2006 (11) TMI 98

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....ncome of Rs. 41,82,030 ; thereafter the return was duly processed by the respondents and notices were issued under sections 143(2) and 142(1) of the Act and after hearing the assessee, the assessment order was passed determining the total income of the appellant-company at Rs. 1,16,55,470 holding, inter alia, that the deduction under section 80HHC to be computed after apportionment under rule 8(1) and not from the composite income; that the assessee is not entitled to deduction on the total dividend income, but made from the net dividend income under section 80M. The assessing authority added that an amount of Rs. 11,50,000 and Rs. 7,50,000 on account of interest and commitment charges and further calculated income as 100 per cent. taxable ....

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....allowances of Rs. 11,50,000 and Rs. 7,50,000 on account of interest and commitment charges respectively made under the head 'Business income' ? 5. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in upholding the order of the Assessing Officer by applying the same net profit rate on the sale of tea manufactured out of own grown green leaf and the sale of tea manufactured out of the green leaf purchased from outside for the purpose of apportionment of business? 6. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax (Appeals) to delete the profit of Rs. 6,49,554 as assessed under the Ce....

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....ough to submit that the decision of the Constitution Bench of the apex court in Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120, is against him, where the apex court has observed (page 134) : "We may, therefore, first examine the language of section 80M for arriving at its true interpretation. But before we do so, let us consider what is the object behind grant of relief under section 80M. It was common ground between the parties that the main object of the relief under section 80M is to avoid taxation once again in the hands of the receiving company of the amount which has already borne full tax in the hands of the paying company. Vide the written submission under the heading 'Object of relief on intercorporate dividend....

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.... from taxation once again in the hands of the assessee. Bearing in mind these prefatory observations in regard to the legislative object, we may now proceed to construe the language of section 80M. Section 80M, sub-section (1), opens with the words 'where the gross total income of an assessee . . . . includes any income by way of dividends from a domestic company' and proceeds to say that in such a case, there shall be allowed in computing the total income of the assessee, a deduction 'from such income by way of dividends' of an amount equal to the whole of such income or 60 per cent. of such income, as the case may be, depending on the nature of the domestic company from which the income by way of dividends is received. The opening words ....