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

Dividends from foreign subsidiaries can offset business losses under Sections 70 and 71 of the Income Tax Act, 1961. An individual inquired whether dividends received from a foreign subsidiary by an Indian holding company, which are taxable at 15%, can be set off against business losses if the losses exceed the dividends. They also asked if carry-forward business losses could be used similarly. The response clarified that, according to Sections 70 and 71 of the Income Tax Act, 1961, there are no restrictions on intra-head or inter-head adjustments. Therefore, dividends can be set off against business losses, even if taxed at a special rate, as per the provisions.