Dividend received from foreign company be avaialble for set off against business losses

[SANJIV KOTHARI]

Dividend received from foreign subsidiary by Indian holding compant is taxable @15%. Please let me know if holding company has business losses more than dividend received . I would like to know can dividend be available for set off against business losses of current year and no tax is chargeable if net income of assessee after set off is nil or negative.

Can carry forward business losses also be set off against dividend received from foreign company?

[Rama Krishana]

In view of Provision of Section 70 and Section 71 of the Income Tax Act, 1961, there is no such restriction of intra head or inter head adjustment. Mere fact that such dividend is taxable at special rate, would not disable the assesee for being set off with other income as per the provisions.

AI Summary

Set off of foreign dividend: special tax rate does not prevent adjustment against business losses under statutory set off rules. Statutory set-off rules permit adjustment across heads of income; a dividend taxed at a special rate is not categorically barred from being set off against business losses. The special rate does not by itself preclude set off, and carry forward of business losses is governed by the same statutory adjustment mechanism and may be applied against such dividend income as permitted by law.