INCOME TAX ACT, 1961

Section 80P(2)(d)

Deduction under section 80P(2)(d) - Allowability - Bonus income received by assessee from Karnataka Co-operative Milk Producers' Federation (KMF), whether to be construed as dividend income -

Only issue in dispute was regarding rejection of assessee's claim for deduction under section 80P(2)(d) in respect of bonus received by assessee from Karnataka Co-operative Milk Producers' Federation (KMF). Revenue alleged that in terms of provisions of section 80P(2)(d), only dividend and interest received by a society from its investment in any other society is eligible for deduction, thus, amount of bonus received by assessee from KMF was not eligible for deduction under section 80P(2)(d). Held: From bye-laws of KMF, it was seen that every member was entitled to receive some amount as bonus and some amount as dividend as distribution of net profit by KMF. It was seen that computation mechanism for payment of bonus and dividend were different but both were towards distribution of net profit of KMF. This is also accepted legal position that divided is only distribution of net profits. There was force in argument of assessee that nature of bonus received by assessee from KMF was nothing but dividend only although mechanism of its computation was different because both bonus and dividend were paid to assessee as distribution of net profit only. AO was directed to consider amount of bonus received by assessee from KMF as dividend received from KMF and allow deduction under section 80P(2)(d) in respect of receipt of bonus also.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2014-15

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