2014 (4) TMI 313

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.....DR, the assessee co-operative society advanced a sum of Rs. 2,21,74,000 for acquiring the shares of Tellicherry Medical Foundation & Infrastructure Ltd. According to the ld.DR, Tellicherry Medical Foundation & Infrastructure Ltd is not the sister concern of the assessee. Tellicherry Medical Foundation & Infrastructure Ltd is engaged in the business of construction of multi storeyed building at Tellicherry. According to the ld.DR, the advance made by the assessee in the shares of Tellicherry Medical Foundation & Infrastructure Ltd is for the purpose of earning income which is exempt from taxation. According to the ld.DR, in view of section 14A of the Act, the expenditure incurred for the purpose of earning of income which does not form part....

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....or counsel, it is an investment for business purpose. The dividend earned on the investment made in the preferential shares is taxable under the Income-tax Act. Therefore, this will form part of the total income. According to the ld.senior counsel for the assessment year 2007-08 the assessee offered the dividend income earned on the investment made in Tellicherry Medical Foundation & Infrastructure Ltd and the same was assessed in the hands of the assessee. For the year under consideration, according to the ld.senior counsel, no dividend was declared by Tellicherry Medical Foundation & Infrastructure Ltd, therefore, no income was offered. On a query from the bench, how the assessee claims that dividend received by the assessee from Telliche....

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....he dividend was assessed in the hands of Tellicherry Medical Foundation & Infrastructure Ltd as tax on distribution of dividend under section 115(O)(1) of the Act. If it is subjected to taxation in the hands of Tellicherry Medical Foundation & Infrastructure Ltd u/s 115(O)(1), then the assessee may not be liable to pay any tax. In other words, it may not be necessarily to be included in the total income of the assessee in case the dividend received by the assessee was included in the total income of Tellicherry Medical Foundation & Infrastructure Ltd u/s 115(O)(1) of the Act. 5. The ld.DR has also placed reliance on the judgement of the Kerala High Court in CIT vs Popular Vehicles & Services Ltd (2010) 189 Taxman 14 (Ker). The Kerala Hig....