Amendment of section 115-O
27. In section 115-O of the Income-tax Act, in sub-section (1A), for clause (i), the following clause shall be substituted with effect from the 1st day of June, 2013, namely:—
“(i) the amount of dividend, if any, received by the domestic company during the financial year, if such dividend is received from its subsidiary and,—
(a) where such subsidiary is a domestic company, the subsidiary has paid the tax which is payable under this section on such dividend; or
(b) where such subsidiary is a foreign company, the tax is payable by the domestic company under section 115BBD on such dividend:
Provided that the same amount of dividend shall not be taken into account for reduction more than once;”.
Notes on Clauses:
Clause 27 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies.
Under the existing provisions contained in sub-section (1A) of section 115-O, the amount of dividends referred to in subsection (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if-
(a) such amount of dividend is received from its subsidiary; and
(b) the subsidiary has paid tax payable under this section on such dividend.
The said sub-section also provides that the same amount of dividend shall not be reduced more than once.
It is proposed to amend clause (i) of the aforesaid subsection (1A) so as to provide that in case a domestic company receives any dividend from any of its subsidiary during the financial year and where such subsidiary -
(a) is a domestic company, the subsidiary has paid tax, if any payable, on such dividend; or
(b) is a foreign company, the tax is payable by the domestic company under section 115BBD, on such dividend, the dividend received from such subsidiary during the financial year shall be reduced.
It is further proposed to insert a proviso to provide that the said amount of dividend shall not be taken into account for reduction more than once.
This amendment will take effect from 1st June, 2013.
