Ita/36/2002 Of The Commissioner Of Incometax, Trichur v. The Catholic Syrian Bank Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 17TH MARCH 2008 / 27TH PHALGUNA 1929 ITA.No. 36 of 2002 ------------------------- ITA.62/COCH/1997 OF I.T.A.TRIBUNAL,COCHIN BENCH. .................... APPELLANT/ APPELLANT: -------------------------------------- THE COMMISSIONER OF INCOME TAX, TRICHUR. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT, SRI.GEORGE K. GEORGE, SC FOR IT. RESPONDENT/ RESPONDENT: -------------------------------------------- THE CATHOLIC SYRIAN BANK LTD., TRICHUR. BY ADV. SRI. SARANGAN (SR), ADV. SRI.K.VINOD CHANDRAN. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17/03/2008,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N. Ramachandran Nair &T.R. Ramachandran Nair, JJ. - - - - - - - - - - - - - - - - - - - - - - - -I.T.A.NO.36 of 2002 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 17th day of March, 2008. JUDGMENT C.N. Ramachandran Nair, J. Heard learned Standing Counsel for the appellant and Shri Sarangan,learned Senior Counsel for the respondent assessee. The order underchallenge is the appellate order of the Tribunal disposing of the departmentappeal filed for the assessment year 1995-96. While claiming deductionunder Section 80M of the Income Tax Act, the assessee claimed 60% of thedividend received from all companies including UTI. The proviso toSection 80M of the Act provided a reduced rate of deduction for dividendincome from UTI in as much as eligible deduction for dividend from UTIwas only 40% as against 60% available in respect of the dividend receivedby the assessee from other companies. In other words, under the section asit stood during the relevant assessment year, the assessee was entitled todeduction of 40% of dividend income received from UTI and 60% ofdividend income from other companies. It is seen from the figures availablein the order of the Commissioner of Income Tax (Appeals) that the lion'sshare of the dividend is from UTI, i.e. above 1.3 crores. The assessing ITA 36/2002 officer took the view that the assessee was entitled to deduction of 40% of60% of dividend income from UTI. In appeal, the Commissioner ofIncome Tax (Appeals) held that the assessee was entitled to deduction of40% of income from UTI, ie. Rs.52 lakhs. Even though the departmentaccepts the mistake in the computation of deduction by the assessing officerwhich was corrected by the Commissioner of Income Tax (Appeals), thedepartment still filed appeal before the Tribunal. 2. During the hearing, learned Standing Counsel for the Revenuecontended that deduction can be reworked by the assessing officer underSection 143(1)(a) of the Act. We are also of the view that the Tribunalcompletely went wrong in holding that a claim contrary to the scheme ofSection 80M cannot be corrected in Section 143(1)(a) proceedings. LearnedSenior Counsel appearing for the assessee also fairly contended that theTribunal's view is incorrect. However, he rightly pointed out that the reliefgranted by the Commissioner of Income Tax (Appeals) is in accordancewith the statute and therefore it warrants no interference. We arecompletely in agreement with the Commissioner of Income Tax (Appeals),because eligible deduction for dividend received from UTI is 40%. Therewas no justification for the department to file an appeal against this orderand we, therefore find that the Tribunal rightly dismissed the appeal, though ITA 36/2002 not for the reasons stated by them. Accordingly, we dismiss the department appeal, but clarify that theinterpretation placed by the Tribunal on Section 143(1)(a) is wrong. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/