2024 (5) TMI 958 - AT - Income Tax

Rectification u/s 154 - correct assessment year for accounting DDT Dividend Distribution Tax - contention of the Revenue is that this dividend was declared for the year ended on 31/03/2014 and, DDT pertained to the A.Y. 2014-15 - HELD THAT - The provision of Section 115-O(3) clearly stipulates that the company had to pay DDT on distributed profits to the credit of Central Government within 14 days from the date of (a) declaration of dividend or (b) distribution of dividend or (c) payment of dividend, whichever was earliest. When the dividend was declared and payment of DDT was made in the financial year 2014-15 it could not have been accounted for in the return for earlier year. DDT has to be accounted for only in the return for the financial year in which it was actually paid. As the DDT was paid on 27-08-2014 in this case, it should have been accounted for in return for the financial year 2014-15 relevant to the A.Y. 2015-16. Assessee had filed a revised Form 3CD for A.Y. 2014- 15 and 2015-16 on 21/05/2019 rectifying the mistake in accounting of DDT. CIT(A) has rejected the revised Form 3CD on the ground that the revised Form 3CD were required to be filed before the end of the relevant assessment year only. The assessee is not making any fresh claim by way of the revised Form 3CD but it was only rectifying the mistake in accounting of DDT. The finding of the Ld. CIT(A) is that declaration of dividend and tax thereon pertained to A.Y. 2014-15. Even though, the dividend was declared for the year ended on 31/03/2014, the declaration took place in the financial year 2015-16 and DDT was also paid during this year only. Therefore, the payment of DDT should have been accounted for in the return for A.Y. 2015-16 and not in the A.Y. 2014-15. Assessee appeal allowed.

Summary

Issues Involved:
The judgment involves the rejection of a rectification application u/s. 154, accounting of Dividend Distribution Tax (DDT) for Assessment Year (A.Y.) 2014-15, and the correct assessment year for accounting DDT.

Rectification Application u/s. 154:
The assessee filed a rectification application u/s. 154 for A.Y. 2014-15 and A.Y. 2015-16 regarding the incorrect accounting of DDT paid on 27/08/2014. The application was rejected by the Assessing Officer (AO) and the rejection was upheld by the CIT(A). The appellant contended that the DDT should have been accounted for in the correct assessment year and requested a direction for the same.

Accounting of Dividend Distribution Tax (DDT):
The dispute centered around the correct accounting of DDT paid on 27/08/2014 amounting to Rs. 6,79,800. The Revenue argued that since the dividend was declared for the year ended on 31/03/2014, the DDT pertained to A.Y. 2014-15. However, the Tribunal held that as per Section 115-O(3), DDT should be accounted for in the return for the financial year in which it was actually paid, which in this case was the financial year 2014-15 relevant to A.Y. 2015-16.

Correct Assessment Year for Accounting DDT:
The Tribunal noted that the DDT payment was made in the financial year 2014-15 and should have been accounted for in the return for A.Y. 2015-16. The assessee rectified the mistake by filing a revised Form 3CD for both A.Y. 2014-15 and 2015-16, but the CIT(A) rejected it on the grounds of timing. The Tribunal held that the DDT should be credited in A.Y. 2015-16 and withdrawn from A.Y. 2014-15, as it was paid during the former financial year.

In conclusion, the Tribunal allowed the appeal filed by the Assessee, directing the Department to credit the DDT of Rs. 6,79,800 paid on 27/08/2014 in A.Y. 2015-16 and withdraw the credit claimed in the return for A.Y. 2014-15.