TaxTMI 
TaxTMI 
2021 (12) TMI 463
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....on any income, profits or gains derived or any amount received by Petitioner. 2. Petitioner is a financial institution established under the SIDBI Act. On 7/6/1997, the Finance Act 1997 amended the Income Tax Act and provided tax payment on distributed profits. Petitioner had transferred a sum of Rs. 54 crore to IDBI, in accordance with the provisions of Section 29(2) of the SIDBI Act out of the profits for the year ended 31/03/1997 and without prejudice to its rights deposited a sum of Rs. 5.4 crore on 29/06/1997. Petitioner for the year ended 31/03/1998 transferred a sum of Rs. 67,50,00,000/- to the IDBI as per Section 29(2) of the SIDBI Act. Petitioner without prejudice paid a sum of Rs. 6.75 crore on 08/06/1998 and Rs. 7.425 crore on 10/06/1999 under Section 115-O of the said Act. 3. Petitioner's Board of Directors recommended a declaration of dividend at the rate of 15% on the share capital for the year ended 31/03/2000. Accordingly, a sum of Rs. 67.5 crore was provided for in the accounts for the year ended 31/03/2000 to meet such liability. Thus, Petitioner, on 12/05/2000, paid tax of an amount of Rs. 6,88,50,000/- without prejudice. 4. Since the liability of P....
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....he profits of the domestic company and more specifically on that part of the profits which is declared and distributed by way of dividend. Therefore, he submitted that Petitioner is entitled to refund of the tax amount paid under protest by Petitioner. This judgment in Godrej Boyce (supra) has been overruled in Godrej & Boyce Mfg. Co. Ltd. vs. CIT (2017) 7 SCC 421. 8. Per contra, Mr. Ashok Kotangale submitted that any amount distributed or paid by the company by way of dividend is not covered by Section 50 of the SIDBI Act. Therefore Petitioner was liable to pay additional tax on the amount distributed by way of dividend. 9. At this juncture, it would be necessary to extract the provision of Section 50 of the SIDBI Act, regarding which the submissions were canvassed. Section 50 of the SIDBI Act reads as under: "Notwithstanding anything to the contrary contained in the Income-tax Act, 1961 or in any other enactment for the time being in force relating to income-tax or any other tax on income, profits or gains, the Small Industries Bank shall not be liable to pay income-tax or any other tax in respect of:- (a) any income, profits or gains accruing or arising to the Small Indust....
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....unctions of the institutions engaged in the promotion, financing or developing industry in the small-scale sector and for matters connected therewith or incidental thereto. Grant of exemption from payment of income tax was to provide an impetus to achieve aforesaid objects in the formative years. 12. For proper appreciation of the effect of the non-obstante clause in Section 50 of SIDBI Act, it is necessary to set out Section 115R of the said Act, which reads as under: 115R (1) Notwithstanding anything contained in any other provisions of this Act and section 32 of the Unit Trust of India Act, 1963 (any amount of income distributed on or before the 31st day of March, 2002 by the Unit Trust of India to its unit-holders) shall be chargeable to tax and the Unit Trust of India shall be liable to pay additional income-tax on such distributed income at the rate of ten per cent: Provided that nothing contained in this sub-section shall apply in respect of any income distributed to a unit-holder of open-ended equity-oriented funds in respect of any distribution made from such Fund for a period of three years commencing from the 1st day of April, 1999." Finance Act 1999 inserted chapt....
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....ce to the dividend distributed. The non-obstante provision in Section 115-O(1A) of the said Act has a limited operation. It applies if a total income of a company is computed in accordance with the provisions of the said Act. In the case of Petitioner, no total income is computed at all under the said Act, in view of the overall overriding effect of Section 50 of the SIDBI Act. The use of the expression no income- tax is payable in Section 115-O(1A) of the said Act also presupposes that the subject company is indeed chargeable to income-tax on its total under Section 4 of the said Act. Section 115-O(1A) of the said Act applies only to a case where the subject company is chargeable to income-tax u/s.4 of the said Act. Section 115-O(1A) of the said Act does not apply to a case where the subject company is not chargeable to income-tax due to an overriding non-obstante provision contained in Section 50 of the SIDBI Act. 14. Dividend is defined in Section 2(22) of the IT Act to, inter alia, include any distribution by a company of accumulated profits, which entails releasing any assets by the company to its shareholders. In terms of Explanation 2 to Section 2(22) of the said Act, the e....