2004 (9) TMI 76

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.... N.K. Sud J.- At the instance of the Revenue, the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), has referred the following question of law arising out of its order dated June 12, 1984, relating to the assessment year 1978-79, for the opinion of this court: "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in la....

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....o the State Government the share of dividend received as finance charges. However, this contention was not accepted by the Assessing Officer who observed that according to the provisions of section 199 of the Income-tax Act, it was immaterial as to in whose hands the shares stood and in view of the second proviso below that section, the credit for tax deducted at source was to be given proportiona....

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....ersion of income, the companies in which the assessee held shares were not required to deduct tax at source on that portion of the dividends which was diverted to the State Government. It was required to deduct only with reference to the 1/3rd share pertaining to the assessee-corporation. Since diversion of 2/3rds dividend income was in favour of the State Government, no tax was required to be ded....

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.... for not deducting tax at source on dividends which are to be diverted to the State Government so that such tax is not deducted in future. In this way, litigation on this point could be avoided." From a perusal of the order of the Tribunal, it is clear that no tax was deductible at all on the portion of dividend diverted to the State Government as it is not assessable under the Income-tax Act. ....