19. In section 115-O of the Income-tax Act, in sub-section (6) [as so inserted by the Special Economic Zones Act, 2005], (28 of 2005.) the following proviso shall be inserted with effect from the 1st day of June, 2011, namely:-
"Provided that the provisions of this sub-section shall cease to have effect from the 1st day of June, 2011.".
Notes on Clauses:
Clause 19 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies.
Sub-section (6) was inserted in the aforesaid section by way of a modification vide section 27 of the Special Economic Zones Act, 2005 read with the Second Schedule thereof.
The existing provisions contained in the aforesaid sub-section provide that notwithstanding anything contained in section 115-O, no tax on distributed profits shall be chargeable in respect of the total income of an undertaking or enterprise engaged in developing or developing and operating or developing, operating and maintaining a Special Economic Zone for any assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income either in the hands of the Developer or enterprise or the person receiving such dividend.
It is proposed to insert a proviso to the said sub-section (6) to provide that the provisions of the said sub-section shall cease to have effect from the 1st day of June, 2011. Accordingly, tax on distributed profits shall be chargeable under this section on any amount declared, distributed or paid by way of dividends by the aforesaid undertaking or enterprise on or after the 1st day of June, 2011.
This amendment will take effect from 1st June, 2011.
