9911796707
TMI Blog2021 (12) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... 115-O(1A) of the said Act applies only to a case where the subject company is chargeable to income-tax u/s.4 of the said Act. Section 115-O(1A) of the said Act does not apply to a case where the subject company is not chargeable to income-tax due to an overriding non-obstante provision contained in Section 50 of the SIDBI Act. Dividend is defined in Section 2(22) of the IT Act to, inter alia, include any distribution by a company of accumulated profits, which entails releasing any assets by the company to its shareholders. In terms of Explanation 2 to Section 2(22) of the said Act, the expression accumulated profits includes all company profits up to the date of distribution or payment thereof. It appears that the transfer of profits of Petitioner to IDBI in terms of Section 29(2) of SIDBI Act entails payment by Petitioner to IDBI. This payment or distribution of Petitioner's liquid assets constitutes dividend distributed by Petitioner out of its accumulated profits as envisaged under Section 2(22)(a) of the IT Act. It needs to be noted that the charge under sub-section (1) of Section 115-O of the said Act is on the company's profits, more specifically on that part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd without prejudice to its rights deposited a sum of ₹ 5.4 crore on 29/06/1997. Petitioner for the year ended 31/03/1998 transferred a sum of ₹ 67,50,00,000/- to the IDBI as per Section 29(2) of the SIDBI Act. Petitioner without prejudice paid a sum of ₹ 6.75 crore on 08/06/1998 and ₹ 7.425 crore on 10/06/1999 under Section 115-O of the said Act. 3. Petitioner's Board of Directors recommended a declaration of dividend at the rate of 15% on the share capital for the year ended 31/03/2000. Accordingly, a sum of ₹ 67.5 crore was provided for in the accounts for the year ended 31/03/2000 to meet such liability. Thus, Petitioner, on 12/05/2000, paid tax of an amount of ₹ 6,88,50,000/- without prejudice. 4. Since the liability of Petitioner to pay additional income tax as per Section 115-O of the said Act was not clear, Petitioner was in consultation with its advisers. Petitioner had also applied with respondent No.1 seeking clarification about Petitioner's liability to pay additional income tax as per Section 115-O of the said Act in the light of Section 50 of the SIDBI Act. Petitioner on 17/3/2003 received communication from responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that any amount distributed or paid by the company by way of dividend is not covered by Section 50 of the SIDBI Act. Therefore Petitioner was liable to pay additional tax on the amount distributed by way of dividend. 9. At this juncture, it would be necessary to extract the provision of Section 50 of the SIDBI Act, regarding which the submissions were canvassed. Section 50 of the SIDBI Act reads as under: Notwithstanding anything to the contrary contained in the Income-tax Act, 1961 or in any other enactment for the time being in force relating to income-tax or any other tax on income, profits or gains, the Small Industries Bank shall not be liable to pay income-tax or any other tax in respect of:- (a) any income, profits or gains accruing or arising to the Small Industries Development Assistance and or any amount received in that Fund, and b) any income, profits or gains derived or any amount received by the Small Industries Bank. 10. Section 50 of the SIDBI Act contains non-obstante clause giving overriding effect over provisions of Income Tax Act in respect of any income, profits, gains derived or any amount received by the company. It is well settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SIDBI Act, it is necessary to set out Section 115R of the said Act, which reads as under: 115R (1) Notwithstanding anything contained in any other provisions of this Act and section 32 of the Unit Trust of India Act, 1963 (any amount of income distributed on or before the 31st day of March, 2002 by the Unit Trust of India to its unit-holders) shall be chargeable to tax and the Unit Trust of India shall be liable to pay additional income-tax on such distributed income at the rate of ten per cent: Provided that nothing contained in this sub-section shall apply in respect of any income distributed to a unit-holder of open-ended equity-oriented funds in respect of any distribution made from such Fund for a period of three years commencing from the 1st day of April, 1999. Finance Act 1999 inserted chapter XXI-E to levy tax on the amount distributed by the Unit Trust of India by introducing Section 115R(1) of the said Act, which contains non-obstante clause giving overriding effect over Section 32 of the Unit Trust of India Act, 1963. It needs to be noted that Section 32 of the Unit Trust of India Act, 1963 is similar to Section 50 of the SIDBI Act. Introduction of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SIDBI Act. The use of the expression no income- tax is payable in Section 115-O(1A) of the said Act also presupposes that the subject company is indeed chargeable to income-tax on its total under Section 4 of the said Act. Section 115-O(1A) of the said Act applies only to a case where the subject company is chargeable to income-tax u/s.4 of the said Act. Section 115-O(1A) of the said Act does not apply to a case where the subject company is not chargeable to income-tax due to an overriding non-obstante provision contained in Section 50 of the SIDBI Act. 14. Dividend is defined in Section 2(22) of the IT Act to, inter alia, include any distribution by a company of accumulated profits, which entails releasing any assets by the company to its shareholders. In terms of Explanation 2 to Section 2(22) of the said Act, the expression accumulated profits includes all company profits up to the date of distribution or payment thereof. It appears that the transfer of profits of Petitioner to IDBI in terms of Section 29(2) of SIDBI Act entails payment by Petitioner to IDBI. This payment or distribution of Petitioner's liquid assets constitutes dividend distributed by Petitioner out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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