ITAT Kolkata allows Section 80M deduction for ‘Dividend Distributed’ before Income Tax Return filing due date

Purnasons Pvt Ltd Vs ITO (ITAT Kolkata)

The case of Purnasons Pvt Ltd vs ITO, adjudicated by the Kolkata ITAT, revolves around the allowance of deduction under Section 80M of the Income Tax Act.

The appeal, pertaining to the Assessment Year 2021-22, challenges the disallowance of a deduction claimed by Purnasons Pvt Ltd under Section 80M of the Income Tax Act. The company, primarily earning income from commission, contested the disallowance of Rs. 30 Lakh.

The contention of the appellant rests on the interpretation of Section 80M, which allows a deduction equal to the dividend distributed on or before the due date. Purnasons Pvt Ltd received a dividend of Rs. 37,12,500 from another domestic company and distributed Rs. 30 Lakh to its shareholders.

The critical aspect examined by the Kolkata ITAT is whether the dividend distribution was within the ambit of the law. Section 80M(1) stipulates that the deduction is allowable if the dividend is distributed before the due date for filing the return of income.

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