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[2009] 308 ITR 351 (KER.) HIGH COURT OF KERALA South Indian Bank Ltd. v. Commissioner of Income-tax C.N. RAMACHANDRAN NAIR AND V. K. MOHANAN, JJ. IT Appeal NO. 30 OF 2002 JUNE 17, 2008 Section 80M of the Income-tax Act, 1961 - Deductions - Inter Corporate Dividends South Indian Bank Ltd. v. CIT [2009] 308 ITR 351 /223 CTR (Ker.) 418 The contention that clause (a) to proviso is subject to the limit contained in sub-clause (i) of section 80M(1) is absolutely untenable. So the argument that admissible deduction for dividend income from the Unit Trust of India for the year 1994-95 was only 4/5th of 60 per cent of such income had no merit : the deduction under the main section available to dividend income from the Unit Trust of India was subject to the limit contained only in clause (a) to the proviso for the year 1994-95. So the assessee was entitled to deduction of 4/5th of the dividend income received from the Unit Trust of India. For the year 1995-96, the limitation was only what was provided in clause (b) of the proviso to section 80M(1) [Assessment year 1994-95] [In favour of assessee]. P. Balakrishnan and R. Amritharaj for the Appellant. P.K.R. Menonfor the Respondent. JUDGMENT C.N. Ramachandran Nair, J.-The appellant, a scheduled bank, claimed deduction of 4/5th of the dividend income received from the Unit Trust of India under proviso (a) to section 80M(1) of the Income-tax Act, 1961, for the assessment year 1994-95. The Assessing Officer, however, restricted the deduction to 4/5th of 60 per cent, of the dividend income from the Unit Trust by taking the view that "such income" referred to in proviso (a) above referred means 60 per cent, of the dividend income mentioned in sub-clause (i) of section 80M(1) of the Act. Even though the first appellate authority allowed the appeal holding that the appellant is entitled to deduction of 60 per cent, on the dividend income from the Unit Trust in terms of proviso (a) to section 80M(1) of the Act, the Tribunal reversed the order of the first appellate authority and restored the assessment. It is against this order of the Tribunal, the assessee has filed this appeal raising two questions of law. Since the questions…

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