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TMI Blog1986 (1) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure towards stationery, printing, scooter expenses, finding fees, audit fees, preliminary depreciation etc., and the net profit carried over to the balance sheet was shown at Rs. 759. Along with the return of income, the assessee had enclosed the statement of income wherein it had worked out refund of Rs. 360 in the following manner: "Net Profit as per P L A/c . 759 Add: (1) Taxation-provision Rs. 1600 . (2) Preliminary expenses S/off Rs. 1621 . (3) Depreciation treated separately Rs. 820 4,041 . . 4,800 Less: (—) . . (i) U/s 35D, 10per cent of Rs. 1,621 i.e. preliminary expenses. Rs. 162 . (ii) De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Gross dividend income as per A/c Rs. 6,000 Relief under s. 80M claimed is not admissible as there is nothing on record to show that the domestic company had made prescribed arrangement for declaration and payment within India of dividend payable out of company's income. Total Income : Rs. 6,000" 5. In appeal before the CIT(A), it was argued on behalf of the assessee that since it was engaged in the business of finance/investment, the ITO ought to have treated this income under the head "business". The CIT(A) attention was also invited to the memorandum of association with a view to impress upon him that the main object of the assessee company was to carry on business as investment com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel for the assessee, the dividend income of Rs. 6,000 earned by the assessee fully qualified for deduction as contemplated under s. 80M of the Act. In this connection, he stated that it is of no consequence whether the assessee is carrying on business or investing funds in the shares of other companies with a view to earn dividend. Again, as both the assessee and M/s Steel Cast Bhavnagar (P) Ltd. are domestic companies and have made prescribed arrangement for declaration and payment of dividend within India, there was no justification on the part of the ITO to deny the assessee's claim for deduction as contemplated under s. 80M of the Act. The learned counsel for the assessee, therefore, submitted that the total income as show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire dividend income of Rs. 6,000 would qualify for deduction as contemplated under s. 80M of the Act. Again, we entirely agree with the submissions made on behalf of the assessee that since both the assessee company and M/s Steel Cast Bhavnagar (P) Ltd., are domestic companies and have made prescribed arrangement for declaration and payment of dividend within the India, the assessee would be entitled to claim deduction as contemplated under s. 80M of the Act. The ITO is, therefore, directed to modify the assessment after granting deduction under s. 80M of the Act, in respect of the dividend income earned by the assessee. 8. In view of our decision in the appeal filed by the Revenue, the cross objections filed by the assessee becomes inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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