TaxTMI 
TaxTMI 
2017 (10) TMI 634
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....when the errors were apparent on record. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by rectifying the errors and quashing the demand of Rs. 34,79,725/-. 3.(a) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in not accepting the rectification regarding the fact that no dividend was declared or paid for the Assessment year 2010-11. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the rectification and quashing the demand accordingly. (b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in rejecting the application under Section 154 when the facts apparent on record do confirm that there was no liability of DDT in this A.Y. i.e. 2010- 11. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the rectification and quashing the demand accordingly. 4. The assessee Company craves its right to add, am....
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.... 20.08.2010. Since this proposal of dividend was prior to the filing of the return of income, therefore, the assessee has mistakenly and inadvertently shown this amount of dividend in the schedule of DDT of the return form and mention the details of dividend declaration by it on 29.09.2010. The said return was processed u/s 143(1) however, there was a mistake in the return of income and wrong declaration of tax liability on account of dividend distribution tax. Therefore, the assessee filed an application for rectification u/s 154. The assessee has furnished all the relevant facts as well as details to show that the declaration of dividend would fall in the A.Y. 2011-12 and not in the assessment year under consideration. The Ld. AR further pointed out that there was another mistake in the challan under which the dividend distribution tax was paid as it was shown as deposit of TDS u/s 194 instead of DDT u/s 115 O. Therefore there are various factual mistake in the return of income as well as in the challan which shows that the assessee has inadvertently and due to inexperience staff has shown this amount in the return of income as dividend declared during the year under consideratio....
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....of additional income tax in respect of the amount declared, distributed or paid by a domestic company by way of dividend on or after 01.04.2003. For reading reference, section 115 O is quoted as under:- "Section 115 O. (1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the Income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003, whether out of current or accumulated profits shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) at the rate of 91 [fifteen] per cent.] [(1A) The amount referred to in sub-section (1) shall be reduced by (i) the amount of dividend, if any, received by the domestic company during the financial year, if such dividend is received from its subsidiary and; (a) where such subsidiary is a domestic company, the subsidiary has paid the tax which is payable under this section on such dividend; or (b) where such subsidiary is a foreign ....
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....n which it is so declared, distributed or paid, as the case may be; (b) any interim dividend shall be deemed to be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it" Section 8 envisages the inclusion of dividend income in the total income of the previous year in which it is so declared, distributed or paid. From the conjoint reading of the relevant provisions of section 115 O as well as section 8 of the Act makes its clear that the DDT is chargeable only when the dividend is declared, distributed or paid whichever is earlier and not prior to that. Section 8 is consistent with section 115 O and corroborate this analogy by treating dividend income as part of the total income of the previous year in which the dividend is declared, distributed or paid as case may be. The Hon'ble AP High Court in case of CIT vs. NMDC Ltd. (supra) while dealing with an identical issue of chargeability of DDT as held in para 6 & 7 are as under:- "6. Section 173 of the Companies Act requires an explanatory statement to be annexed to notice except, among others, declaration of dividend. Section 2....
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.... Rajkot Bench of this Tribunal in case of CIT vs. Rupam Impex (supra) while deciding with the scope of section 154 of I.T. Act has also taken a similar view in para 9 as under:- "9. A lot of emphasis is placed on the fact that the mistake was committed by the assessee himself which has resulted in the error creeping in the assessment order as well. Instead of being apologetic about the complete non application of mind to the facts and making a mockery of the scrutiny assessment proceeding itself, the Assessing Officer has justified the mistake on record on the ground that it is attributed to the assessee. The income tax proceedings are not adversarial proceedings. As to who is responsible for the mistake is not material for the purpose of proceedings under section 154; what is material is that there is a mistakea mistake which is clear, glaring and which is incapable of two views being taken. The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. It is only elementary that the income liable to be taxed has to be worked out in accordanc....
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....n declaration of dividend on 28.09.2010 which is prior to the date of payment on 01.10.2010. Ttherefore, the liability on account of DDT would arise only in the A.Y. 2011-12 and not in the A.Y. 2010-11. Though the assessee has committed various mistakes in giving the details in the return of income as well as in the challan under which the tax was paid regarding the date of payments, the date of distribution however, when the assessee has brought on record the relevant evidence to show that the dividend was actually declared on 28.09.2010 then this cannot be charged to tax u/s 115 O in the year under consideration merely on the basis of mistakes committee by the assessee. Accordingly, we set aside the impugned orders of the authority below and allow the claim of the assesse that no dividend is chargeable to tax during the year under consideration. 9. For the Assessment Year 2011-12, the assessee has raised the following grounds of appeal as under:- "1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in rejecting the grounds of appeal without providing cogent reasons. The action of ld. CIT(A) is illegal, justified, arbitrary and against the facts o....
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....ther, the said proposal was approved in the AGM held on 30.09.2011. Therefore, the dividend was declared on 30.09.2011 and was paid by the assessee on 10.10.2011. Since the amount of dividend is identical of Rs. 1,95,00,000/- therefore, the Assessing Officer has again assessed this amount to the DDT in the year under consideration. He has further pointed out that no demand has been raised by the Revenue for the A.Y. 2012-13 though the DDT is chargeable to tax only for the A.Y. 2012-13. 12. On the other hand, the DR has reiterated its contention has raised for the A.Y. 2010-11 and submitted that the assessee itself has declared this amount in the return of income and further the approval of the dividend is within 6 months from the end of the financial year. 12. I have considered the rival submissions as well as the relevant material on record. It is noted that the facts for the A.Y. 2011-12 are almost identical as A.Y. 2010-11 and therefore in view of the finding on this issue for the A.Y. 2010-11on principle this issue is decided in favour of the assessee because the instance of chargeability of tax arises on 30.09.2011 when the dividend was declared which would fall in the A.Y. ....