ 2.5%) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that the dividend distribution by the company being after 31.03.2003, the same is hit by section 115-O of the Act, so that no deduction u/s.80M of the Act was eligible for A.Y. 2003-04. The assessee vide its letter dated 27.08.2010 clarified that section 115-O and section 80-M are distinct and separate provisions, though both may be applicable for the relevant year. While section 80-M is in respect of the dividend received by the company, though subject to deduction with reference to the dividend distributed by the company (on or before the due date for filing of return as specified u/s. 139(1)), section 115-O seeks to subject the dividend declared or distributed by the company on or after 01.04.2003 to tax. There was, thus, no confl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect in the reasons recorded was without basis. In fact, both the authorities below have not substantiated in their respective orders as to how there has not been a proper disclosure by the assessee; the assessment being reopened after four years from the end of the relevant assessment year, so that the same is a material and relevant consideration. Reliance was placed by him in the matter on the decisions in the case of Bhogwati Sahakari Sakhar Karkhana Ltd. v. Dy. CIT (2004) 269 ITR 186 (Bom); Bhor Industries Ltd. v. Asst. CIT (2004) 267 ITR 161 (Bom) and B. Sundararajan v. Appropriate Authority (2002) 254 ITR 794 (Mad.). On merits, it was submitted by him that the matter stands settled by the decision of the hon'ble jurisdictional High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment for the relevant assessment year. The assessee having raised a specific charge in its respect before the first appellate authority (vide Ground No. 1(b) before him), the same ought to have been answered by him, which unfortunately is not the case. The assessee had disclosed all the primary facts in relation to its deduction u/s.80-M. In fact, we find that the A.O. has incorrectly considered it to be a claim for exemption of income and, accordingly, effected a disallowance at Rs. 21 lakh, invoking section 14A of the Act qua the deduction claimed and allowed u/s.80-M. There has been thus, and clearly, a deliberation at the end of the A.O. in the matter. No doubt, there is nothing to suggest consideration of the applicability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributed by it by way of dividend. The deduction claimed u/s.80-M is in respect of the dividend received by the assessee-company during the relevant year, being financial year (f.y.) 2002-03, chargeable to tax for the relevant assessment year (i.e., A.Y. 2003-04), though on the strength of the distribution of dividend, for which an extended time period, i.e., up to the date of the filing the return of income for the relevant year, being 31.10.2003 (extended up to 30.11.2003), stands allowed. All the requirements for a valid claim u/s.80-M, which stands omitted by Finance Act, 2003, w.e.f. 01.04.2004, thus, stand satisfied, as was also found to be the case by the A.O. during the original assessment proceedings. Sec.115-O, on the other hand, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end income to tax in the hands of the payer-company, on the other hand, is only on dividends declared or paid on or after 01.04.2003. That is, though tax u/s. 115-O(1) on the payer-company would definitely bar a deduction in respect of the dividend in the hands of the recipient-assessee inasmuch as the same extends to a shareholder as well, there is nothing on record to show of the charge of the said tax on the payer-company. In fact, the same (tax u/s. 115-O(1)) is not attracted in the instant case. This is as the said tax is applicable only to dividends declared or paid on or after 01/4/2003, while the impugned dividend stands paid and, thus, received by the assessee-company by 31/3/2003. There is, thus, no question of the applicability o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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