Section 80M
has been re-introduced from the financial year 2020-21. The text of the law is
given below.
80M. (1) Where the gross total income of a domestic company in any previous year includes any income by way of dividends from any other domestic company or a foreign company or a business trust, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends received from such other domestic company or foreign company or business trust as does not exceed the amount of dividend distributed by it on or before the due date.
(2) Where any deduction, in respect of the
amount of dividend distributed by the domestic company, has been allowed under
sub-section (1) in any previous year, no deduction shall be allowed in respect
of such amount in any other previous year.
Explanation.—For the purposes of this
section, the expression "due date" means the date one month prior to
the date for furnishing the return of income under sub-section (1) of section 139.
From the
above following is being concluded.
1.
Domestic
company is in receipt of dividend from
(i)
Domestic
company
(ii)
Foreign
company
(iii)
Business
trust
2.
Thus
following dividend income is not included
(i)
Dividend
from mutual fund or units.
(ii)
Share
of profit from LLP
3.
The
quantum of the deduction under section 80M is the least of the following
(i)
Divided
income received as mention in SN 1 during the FY.
(ii)
Dividend
payout by the company before filing return of Income u/s 139(1) for the FY.
4.
Once
deduction for a particular dividend has been claimed for one FY same cannot be claimed as
deduction for next FY.
5.
In
the act, there is no mention that dividend should receive first and then
dividend payout should happen.
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