115BBD Tax on Dividend from pscified Foreign companies

[Chichu Bhatt]

If specified Foreign company is not  there  and dividend is received from them by an Indian company , what deductions can Indian company claim u/s 56 or will be on deductions under section 115BBD

[ROHIT TULSIAN]

Dear Niranjan ji

The dividend in such a case will not be chargeable u/s 115BBD but will be chargeable u/s 56 as rightly mentioned by you.

In this regard,deduction allowed shall be the actual expenditure (not being capital expenditure) incurred to earn the abovementioned dividend.

AI Summary

Tax treatment of foreign dividends: under general dividend provision, only actual non-capital expenses to earn them are deductible.
Where the payor is not a specified foreign company, dividends received by an Indian company are not taxable under 115BBD but are taxable under the general dividend provision (section 56). Deductible amounts are limited to actual revenue expenditures incurred to earn the dividend; capital expenditures are not allowable.