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TMI Blog2019 (1) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... o cascading effect when dividend is finally paid to the shareholders, be it, an individual, HUF or a firm i.e. the ‘specified assessee’ who are liable to pay tax under Clause (a) to Section 115BBDA of the Act. Similarly, the argument that non-residents have been left-out is an argument of under-classification. Non-residents who invest in India contribute and help in growth of industrialization, job creation and economic progress. Non-residents have options to invest in different countries. Consequently, the Legislature/Executive as a matter of policy decide how and in what manner non-residents should be taxed. Non-residents can be treated differently for the reason that they are residents of foreign states and not residents of India. Taxation at source principle may not be applied to non-residents. Non-residents are liable to pay tax in the country of their residence. Taxation regime applicable to non-residents need not identical to that applicable to residents. - Writ Petition (Civil) No. 4089/2017 - - - Dated:- 17-1-2019 - MR. SANJIV KHANNA AND MR. ANUP JAIRAM BHAMBHANI JJ. Petitioner In person. Respondents Through: Mr. Zoheb Hossain, Sr. Standing Counsel with Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied assessee means a person other than,- (i) a domestic company; or (ii) a fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of Section 10; or (iii) a trust or institution registered under Section 12A or Section 12AA. Section 115 BBDA is a non-obstante provision that would apply and prevail over Section 10(34) of the Act. Section 115 BBDA states that notwithstanding anything contained in the Act, where the total income of a specified resident assessee, includes income by way of dividend declared, distributed or paid by domestic companies exceeding ₹ 10 lacs, income tax payable by such assessee shall be the aggregate of clauses (a) and (b). As per clause (a), the specified assessee would be liable to pay tax at the rate of 10% on the amount of income by way of dividend in aggregate of exceeding ₹ 10 lacs. Clause (b) states that the specified assessee would be liable to pay income tax chargeable on his/her total income reduced by the amount of income by way of dividends. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies, then he/she would be liable to pay tax @ of 10% on such dividend income i.e. dividend income exceeding ₹ 10 lacs. The respondents have in fact relied upon and explained the legal position in the memorandum in the form of Explanatory Notes to the provisions of the Finance Act, 2016 in which it was observed that:- 14.1 The provisions contained in clause (34) of Section 10 of the Income-tax Act, before its amendment by the Act, provided that dividend which suffers dividend DDT under Section 115-0 is exempt in the hands of the shareholder. Section 115-0 specifies that dividends are taxed only at the rate of fifteen per cent. at the time of distribution in the hands of company declaring dividends. This created vertical inequity amongst the tax payers as those who have high dividend income are subjected to tax only at the rate of 15% whereas such income in their hands would have been chargeable to tax at the rate of 30%. 14.2 With a view to rationalise the tax treatment provided to income by way of dividend, Section l15BBDA has been inserted in the Income-tax Act to provide that any income by way of dividend in excess of ten lakh rupees shall be chargeable to tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all persons who are not by nature, attainment or circumstances in the same position, as varying needs of different classes of persons often require separate treatment. It is inexpedient and incorrect to think that all laws are uniformly applicable to all people in one go. Earlier in State of W.B. v. Anwar Ali Sarkar AIR 1952 SC 75 , it was observed that if the legislature takes care to reasonably classify persons for legislative purposes and if it deals equally with all persons belonging to a well-defined class, it is not open to the charge of denial of equal protection on the ground that the law does not apply to other persons. 10. Contention of the petitioner that the companies have been left out would be an argument predicated on under-classification, i.e., certain classes which could have been included, have been excluded from taxation. This argument does not carry weight, since under-classification per se is not sufficient ground and justification to strike down a provision. In Amrendra Kumar Mohapatra v. State of Orissa (2014) 4 SCC 583 , the question of under-inclusion was decided by relying upon State of Gujarat v. Shri Ambica Mills Ltd., AIR 1974 SC 1300 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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