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Commr. of Inc. -tax (Central), Bombay Vs. United General Trust P. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 72 of 1976
Judge
Reported in[1979]119ITR664(Bom)
ActsIncome Tax Act, 1961 - Sections 80M and 85A
AppellantCommr. of Inc. -tax (Central), Bombay
RespondentUnited General Trust P. Ltd.
Excerpt:
- .....shares to which the dividend relates are registered in the name of a person other than the recipient company.' 4. in view of this position, which has been clarified we do not think that the deletion or the omission of the words 'received by it' from s. 80m will have the effect as suggested by mr. joshi. 5. in this view of the matter, the rule is discharged with costs.
Judgment:

Tulzapurkar, J.

1. The question in respect of which rule has been obtained by the CIT runs thus :

'Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in applying the decision of the Bombay High Court in the case of New Great Insurance Co. Ltd. : [1973]90ITR348(Bom) to the assessment year in question without considering the effect of the amendment operative from April 1, 1968, and in thus holding that the assessee would be entitled to the deduction under section 80M on the gross dividend before deduction of the proportionate management expense ?'

2. In our view, the question as framed does not really arise out of the Tribunal's order since the only question which was agitated before the Tribunal was whether the deduction under s. 80M of the Act was to be computed with reference to the gross dividend income without deducting therefrom the proportionate management expenses and the Tribunal, relying on the decision of this court in Sahu Brothers (Saurashtra) Pvt. Ltd. ?) and in the case of New Great Insurance Co. Ltd. : [1973]90ITR348(Bom) , held that the relief under s. 80M was to be computed with reference to the gross dividend income. It appears clear that the aforesaid question seems to be finally concluded by the decision of the Supreme Court in the case of CIT v. South Indian Bank Ltd. : [1966]59ITR763(SC) as also the decision in CIT v. Industrial Investment Trust Co. Ltd. : [1968]67ITR436(Bom) .

3. Mr. Joshi, however, urged before us that the question as framed in respect of which the rule has been issued can be said to deal with one of the aspect of the legal contention that was urged before the Tribunal, and as such the rule in respect of such question should be made absolute and in that behalf he relied upon the amendment that has been made in s. 80M of the Act by s. 10 of the Finance Act of 1968, which came into operation from April 1, 1968. It may be stated that by the amendment introduced in s. 80M what was done was that the words, 'received by it', wherever they occurred in the original section, have been omitted or deleted and relying upon this deletion or omission of these words, Mr. Joshi urged that the relief under s. 80M would be required to be computed with reference to the net dividend income and not gross dividend income. It may be stated that in the statement of objects and reasons and notes on clauses of the Finance Bill, 1968, it has been clarified why the deletion of the words, 'received by it' was effected and it has been explained thus :

'The effect of the amendment will be that the concessional tax treatment in respect of dividends received by a company from any domestic company will be available to the recipient company even where the shares to which the dividend relates are registered in the name of a person other than the recipient company.'

4. In view of this position, which has been clarified we do not think that the deletion or the omission of the words 'received by it' from s. 80M will have the effect as suggested by Mr. Joshi.

5. In this view of the matter, the rule is discharged with costs.


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