Deferred dividend taxation: declared dividends treated as income in year of declaration, with TDS credit allowed. Deferred dividends declared in excess of distributable profits but payable in instalments are distributions of company profits and are deemed to be income of the previous year in which they are declared; shareholders' entitlement vests on declaration, interest on deferred payment compensates for delayed payment, the entire dividend is taxable in the year of declaration and tax deducted at source credit is allowed in that year. The taxpayer is not to be treated as an assessee in default and interest on outstanding tax will not be leviable for the period up to 35 days from the date the deferred instalment becomes due or the dividend warrant is transferred.