Disallowance under Section 80M to the amount of the unsustainable dividend paid to shareholders
Fact and issue of the case
This is an application moved on behalf of the appellant/revenue seeking condonation of delay in re-filing the appeal.
According to the appellant/revenue, there is a delay of three hundred and ten (310) days.
Mr Rohit Jain, counsel who appears on behalf of the respondent/assessee, says that he does not oppose the prayer made in the application.
Accordingly, the delay in re-filing the appeal is condoned.
The application is, accordingly, disposed of.
This appeal concerns Assessment Year (AY) 2003 -04.
Via the instant appeal, the appellant/revenue seeks to assail the order dated 16.07.2021 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
According to the appellant/revenue, two issues emanate for consideration by this court.
First, whether the deletion of disallowance by the Tribunal under Section 80IA/80IB of the Income-tax Act 1961 [in short, “Act”], amounting to Rs. 4,32,65,725/-, was in order.
Second, whether the deletion of disallowance of the claim made by the respondent/assessee under Section 80M of the Act, amounting to Rs. 3,97,34,475/-, was sustainable in law.
Observation of the court
Therefore, the respondent/assessee can only claim a deduction to the extent of the dividend it distributed to its shareholders. Although Mr Rai sought to place reliance on the assessment order to submit that the dividend was not distributed by the respondent/assessee, it appears to be based on an erroneous factual foundation.
The CIT(A) has returned the finding of fact, which was sustained by the Tribunal, that the respondent/assessee had placed the relevant material before the AO which showed that dividend to the extent of Rs. 3,97,34,475/- had been distributed by it to its shareholders. In this regard, the CIT(A) notes: “Examined the rival submissions. During the relevant period Rs. 5,09,19,998/- was received by way of dividend out of which Rs.3,97,34,475/- was distributed to its share holder. Further all these facts were brought to the notice of the Ld AO by the appellant during 147 proceeding, so much so a certificate was also filed along with the return for the relevant period. Here also the Ld AO has not diicussed anything in her order but not allowed the claim u/s 80M. It was stated before me that the appellant thought it was a mistake on part of the Ld AO and an 154 petition dated 25/12/10 was filed on 05/01/11 but to no avail. The appellant stated before me that neither the facts were confronted to the appellant nor the matter was discussed in her order. I find full justification in such submission of the Ld AO of the appellant and hence disallowance u/s 80M is not sustainable.”
[Emphasis is ours]
This is a finding of fact that remains undisturbed and, therefore, in our view, the deletion of disallowance ordered by the CIT(A) and the Tribunal under Section 80M was correct.
Thus, for the aforesaid reasons, in our view, no substantial question of law arises for our consideration.
The appeal is, accordingly, closed.
Parties will act based on the digitally signed copy of the order.
Read the full order from herePCIT-Vs-SIL-Investments-Ltd.-Delhi-High-Court2