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TMI Blog2022 (1) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2003-2004. For the assessment year 2003-2004, the assessee was not entitled to exemption of dividend income in absence of section 10(33) of the Act (section 10(33) of the Act was omitted by the Finance Act, 2002). Moreover, the contention of the assessee that the impugned payment of ₹ 25 lakh is in the nature of capital in view of the fact that the company was under liquidation proceedings, and accordingly, such distribution will have to be taxable in accordance with section 46(2) of the Act is also devoid of any merits, because dividend was declared before liquidation and dividend distribution tax was paid u/s. 115-O of the Act by the company (dividend was declared on 05.07.1999 and dividend distribution tax was paid on 31.01.2001) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared the company on which dividend distribution tax was already paid. 6. The ld. CIT(A) has erred in ignoring the provision of section 115-O of the Act as per which, payment of dividend distribution tax is considered as final payment of tax and thus, taxing the same under section 2(22) of the Act is bad in law. 7. The ld. CIT(A) and ld. AO failed to appreciate that the company had declared the interim dividend during the previous year 1999-2000 and remitted the DDT along with interest under section 115-P of the Act in the subsequent previous year 2000-01 during which sections 115-O and 10(33) were very much in existence. 8. Notwithstanding the above, the ld. CIT(A) ad the ld. AO ought to have appreciated the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and reassessment was completed on 12.12.2007, determining total income of ₹ 1,02,36,398. One of the additions made by the Assessing Officer was dividend income of ₹ 25,00,000. The A.O. held that sum of ₹ 25 lakh was received during the financial year relevant to the assessment year 2003-2004 for which the assessee is not entitled to any exemption, in the absence of section 10(33) of the Act and accordingly taxed the same as deemed dividend. On further appeal, the CIT(A) confirmed the view taken by the Assessing Office as regards the dividend income of ₹ 25 lakh. On further appeal, the Tribunal vide its order dated 22.06.2011 in ITA No. 391/Bang/2010, restored the issue to the files of the A.O. The Tribunal d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 33 nor 34 were existing. The AR's arguments are in two folds. One is that the dividend declared by the company will not fall under the definition of dividend within the meaning of section 2(22) since dividend includes any distribution by the company out of accumulated profits and when the appellant company declared dividend there were no surplus funds and therefore it cannot be termed as dividend. The appellant received 25 lakhs on liquidation/slump sale as distributed dividends declared interim and paid DDT under section 115-O. Since dividend was declared before liquidation and payments made in the course of liquidation and therefore in order to apply the provision of section 46(2) the issue to be examined is that on what basis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(33) of the Act was omitted by the Finance Act, 2002). Moreover, the contention of the assessee that the impugned payment of ₹ 25 lakh is in the nature of capital in view of the fact that the company was under liquidation proceedings, and accordingly, such distribution will have to be taxable in accordance with section 46(2) of the Act is also devoid of any merits, because dividend was declared before liquidation and dividend distribution tax was paid u/s. 115-O of the Act by the company (dividend was declared on 05.07.1999 and dividend distribution tax was paid on 31.01.2001). Therefore, the provisions of section 46(2) of the Act do not have application to the facts of the present case. In the light of the aforesaid reasoning, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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