1992 (4) TMI 18

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... respectively, computing the net income from dividend at Rs. 34,581 and Rs. 32,420, respectively, for the assessment years 1982-83 and 1983-84. Thereafter, he allowed deduction under section 80M of the Income-tax Act, 1961, on such net income from dividend for both the years under reference. On appeal by the assessee, the Commissioner of Income-tax (Appeals) observed that there was no fresh investment during the assessment years in shares wherefrom any dividend has been earned. Hence the expenses other than those admitted by the assessee as having been incurred for earning dividend should not be deducted in order to compute relief under section 80M. In other words, the relief should not be reduced by the amount of estimated expenses by the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... follows : "The Revenue has also raised a common additional ground for both the years under appeal, which is indicated as ground No. 3. It is well-settled principle now that deduction under section 80M requires to be allowed on the gross dividend instead of deducting the allocation of expenses incurred in earning the dividend income." In our view, the approach of the Tribunal is erroneous. The relief under section 80M is allowable only on the net dividend which is arrived at after taking into account the expenditure, if any, incurred for the purpose of earning such dividend. Where there is no such expenditure, the gross dividend will be the net dividend and no problem will be posed in determining the issue. In this case, the Income-tax .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ll be deducted from the gross dividend income. There is no scope for any estimate of expenditure being made and no notional expenditure can be allocated also for the purpose of earning income unless the facts of a particular case warrant such allocation. In that view of the matter, we are of the view that only the actual expenses should be taken into account in reducing the dividend income and not any notional expenditure as has been done in the instant case. We, therefore, decline to answer the question. The Tribunal will find out the expenditure, if any, actually incurred in earning the dividend and, to that extent, the dividend income should be reduced and relief under section 80M should be allowed on that. There will be no order as .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X