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 under challenge is the appellate order of the Tribunal disposing of the department appeal filed for the assessment year 1995-96. While claiming deduction under Section 80M of the Income Tax Act, the assessee claimed 60% of the dividend received from all companies including UTI. The proviso to Section 80M of the Act provided a reduced rate of deduction for dividend income from UTI in as much as eligible deduction for dividend from UTI was only 40% as against 60% available in respect of the dividend received by the assessee from other companies. In other words, under the section as it stood during the relevant assessment year, the assessee was entitled to deduction of 40% of dividend income received from UTI and 60% of dividend income from other companies. It is seen from the figures available in the order of the Commissioner of Income Tax (Appeals) that the lion's share of the dividend is from UTI, i.e. above 1.3 crores. The assessing ITA 36/2002 -2- officer took the view that the assessee was entitled to deduction of 40% of 60% of dividend income from UTI. In appeal, the Commissioner of Income Tax (Appeals) held that the assessee was entitled to deduction of 40% of income from UTI, ie. Rs.52 lakhs. Even though the department accepts the mistake in the computation of deduction by the assessing officer which was corrected by the Commissioner of Income Tax (Appeals), the department still filed appeal before the Tribunal. 2. During the hearing, learned Standing Counsel for the Revenue contended that deduction can be reworked by the assessing officer under Section 143(1)(a) of the Act. We are also of the view that the Tribunal completely went wrong in holding that a claim contrary to the scheme of Section 80M cannot be corrected in Section 143(1)(a) proceedings. Learned Senior Counsel appearing for the assessee also fairly contended that the Tribunal's view is incorrect. However, he rightly pointed out that the relief granted by the Commissioner of Income Tax (Appeals) is in accordance with the statute and therefore it warrants no interference. We are completely in agreement with the Commissioner of Income Tax (Appeals), because eligible deduction for dividend received from UTI is 40%. There was no justification for the department to file an appeal against this order and we, therefore find that the Tribunal rightly dismissed the appeal, though ITA 36/2002 -3- not for the reasons stated by them. Accordingly, we dismiss the department appeal, but clarify that the interpretation placed by the Tribunal on Section 143(1)(a) is wrong. (C.N. Ramachandran Nair, Judge.) (T.R. Ramachandran Nair, Judge.) kav/