Under-charge of sur-tax due to deduction of tax on excess dividends. - Income Tax - 516/CBDT

INSTRUCTION NO. 516/CBDT Dated : Feburary 27, 1973 Section(s) Referred: Rule 2(i)(b) of ST Act Statute: Under the Companies (Profits) Sur-tax Act, 1964 while computing the chargeable profits deduction is allowed in respect of the Income-tax payable by the Company, but no deduction is admissible in respect of income-tax on distribution of excess dividends. Please see Rule 2(i)(b) of the First Schedule of the Companies (Profits) Sur-tax Act, 1964. The Revenue Audit has pointed out cases of under-charge of sur-tax due to the deduction of tax on excess dividends. 2. Lapses of this type should have been avoided. 3. The correct legal position may please be brought to the notice of all Income-tax Officers. A review may also be made of all the completed assessments in the light of the above clarification and a report sent so as to reach the Board by 30th April, 1973. In the meantime, it should be ensured that no action becomes time barred.