2016 (5) TMI 212

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of 2014 is preferred against the order passed by the Tribunal in I. T. A. No. 293 of 2013 dated May 31, 2013 for the assessment year 2009-10. As the parties in both the appeals are common and the questions of law, which arise for consideration in both the appeals, are the same, both the appeals were heard together and are now being disposed of by a common order. 2. The question, which arises for consideration in these appeals, is regarding levy of interest under section 115P of the Act. The assessee, a public limited company, made a provision, for payment of dividend, in its books of account at the end of the relevant financial year. After the accounts were finalised and approved by the board, the shareholders of the company in the annual ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... be taken by the board; dividend declaration is not automatic upon the presence of profits or reserves; this is a decision of the management; within 14 days of the annual general body meeting being held, wherein dividend was declared, dividend tax was paid; and as payment of dividend tax was well within the time limit prescribed under section 115-O of the Act, levy of interest was invalid. 5. Aggrieved thereby, the Revenue carried the matter in appeal before the Tribunal. In its order in I. T. A. No. 1774 of 2011 dated August 3, 2012, the Tribunal held that declaration of dividend was not automatic upon finalisation of accounts, and presence of profits and reserves; declaration of dividend is within the domain of the board of directors, an....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....but no dividend shall exceed the amount recommended by the directors. The Supreme Court in CIT v. Express Newspapers Ltd. [1998] 230 ITR 477 (SC) referred to with approval to its earlier judgment in J. Dalmia v. CIT [1964] 53 ITR 83 (SC) and to articles 85 and 86 of Table A of the First Schedule to the Companies Act, to hold that the power of the Board of Directors of Company is only to declare interim dividend, whereas final dividend is to be declared only by the company in its general meeting. It is evident, therefore, that the power of the board of directors is only to 6 recommend dividend; and it is for the shareholders of the company, in the general meeting, to declare the dividend. It is not in dispute that dividend tax, under section....