Section 80M deduction allowed for dividend ‘distributed’ on or before due date

Section 80M deduction allowed if amount of dividend “distributed” on or before due date under section 139(1)

In the case of Purnasons Pvt. Ltd vs. ITO (ITAT Kolkata), the appeal pertains to the Assessment Year 2021-22 and is directed against the order passed by the Commissioner of Income-tax (Appeals)- National Faceless Appeal Centre, Delhi [CIT(A)] under section 250 of the Income Tax Act, 1961 (the Act) dated 30.10.2023, arising out of the assessment order framed under section 154 of the Act dated 16.01.2023.

The assessee, a private limited company earning income from commission, filed its return of income electronically on 29.12.2021. However, the Centralized Processing Centre (CPC) disallowed the deduction claimed by the assessee under section 80M of the Act amounting to Rs. 30 Lakh. Despite the assessee’s grievances and subsequent appeals, including before the CIT(A), the disallowance was upheld.

The crux of the matter revolves around whether the assessee is entitled to claim a deduction under section 80M of the Act. Section 80M(1) of the Act allows for a deduction in computing the total income of a domestic company, where the gross total income includes dividends from other domestic or foreign companies or a business trust. This deduction is equal to the amount of dividends distributed by the company on or before the due date.