1992 (4) TMI 18

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....the gross dividend of Rs. 42,680 and Rs. 47,680, respectively, computing the net income from dividend at Rs. 34,581 and Rs. 32,420, respectively, for the assessment years 1982-83 and 1983-84. Thereafter, he allowed deduction under section 80M of the Income-tax Act, 1961, on such net income from dividend for both the years under reference. On appeal by the assessee, the Commissioner of Income-tax (Appeals) observed that there was no fresh investment during the assessment years in shares wherefrom any dividend has been earned. Hence the expenses other than those admitted by the assessee as having been incurred for earning dividend should not be deducted in order to compute relief under section 80M. In other words, the relief should not be ....

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.... has been referred to this court. The observation is as follows : "The Revenue has also raised a common additional ground for both the years under appeal, which is indicated as ground No. 3. It is well-settled principle now that deduction under section 80M requires to be allowed on the gross dividend instead of deducting the allocation of expenses incurred in earning the dividend income." In our view, the approach of the Tribunal is erroneous. The relief under section 80M is allowable only on the net dividend which is arrived at after taking into account the expenditure, if any, incurred for the purpose of earning such dividend. Where there is no such expenditure, the gross dividend will be the net dividend and no problem will be pose....