Law:

Section:

Section 80M of the Income-tax Act, 1961 - Deductions - Inter-corporate dividends - Assessment year 2003-04 - Whether under section 80M, as it then stood, deduction was not in respect of amount declared or distributed by way of dividend but was in respect of dividend received by a domestic company from another domestic company and section 115-O(5) did not, in any way, restrict allowability of claim under section 80M - Held, yes Section 147, read with section 80M, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 2003-04 - Assessee-company received certain dividend in respect of its shareholdings in other corporate entities - In assessment, it was held to be entitled to a full deduction under section 80M, restricted to amount of dividend distributed - Thereafter, Assessing Officer reopened assessment on ground that assessee having not complied with provisions of section 115-O was not entitled to deduction under section 80M and, thus, income to that extent had escaped assessment - Whether Assessing Officer, by adverting to provisions of section 115-O had proceeded to reopen assessment on a plainly extraneous ground and, therefore, impugned notice was liable to be set aside - Held, yes FACTS The assessee-company had received a dividend income of Rs. 5.59 crores during the assessment year 2003-04 in respect of its share holdings in other corporate entities. The assessee had also declared and distributed an interim dividend in the amount of Rs. 5.61 crores before the due date of filing the return. In the assessment, the assessee was allowed deduction under section 80M restricted to the amount of dividend distributed. Subsequently, the Assessing Officer issued notice under section 148 to the assessee on the reason that the assessee having not complied with the provisions of section 115-O deduction under section 80M was not allowable to it and, thus, the income of the assessee to that extent had escaped assessment. On writ petition : HELD On facts, it was impossible to contend that the assessee was not entitled to a deduction under section 80M. Significantly, the view of the Assessing Officer was consistent…

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