Deduction in respect of certain inter-corporate dividends
Deduction in respect of certain inter-corporate dividends.
80M. (1) Where gross total income of an assessee being a company includes any income by way of dividends from a domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income by way of dividends of an amount equal to—
4[(a) where the assessee is a foreign company—
(i) in respect of such income by way of dividends from an Indian company which is not such a company as is referred to in section 108 and which is mainly engaged in a priority industry ...80% of such income;
(ii) in respect of such income by way of dividends other than the dividends referred to in sub-clause (i) .. 65% of such income;
4[(b) where the assessee is a domestic company—in respect of any such income by way of dividends ...60% of such income;
1Explanation.—For the purposes of this section, a company shall be deemed to be mainly engaged in a priority industry if the income attributable to any such industry or industries included in its gross total income for the previous year is not less than fifty-one per cent of such gross total income.
2[(2) Where a company to which this section applies is entitled also to the deduction in respect of income by way of dividends under section 80K or section 80L, the deduction under sub-section (1) shall be allowed in respect of income by way of dividends referred to therein as reduced by the aggregate of the deductions, if any, in respect of income by way of dividends under section 80K or section 80L.
Explanation.—For the purposes of this section, the deduction in respect of income by way of dividends under section 80L shall be taken to be so much of the amount of the deduction under that section as may be in excess of the aggregate of the items of income referred to in clauses (i), (ii), (iii), (v), (vi), and (vii) of sub-section (1) of that section].
4. As per Finance (No. 2) Act, 1971 for clauses (a) and (b), the following clauses shall be substituted, w.e.f. 1-4-1972 namely :—
"(a) sixty per cent of such income, where the assessee is a domestic company;
(b) sixty-five per cent of such income, where the assessee is a foreign company."
1 The explanation shall stand omitted w.e.f. 1-4-1972 as provided by Finance (No. 2) Act, 1971.
2 As provided by Finance (No. 2) Act, 1971 for sub-section (2) and the Explanation appearing below that sub-section, the following sub-section shall be substituted w.e.f. 1-4-1972 namely :—
"(2) Where a company to which this section applies is entitled also to the deduction under section 80K, the deduction under sub-section (1) shall be allowed in respect of income by way of dividends referred to therein as reduced by the amount of the deduction under section 80K."
[As amended by Finance (No. 2) Act, 1971 and Taxation Laws (Amendment) Act, 1970]