Taxability of dividends received

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..... Cooperative banks have to pay regular income tax.After such payment they distribute dividend.Such dividend should be tax free in the hands of shareholder.Under the basic provision of double taxation such dividends must be tax free. - Reply By DEV .KUMAR KOTHARI - The Reply = Dividend paid by coop Bank is not covered by S. 115 O or any similar provision. There appears no exemption for such div .....

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..... idend in hands of shareholder u/s 10 . It is in nature of income of share holder as reward for capital invested by him. However, co-op bank can claim the same as business expenditure as bank and its shareholders are different persons, dividend is paid for servicing the existing capital which is raised and used for business of co op bank, dividend is not paid to raise capital, but to serve capita .....

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..... l it is not personal exp. of bank, it is not capital expenditure, it is paid on ground of commercial expediency and in usual course of business, it is not covered by S. 30 - 36 , 40 and 40A it is also not covered by S. 115 O (4) for non allowability. As it satisfy all tests laid down for allowability and not disentitled for deduction one can claim dividend paid by co-op bank to its members .....

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..... as business expenses u/s 37 or u/s 28 . However disputes will arise and one has to forcefully and very carefully press claim before authorities/ courts to get a deduction of dividend paid as business expenses. - Reply By DEV KUMAR KOTHARI - The Reply = read my article in the Chartered Accountant - November 2008 issue. - Taxability of dividends received - Query Started By: - Shrivallabh Randa .....

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..... d Dated:- 11-10-2008 Income Tax - Got 2 Replies - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax .....

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