SIGN IN SUBSCRIBE

News Update

Cus - When there is nothing on record to show that appellant had connived with other three persons to import AA batteries under the guise of declaring goods as Calcium Carbonate, penalty imposed on appellant are set aside: HCCongress fields Rahul Gandhi from Rae Bareli and Kishori Lal Sharma from AmethiCus - The penalty imposed on assessee was set aside by Tribunal against which revenue is in appeal is far below the threshold limit fixed under Notification issued by CBDT, thus on the ground of monetary policy, revenue cannot proceed with this appeal: HCGST -Since both the SCNs and orders pertain to same tax period raising identical demand by two different officers of same jurisdiction, proceedings on SCNs are clubbed and shall be re-adjudicated by one proper officer: HCFormer Jharkhand HC Chief Justice, Justice Sanjaya Kumar Mishra appointed as President of GST TribunalSale of building constructed on leasehold land - GST implicationI-T - If assessee is not charging VAT paid on purchase of goods & services to its P&L account i.e., not claiming it as expenditure, there is no requirement to treat refund of such VAT as income: ITATBengal Governor restricts entry of State FM and local police into Raj BhawanI-T - Interest received u/s 28 of Land Acquisition Act 1894 awarded by Court is capital receipt being integral part of enhanced compensation and is exempt u/s 10(37): ITATCops flatten camps of protesting students at Columbia UnivI-T - No additions are permitted on account of bogus purchases, if evidence submitted on purchase going into export and further details provided of sellers remaining uncontroverted: ITATTurkey stops all trades with Israel over GazaI-T- Provisions of Section 56(2)(vii)(a) cannot be invoked, where a necessary condition of the money received without consideration by assessee, has not been fulfilled: ITATGirl students advised by Pak college to keep away from political eventsI-T- As per settled position in law, cooperative housing society can claim deduction u/s 80P, if interest is earned on deposit of own funds in nationalised banks: ITATApple reports lower revenue despite good start of the yearI-T- Since difference in valuation is minor, considering specific exclusion provision benefit is granted to assessee : ITATHome-grown tech of thermal camera transferred to IndustryI-T - Presumption u/s 292C would apply only to person proceeded u/s 153A and not for assessee u/s 153C: ITATECI asks parties to cease registering voters for beneficiary-oriented schemes under guise of surveys
 
I-T - Levying tax on transfer of unclaimed dividend to Reserve Fund would amount to double taxation, if such dividend was not debited to P&L A/c: HC

By TIOL News Service

MUMBAI, MAY 03, 2017: THE issue is - Whether levying tax on transfer of unclaimed dividend to Reserve Fund would amount to double taxation, when such dividend has not been debited to its P&L A/c. YES is the verdict.

Facts of the case:

The AO during the assessment noted that the Assessee had shown an amount of Rs.6.56 lakhs as unclaimed dividend under the head 'statutory reserve fund'. This unclaimed dividend, according to AO, was in the nature of income. Thus, he called upon the Assessee to explain the same who contended that the amount of Rs.6.56 lakhs dividend was not claimed by its shareholders. This dividend had been declared out of its net profits on which the tax had already been paid. However, this was not accepted by the AO and therefore he added the amount of Rs.6.59 lakhs to the income of assessee. On appeal, the CIT(A) upheld the view of the AO that once the dividend had been declared, the bank was merely a custodian of the amounts on behalf of the shareholder. Consequently, the character of the unclaimed dividend became income in the hands of the Assessee. On further appeal, the ITAT held that seeking to tax the unclaimed dividend transferred to Reserve Fund would amount to double taxation.

On appeal, the HC held that,

++ the grievance of the Revenue before us is that once dividend is declared by the Assessee, it becomes the property of the shareholder and the same is merely held by the bank as a custodian/ trustee for the shareholder. Therefore, transferring it to its Reserve Fund, changes the character of its holding. It, thereafter, owns the amount on its own account and not on behalf of the shareholder. It is an undisputed position that in the present facts, the dividend had not been charged to the Profit & Loss Account. It forms part of appropriation of income as it is not debited to its Profit & Loss Account. In the above view, it is not disputed that the unclaimed dividend which has been transferred to the Reserve Fund, has already borne income tax. Thus, bringing the same to tax, would amount to double taxation. Our view is fortified by the observations of this Court in CIT v/s. M/s. Deogiri Nagari Sahakari Bank Ltd. - 2015-TIOL-1963-HC-MUM-IT on an identical fact situation, that the view of the Tribunal that no tax is payable on transfer of unclaimed dividend to Reserve Fund, calls for no interference.

(See 2017-TIOL-839-HC-MUM-IT)


POST YOUR COMMENTS
   

TIOL Tube Latest

TIOL Tube
Shri N K Singh, recipient of TIOL FISCAL HERITAGE AWARD 2023, delivering his acceptance speech at Fiscal Awards event held on April 6, 2024 at Taj Mahal Hotel, New Delhi.

TOP NEWS

AR not Afar by SK Rahman

VISION 360



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.

TII LATEST

TIOLCORPLAWS LATEST