2008 (6) TMI 169

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....thof 60% of the dividend income from the Unit Trust bytaking the view that 'such income' referred to in proviso(a) above referred means 60% of dividend incomementioned in sub-clause (i) of Section 80 M(1) of the Act.Even though, the First Appellate Authority allowed theappeal holding that the appellant is entitled to deductionof 60% on the dividend income from the Unit Trust interms of proviso (a) to Section 80M(1) of the Act, theTribunal reversed the order of the First AppellateAuthority and restored the assessment. It is against thisorder of the Tribunal, the assessee has filed this appealraising two questions of law. Since the questionsraised separately or together do not reflect the issueprecisely, we redraft the question as follows:- ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ic company on or before the due date; Provided that where any domestic company receives any income by way of dividend from the units of the Unit Trust of India established under the Unit Trust of India Act,1963 (52 of 1963), such domestic company shall, subject to the aforesaid provisions, be eligible for deduction to the extent of- (a) four-fifth of such income in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1994;         (b) two-fifth of such income in respect of the previous year relevant to the assessment year commencing on the 1st day of April, 1995, and no deduction shall be allowed on such income in respect of the previous year releva....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ction 80M of the Income tax Act relating to deduction in respect of certain intercorporate dividends. The proposed amendment seeks to insert a proviso in sub-section(1) of section 80M so as to withdraw the deduction under that section in respect of dividend income received by a domestic company from the units of the Unit Trust of India in a phased manner. The amount of deduction shall be limited to four-fifth of such dividend income of the previous year relevant to the assessment year 1994-95. Similarly, in respect of dividend of the previous year relevant to the assessment year 1995-96, the amount of deduction allowed shall be limited to two-fifth of such dividend. No such deduction in respect of dividend income from units in any other ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ision. We are unable to agree with this argument because the purpose of introduction of proviso as stated in the Explanatory Note attached to the Finance Bill is to take away deduction for dividend income from Unit Trust of India in a phased manner. In the first year, 1994-95, the relief provided was up to 4/5th of dividend income received from Unit Trust of India. For the next year 1995-96, it was reduced to 2/5^th of the dividend income received from Unit Trust of India and thereafter, from the assessment year 1996-97 onwards, no deduction is admissible under Section 80M (1) of the Act for the dividend income received from the Unit Trust of India. As already stated, the purpose of amendment through introduction of provisos (a) and (b) to ....