Deputy Commissioner of Income Tax vs G.I.I.C. Limited

D.A. Mehta, J.—At the time of admission on July 12, 2000, the following substantial question of law was formulated by the High Court:

Whether, the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to allow deduction u/s 80M on the gross amount of dividend without deducting the proportionate deduction admissible u/s 36(1)(viii) of the Income Tax Act ?

The assessment year in question is 1986-87. The assessee is a financial institution and hence, is entitled to deduction u/s 36(1)(viii) of the Income Tax Act, 1961 (the Act). The Assessing Officer was of the view that while granting deduction u/s 80M of the Act the amount deducted u/s 36(1)(viii) of the Act is required to be reduced as deduction u/s 80M of the Act is available only on the net amount of dividend.

The assessee carried the matter in appeal and succeeded. The Commissioner (Appeals), while passing the order dated April 4, 1992, referred to his own appellate order dated October 4, 1991 for the assessment year 1988-89.

When the Revenue carried the matter further before the Tribunal, the Tribunal referred to its own order dated August 3, 1998, in assessee''s own case relating to the assessment year 1988-89.

At the time of hearing learned advocate for the respondent-assessee placed on record a copy of the said order dated August 3, 1998, of the Tribunal as well as the order dated April 19, 1999, whereby reference, at the behest of the Revenue u/s 256(1) of the Act came to be rejected.

As can be seen from the facts found concurrently, both by the Commissioner (Appeals) and the Tribunal in the assessment year 1988-89, there was no difference between the gross dividend and net dividend and, therefore, deduction u/s 80M of the Act was allowed on the entire amount of dividend. It was further found that deduction u/s 36 of the Act was available while computing the business income u/s 28 of the Act and the said amount, viz., the income from which such deduction is available did not fall under the head "Income from other sources".

For the year under consideration, learned advocate for the appellant-Revenue was not in a position to point out any distinguishing feature on facts so as to warrant a different view taken from the assessee''s own case for the year 1988-89.

Accordingly, it is held that the Tribunal was justified in holding that deduction u/s 80M of the Act was allowable on gross amount of dividend without deducting the proportionate deduction available u/s 36(1)(viii) of the Act.

The appeal is accordingly dismissed with no order as to costs.