2018 (11) TMI 1340

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....late Tribunal was justified in holding that the amount of Rs. 2,78,46,000/received by the assessee from Spirax Marshall (P) Ltd on sale of its shares to the said company under the Scheme of Arrangement, which is treated as deemed dividend under section 2(22)(d) of the Act, is exempt under Section 10(34) of the Act? (b) Whether on the facts and in the circumstances of the case and in law, in this peculiar case, the assessee can claim exemption under section 10(34) of the Act when the company M/s Spirax Marshall (P) Ltd has not paid additional income-tax under section 115O of the Act?" 3. Brief facts are as under: Respondent-assessee is an individual. The issue pertains to the Assessment Year 2008-09. The assessee was holding shar....

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.... counsel agreed that against the judgment of the Tribunal in case of Kamal Imran Panju, Mumbai Vs. Department of Income Tax I.T.A.No.7620/Mum/2011 who is an assessee similarly situated as the present one, the Revenue has not preferred any appeal before the High Court. He, however, submitted that non-filing of the appeal by the Revenue was on account of misinterpretation of the relevant provisions. When court interpretation was adopted, the revenue formed a belief that the question requires further consideration. In this context, learned counsel relied on the judgment of Supreme Court in the case of Commissioner of Income Tax Vs. Modipon Limited (2018) 400 ITR 1 (SC) to argue that merely because in case some other assessee, Revenue has not p....

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....ontention in this regard. Surely, however, the Revenue cannot change the stand that income was in the nature of deemed dividend. We have, therefore, examined the entire issue in this backdrop. 8. Section 2(22) of the Act as is well known includes range of situations under which payment by company to its shareholders would amount to distribution of dividend. Clause (d) of Section 2(22) provides that any distribution to its shareholders by the company on reduction of capital to the extent to which the company possesses the accumulated profit which arose after end of previous year, under certain circumstances would be included in the term "dividend". 9. Section 10(34) in turn exempts from payment of tax, any income by way of dividend ref....