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TMI Blog2015 (7) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed to invest in shares for earning dividend income. Thus the decision in the case of Distributors (Baroda) P. Ltd. (supra) is distinguishable in facts as in those facts there was interest paid on money borrowed to make investment in companies which resulted in income to the assessee therein. This is not so factually in this case. The decision of the Apex Court would have no application in the present facts and hence gross dividend and net dividend received is the same. In the present facts, as amply demonstrated in the impugned order, the respondent-assessee had its own funds available to make the investment. Therefore, the presumption as set out in Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) would apply, which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel appearing for the revenue urges the following question of law for our consideration: (1) Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in holding that the respondent Company was entitled to deduction of gross dividend under Section 80-M, whereas the Apex Court had in Distributors Baroda Pvt. Ltd. (155 ITR 120) held that only net dividend is deductible? (2) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that the profits of the Marketing Division of the respondent Company are entitled for deduction under Section 80IB, whereas intention of the Legislature was to give deduction for the profits of only industrial unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. All other investments were made during the earlier years. However, it is recorded by the Tribunal that for the earlier assessment year no disallowance was made on account of interest or any other expenses while allowing the claim for deduction of dividend received on gross basis under Section 80-M of the Act. Besides, during the subject assessment year and earlier, the assessee's own funds were available in excess of the investment made. The summary of available funds as recorded in the impugned order is as under: Assessment-year Owned fund Total owned funds Investment at year end Profit after tax butbefore depreciation Increase/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring funds) are also taken, yet a presumption would arise that the investments were from the interestfree funds available with the assessee. Thus, the entire deduction as claimed on the gross basis by the respondent-assessee was allowed. (d) The grievance of the revenue is that the impugned order failed to follow the decision of the Supreme Court in Distributors (Baroda) P. Ltd. (supra). It is submitted that deduction had to be allowed only on net basis and not on gross basis as claimed under Section 80-M of the Act. (e) It is undisputable that the Hon'ble Supreme Court in Distributors (Baroda) Pvt. Ltd. (supra) has held that deductions under Section 80-M would not be of the gross amount but of the net amount of dividend received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order the Tribunal has upheld the respondent's claim for deduction under Section 80I of the Act by merely following its own decision in the case of Hindustan Petroleum Corpn. Ltd. reported in 35 TTJ 400, which has been upheld by this Court in Income Tax Appeal No.57 of 2002 C.I.T. v/s Hindustan Petroleum Corpn. Ltd., delivered on 24 July 2006. In the above decisions wherein in respect of identical issue, this Court has held that deduction under Section 80I of the Act refers to profits and gains from industrial undertaking. It held that manufacturing, processing and marketing are part of the industrial undertaking. 8. In view of the above, no fault can be found with the impugned order of the Tribunal in the absence of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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