Clarification regarding scope of additional income-tax on distributed income under section 115R of the Income-tax Act -regarding.

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....dditional income-tax on distributed income under section 115R of the Income-tax Act -regarding. Section 115R of the Income-tax Act, 1961 ('Act') provides for levy of additional income-tax on distributed income to unit holders (hereinafter referred to as 'additional income-tax'). 2. It has been reported that some field authorities are taking a view that mutual funds/specified companies are requir....

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.... liable to pay additional income tax on such distributed income at the rates prescribed therein. The income so distributed by such entities is the dividend paid to the unit holders and is liable to tax under this section. However, redemption of units or repurchase of units would not attract levy of tax under sub-section (2) to section 115R of the Act as such income is not of the nature of income '....

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....nus units is not akin to distribution of income by way of dividend. This may be inferred from provisions of section 55 of the Act which prescribes that 'cost of acquisition' of bonus units shall he treated as nil for purposes of computation of capital gains tax. 7. In view of above position, Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby clarifies tha....