2010 (10) TMI 859

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....onsideration of the following substantial question of law:-   "Whether on the facts and circumstances of the case, the Tribunal was right in law in not allowing deduction u/s 80-M of the Act to the assessee company in respect of income distributed by PNB Mutual Fund which partakes the same character as was in their hand and exempt u/s 80-M of the Act?"   3. Facts necessary for disposal of the appeal relating to claim of deduction under Section 80M of the Income Tax Act, 1961 (in short "the Act') only may be noticed. The assessee is engaged in the manufacture and export of Textile and Hosiery garments. It claimed deduction under Section 80M of the Act. During the course of assessment proceedings for the assessment year 1992-9....

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....h was distributed by the PNB Mutual Fund and that the Mutual Fund was not a company. It was urged that once it was so, the assessee was not entitled to any deduction under Section 80M of the Act. Learned counsel supported the orders passed by the authorities below.   8. We have given our thoughtful consideration to the respective submissions of the learned counsel for the parties and are not impressed with the submission made by the learned counsel for the assessee. It would be relevant to reproduce Section 80M as it existed before it was omitted by Finance Act, 2003 w.e.f. 1.4.2003 and the same reads thus:-   "80M. Deduction in respect of certain inter-corporate dividends.- (1) Where the gross total income of a domestic com....

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....ceipts of dividend received from such entity which is not company itself does not make such receipts, eligible for deduction u/s 80M as under the provisions of this section, the dividend must flow from one domestic company to another domestic company. In view of the fact that the dividend received from PNB Mutual Funds is not inter-corporate dividend, deduction to the extent of 8,00,000/- is not allowed, as claimed by the assessee."   11. The said finding was upheld by the CIT (A) and affirmed by the Tribunal. The findings of the Tribunal recorded in paras 13 and 14 read thus:-   "13. Ground No.4 is relating to deduction u/s 80M on dividend of Rs.8 Lacs received from PNB mutual fund. The Ld. counsel for the assessee contende....