2015 (7) TMI 572

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....uestion of law for our consideration: (1) Whether on the facts and in the circumstances of the case and in law the Tribunal was correct in holding that the respondent Company was entitled to deduction of gross dividend under Section 80-M, whereas the Apex Court had in Distributors Baroda Pvt. Ltd. (155 ITR 120) held that only net dividend is deductible? (2) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that the profits of the Marketing Division of the respondent Company are entitled for deduction under Section 80IB, whereas intention of the Legislature was to give deduction for the profits of only industrial undertaking? 3. Regarding question No.1: (a) The respondent-a....

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....r, it is recorded by the Tribunal that for the earlier assessment year no disallowance was made on account of interest or any other expenses while allowing the claim for deduction of dividend received on gross basis under Section 80-M of the Act. Besides, during the subject assessment year and earlier, the assessee's own funds were available in excess of the investment made. The summary of available funds as recorded in the impugned order is as under: Assessment-year Owned fund Total owned funds Investment at year end Profit after tax butbefore depreciation Increase/De crease) in investment   Share capital Reserve & surplus         1999-2000 389.31 11,879.52 122....

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....e gross amount but of the net amount of dividend received i.e. after deducting the interest paid on monies borrowed. In the facts before the Hon'ble Apex Court, the Distributors (Baroda) Pvt. Ltd. borrowed to invest in shares for earning dividend income. Thus the decision in the case of Distributors (Baroda) P. Ltd. (supra) is distinguishable in facts as in those facts there was interest paid on money borrowed to make investment in companies which resulted in income to the assessee therein. This is not so factually in this case. The decision of the Apex Court would have no application in the present facts and hence gross dividend and net dividend received is the same. In the present facts, as amply demonstrated in the impugned order, th....