TaxTMI 
TaxTMI 
2006 (3) TMI 283
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....n the distribution of dividend can be added back to the book profit under section 115JA. 2. Mr. K. Anangapal, the learned Departmental Representative (D.R.), submitted that on an identical situation in the assessee's own case, the CIT(A), when the matter came up before him in an appeal arising out of an assessment order under section 143(3) for the assessment year 1997-98, upheld the order of the Assessing Officer on the basis of the sub-section (5) of section 115-0 of the Income-tax Act. The assessee accepted the decision of the CIT(A). According to the learned D.R., no appeal was filed against the order of the CIT(A) dated 13-10-2000. Therefore, the order of the CIT(A) attained finality. According to the learned D.R., in respect of earli....
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....n the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273. According to the learned counsel, tax on distributed profit cannot be called as income-tax. According to the learned counsel, fringe benefit tax is also an additional tax permitted to be deducted in computing the book profit. The learned counsel placed his reliance on the C.B.D.T. Circular No.8 of 2005 [277 ITR 20 (St.)]. According to the learned counsel, tax on distribution of profit is identical to fringe benefit tax, therefore, the tax paid by the assessee on distribution of profit cannot be added back in computing the book profit. 5. The learned counsel for the assessee placed his reliance on the judgment of the Bombay High Court in the case of CIT v. Echjay Forgings (P.) Ltd. ....
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....f ten per cent." 7. In view of section 115-0, the domestic companies which declare or distribute profit or dividend on or after 1-6-1997 shall pay an additional income-tax on the amount distributed as profit or dividend. The question arises for consideration is whether the tax on distribution of profit or dividend constitutes a tax on income. It is not in dispute that the assessee-company is a separate independent assessable unit under the Income-tax Act. Therefore, the income or profit earned by the assessee has to be necessarily included in the total income for the purpose of levying income-tax. Under the Companies Act, a company can declare and distribute the profit to its shareholders. Once the profits were declared and distributed to ....
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....tion 40 of the Income-tax Act for deduction of the amount of fringe benefit tax paid for the purpose of computing the income under the head "Profit and gains of business or profession" does not apply to computation of book profit for the purpose of section 115AB. Accordingly, it was clarified that fringe benefit tax is an allowable deduction in computation of book profit under section 115AB of the Income-tax Act. In the case on our hand, it is not the case of the assessee that the tax paid or payable on distribution of profit is an allowable deduction. In fact, the learned counsel for the assessee clarified that the assessee is not claiming deduction out of the book profit. Therefore, in our opinion, this explanation of the CBDT may not be ....