Law:

Section:

Section 80M, read with section 67A, of the Income-tax Act, 1961 - Deductions - Intercorporate dividends - Assessment year 1989-90 - Assessee received share of income from two trusts - Share received from trusts by assessee included share in dividend income received by trust from 'H' - Assessee claimed deduction under section 80M in respect of share of dividend received from two trusts - Whether in terms of section 67A assessee would be entitled to deduction under section 80M - Held, yes FACTS The assessee-company received share of income from two trusts. The said trusts also held equity shares of 'H'. Accordingly, the share received from the trusts by the assessee included share in dividend income received by the trusts from 'H'. The assessee claimed deduction under section 80M in respect of dividend income received by it directly and also share of dividend received from the two trusts. The Assessing Officer allowed the claim for deduction only in respect of dividend received by the assessee-company directly. In respect of the dividend received from the trust, Assessing Officer held that the same was not in the nature of dividend income but income from the trusts and, therefore, the same did not qualify for deduction under section 80M. On appeal, the Commissioner (Appeals) allowed the assessee's claim that the share of dividend received from the trusts continued to retain its character as dividend income in its hands, entitling it to claim deduction under section 80M. On further appeal, the Tribunal affirmed the order of the Commissioner (Appeals). On appeals : HELD A plain reading of section 67A shows that the share of a member in the income or loss of the association or body, for the purposes of assessment, has to be apportioned under various heads of the income in the same manner in which the income or loss of the association or body has been determined . Thus, the income from the trusts received by the assessee had to be apportioned under various heads and if that was done, it was not in dispute that the deductions claimed by the assessee would fall under the head 'Dividend'. [Para 8] Thus, the view taken by the Tribunal was in accordance with the clear…

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