| Case ID |
219874d6-4bcd-47b1-9eb4-658b9a155386 |
| Body |
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| Case Number |
WRIT PETITION NO. 2043 OF 1981 |
| Decision Date |
Jan 01, 1985 |
| Hearing Date |
Jan 01, 1985 |
| Decision |
The Supreme Court ruled that the deduction under Section 80M of the Income-Tax Act, 1961, must be calculated based on the income computed in accordance with the provisions of the Act and not the total amount of dividends received. The Court overruled its previous decision in Cloth Traders (P.) Ltd. v. Addl. CIT and determined that Section 80AA, introduced by Parliament, clarifies the law and does not impose new tax burdens retrospectively. The Court emphasized the need for continuity in judicial decisions while acknowledging that public interest may necessitate a review of prior rulings. The decision held that the retrospective application of Section 80AA is merely declaratory of the law as it has always existed since 1-4-1968. |
| Summary |
This case revolves around the interpretation of Section 80M of the Income-Tax Act, 1961, concerning deductions for inter-corporate dividends. The Supreme Court examined whether the deduction should be based on the net dividend income as per the Act or the gross amount received. The Court overruled its earlier ruling in Cloth Traders (P.) Ltd. and validated the retrospective introduction of Section 80AA by Parliament, which clarifies that deductions must be computed according to the provisions of the Act. This ruling is significant for corporate tax planning and clarifies the law regarding dividend taxation, potentially affecting many companies' fiscal arrangements. The decision underscores the importance of legislative intent and the need for clarity in tax law, ensuring that taxpayers understand their obligations and rights under the Income-Tax Act. Keywords include 'Income-Tax Act', 'Section 80M', 'Section 80AA', 'corporate dividends', 'tax deductions', 'Supreme Court ruling', 'tax law interpretation'. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
Y.V. Chandrachud, C.J.,
P.N. Bhagwati, J.,
Amarendra Nath Sen, J.,
D.P. Madon, J.,
M.P. Thakkar, J.
|
| Lawyers |
Not available
|
| Petitioners |
K.H. Kaji,
M.N. Shroff
|
| Respondents |
K. Parasaran,
K.S. Gurumoorthy
|
| Citations |
1985 SLD 1331,
(1985) 155 ITR 120
|
| Other Citations |
Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243 (SC),
Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC),
CIT v. New Great Insurance Co. Ltd. [1973] 90 ITR 348(Bom.),
CIT v. Industrial Investment Trust Co. Ltd. [1968] 67 ITR 437 (Bom.),
CIT v. South Indian Bank Ltd. [1966] 59 ITR 763,
CIT v. Darbhanga Marketing Co. Ltd. [1971] 80 ITR 72 (Cal.),
CIT v. Madras Motor & General Insurance Co. Ltd. [1975] 99 ITR 243 (Mad.),
Madras Auto Service v. ITO [1975] 101 ITR 589 (Mad.),
Addl. CIT v. Cloth Traders (P.) Ltd. [1974] 97 ITR 140 (Guj.)
|
| Laws Involved |
Income-Tax Act, 1961
|
| Sections |
80M,
80AA
|