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2016 (5) TMI 212 - TELANGANA AND ANDHRA PRADESH HIGH COURT

2016 (5) TMI 212 - TELANGANA AND ANDHRA PRADESH HIGH COURT - [2016] 383 ITR 56 - Levy of interest under section 115P - Tribunal held that dividend was declared for the assessment year 2003-04 on September 24, 2003, and tax was paid on October 3, 2003 which was within the time limit prescribed under section 115-P, hence no levy of interest - Held that:- The power of the Board of Directors of Company is only to declare interim dividend, whereas final dividend is to be declared only by the company .....

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the balance-sheet of the assessee, would itself amount to declaration of dividend does not merit acceptance, as provision for payment of dividend does not automatically result in payment of dividend. It is only after the board of directors decide to recommend dividend, and the shareholders in the general meeting approve the recommendation of the board of directors, can dividend be held to have been declared. We find no error in the orders of the Tribunal, much less a substantial question of law, .....

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nst the order of the Tribunal in I. T. A. No. 1774 of 2011 dated August 3, 2012 which relates to the assessment year 2003-04, I .T. T. A. No. 449 of 2014 is preferred against the order passed by the Tribunal in I. T. A. No. 293 of 2013 dated May 31, 2013 for the assessment year 2009-10. As the parties in both the appeals are common and the questions of law, which arise for consideration in both the appeals, are the same, both the appeals were heard together and are now being disposed of by a com .....

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e Assessing Officer levied interest of ₹ 1,33,98,180 and ₹ 3,82,15,542 treating the provision for payment of dividend as declaration of final dividend. On the ground that tax ought to have been remitted by 14th April (within 14 days of making the provision), and as tax was paid within 14 days of the declaration of dividend by the shareholders in the annual general meeting, interest was levied on belated payment of dividend tax. Aggrieved thereby, the assessee carried the matter in ap .....

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end be said to have been declared; and, since tax was paid under section 115P of the Act within the time limit prescribed under section 115-O of the Act, i.e., 14 days from the date of declaration of dividend, levy of interest was illegal. 4. In his order, the Commissioner (Appeals) held that finalisation of accounts cannot be equated to declaration of dividend; the latter is a specific decision to be taken by the board; dividend declaration is not automatic upon the presence of profits or reser .....

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omatic upon finalisation of accounts, and presence of profits and reserves; declaration of dividend is within the domain of the board of directors, and the management; the date of declaration of dividend is when it is actually declared by the board; and from the material on record it was clear that dividend was declared for the assessment year 2003-04 on September 24, 2003, and tax was paid on October 3, 2003 which was within the time limit prescribed under section 115-P of the Act. In I. T. A. .....

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directors with respect to the amount, if any, which it recommends should be paid by way of dividend. Table-A of the First Schedule to the Companies Act contain the regulations for management of a company limited by shares. Regulation 85 thereunder stipulates that the company, in the general meeting, may declare dividends, but no dividend shall exceed the amount recommended by the board. A copy of the articles of association of the assessee has also been placed before us. Article 94 thereof provi .....

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