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S.115O - Dividend Distribution Tax (DDT) – vital points missed by counsels in case of Tata Tea and others before the Supreme Court

Income Tax - By: - CA DEV KUMAR KOTHARI - Dated:- 5-10-2017 - Relevant links and references: Judgment of the Supreme Court: Union of India & Others Versus M/s. Tata Tea Co. Ltd. & Another, M/s. Apeejay Surrendra Corporate Service Ltd. And M/s George Williamson (Assam) Ltd. Versus Union of India & Others 2017 (9) TMI 1300 - SUPREME COURT Related reported judgment: George Williamson (Assam) Limited And Another Versus Union of India And Others. 2007 (6) TMI 174 - GAUHATI HIGH COURT Judg .....

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the honourable Supreme Court vide order dated 01.08.2008 in Civil Appeal no.9853 of 2008. Earlier article by author: Section 115 O Tax on Distributed Profit Seems Ultra Virse dt. August 26, 2013 Many contentions as mentioned in this article were not raised by companies. Short analysis: Assesses in these cases challenged validity of provisions of S. 115O, imposing tax on companies on dividend declared by them to their shareholders. High Court of Calcutta and Guwahati both held that levy of tax i .....

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in case of Jayshree Tea is reported, against this judgment SLP of revenue was also dismissed, though for delay. The honourable Supreme Court upheld judgments of both High Court on issue of validity of S. 115O. However, the honourable Supreme Court held that the rider of the Calcutta High Court that only 40% of dividend is taxable was not required. Therefore, as per the Supreme Court, full amount of dividend declared by tea company is taxable under S. 115O. What counsels missed vis a vis precede .....

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, it could be considered that Revenue has, at first accepted the judgment of Calcutta High Court, and then filing of appeal with a petition for condonation of delay was an afterthought. Therefore , once such SLP was dismissed, though for delay, should have been brought to the notice of honourable Supreme Court. From website of the Supreme Court we find following information about case of Jayshree Tea: Diary no. 17951/2007 filed on 02.07.2007 10:43AM (section XVI) Title: Union Of India Vs. Jayshr .....

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.(C)...CC No. 011832 / 2007 Registered on 10-12-2007 SLP(C) No. 023981 / 2007 Registered on 10-12-2007 Present/Last Listed On 20-09-2017 [HON'BLE MR. JUSTICE A.K. SIKRI and HON'BLE MR. JUSTICE ASHOK BHUSHAN] Status/Stage PENDING (Final Hearing) Heard & Reserved-Ord dt:07-09-2017 Admitted [ADMITTED ON : 14-12-2012] Category 0-0303-Direct Taxes Matter : Other matters under Income Tax act, 1961, FOR JUDGEMENT Act Petitioner(s) 1 UNION OF INDIA AND ORS. MINISTRY OF LAW JUSTICE AND COMPAN .....

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12. Even if date of filing be taken as 04.08.2007 then question arises as to how this case was registered in 2012. And whether a petition for condonation of delay was, considered and decided? Cases of Tata Tea and Appejay Tea: On reading of the judgment of the Supreme Court we find that appeals by revenue were filed in 20012. And appeals are against judgment dated 28.07.2006 of Calcutta High Court. The date is same as in case of Jayshree Tea. Therefore, the filing of appeals in case of Tata Tea .....

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s income so additional tax, being a tax on company, should be levied only on 40% of dividend distributed out of such composite income which had only 40% element as taxable under Income-tax Act. Important aspects missed by counsels: Contention that dividend paid by company is not its income but an expenditure to service its capital, shareholders and to maintain and improve goodwill of company. An expenditure cannot be considered as income to levy tax on income. How income-tax can be levied on an .....

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