TaxTMI 
TaxTMI 
2022 (2) TMI 115
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act on 31.03.2015. Though the assessee has raised multiple grounds of appeal, however, the only grievance of the assessee is computation of deduction u/s 80M. The provisions of Section 80M (as existed in that year) provide that where gross total income of a domestic company (recipient) includes any income by way of dividends from another domestic company then the recipient shall be allowed a deduction of an amount equal to so much of the amount of income by way of dividends from another domestic company as does not exceed the amount of dividend distributed by the recipient company. 2. Having heard rival submissions and after going through relevant material on record including the orders of lower authorities, our adjudication would be as u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tments. The assessee incurred finance expenses of Rs. 8141.73 Lacs and administrative and personnel expenses for Rs. 480.76 Lacs. Since paid-up capital increased only by Rs. 10 Crores whereas the investments increased by Rs. 97.24 Crores, entire own capital could not be said to have been invested in units and shares yielding dividend income for which the assessee claimed deduction u/s 80M. The onus was on assessee to establish direct nexus between own funds and investments made by the assessee. The assessee submitted that it commenced business activities during calendar year 1989. In that year, the assessee did not accept any deposits from the public and capital and reserves at year-end amounted to Rs. 600 Lacs which could be considered to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....06.1991. The balance investment of Rs. 267 Lacs could alone be considered to have been made out of borrowed funds. Taking 7% as cost of Rs. 267 Lacs, proportionate interest may be disallowed and the balance dividend income may be exempted u/s 80M. 5. However, Ld. CIT(A) opined that in case of mixed funds, it could not be taken that the investments were out of interest free funds. The assessee was not able to link the share capital and reserves available with the investment. In such a case, the only course available would be to disallow proportionate expenditure. Therefore, the course adopted by Ld. AO was reasonable. Accordingly, the working was upheld against which the assessee is in further appeal before us. 6. After careful considerat....