Deduction Of Amount Equal To And Not Exceeding “Dividend Distributed” On Or Before Due Date Is Allowable U/s 80M On Receipt Basis: Kolkata ITAT

Section 80M of the Income Tax Act, was introduced by the Finance Act 2020 to exempt inter-corporate dividends from tax when received from a domestic company before 1st April 2020.

The Bench of the ITAT comprising of Pradip Kumar Choubey (Judicial Member) and Dr. Manish Borad (Accountant Member) observed by plain reading of section 80M(1) that “in the year in which the dividend was received, the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend “distributed” on or before the due date.” (Para 10)

Facts of the case:

The assessee is a private limited company earning income from commission. The return of income was filed electronically. It was successfully e-verified and processed. In processing the CPC disallowed the deduction claimed by the assessee u/s 80M. The assessee filed for re-processing, but CPC did not make any correction. The CIT(A) also disallowed the deduction and confirmed the order of the AO.

Observations of Tribunal:

The Bench noted that the question to decide is whether the assessee is entitled to claim deduction worth of Rs. 30 Lakh u/s 80M.

The Bench observed that it reveals from the documents filed that the assessee had received dividend of Rs. 37,12,500/- from another domestic company and distributing the dividend amounting to Rs. 30 Lakh to its shareholder.

The Bench further observed that the dividend was paid to the shareholders of the assessee before due date u/s 139(1) via cheques.

Therefore, ITAT allowed the assessee's appeal.

Counsel for Appellant/Taxpayer: Manish Tiwari

Counsel for Respondent/Department: Swapan Kumar Bera

Case Title: Purnasons Pvt. Ltd verses ITO

Case Number: I.T.A. No.: 1441/Kol/2023

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