TMI Blog2017 (10) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... le to DDT only during the A.Y. 2012-13 but AO has not raised any demand for the said assessment as it was assessed for the A.Y. 2011-12. Therefore, even if the tax liability is determined in the A.Y. 2011-12 it is in fact the liability for the A.Y. 2012-13 Accordingly, this issue set aside to the record of the AO to verify the payment made by the assessee on 10.10.2011 on account of DDT in respect of the dividend amount of ₹ 1,95,00,000/- declared on 30.09.2011. If the said amount is till available for credit in the account of the assessee and has not been adjusted against any other tax liability then the Assessing Officer may consider the said amount against the taxability on account of DDT which is chargeable for the A.Y. 2012-13. Assessee of the appeals are allowed. - ITA No. 442/JP/2016 And ITA No. 443/JP/2016 - - - Dated:- 11-10-2017 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER For The Assessee : Shri Rajeev Sogani (CA) For The Revenue : Shri Sailendra Sharma (Addl.CIT) ORDER PER: VIJAY PAL RAO, J.M. These two appeals by the assessee are directed against the two separate orders of ld. CIT(A) both dated 15.03.2016 arising from the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,064/- the net demand was raised to the declare of ₹ 33,90,660/-. Thereafter, the assessee filed an application under Section 154 of the I.T. Act on 27.02.2013 wherein the assessee claimed that no dividend has been paid in the previous year relevant to the assessment year under consideration. The assessee claimed that dividend of ₹ 1,95,00,000/- has been paid in the previous year relevant to the Assessment Year 2011-12.The AO did not accept this contention of the assessee that the dividend was paid in the previous year relevant to the Assessment Year 2011-12 on reason that in the balance sheet ending on 31.03.2010 the assessee has shown the dividend declared of ₹ 1,95,00,000/-. The AO held that the dividend was declared for the F.Y. 2009-10 and therefore, the liability to pay DDT arise in the A.Y. 2010- 11. 4. Being aggrieved by the order of the Assessing Officer passed u/s 154, the assessee filed an appeal before the ld. CIT(A) and contended that during the financial year relevant to the A.Y. 2010-11, the Board of Director of the assessee company merely proposed a dividend of ₹ 1,95,00,000/- subject to the approval of the share holders in the Annual Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajkot Bench in the case of ACIT vs. Rupam Impex in ITA No. 472/RJT/2014. 6. The ld. AR further submitted that as per the amended accounting standard 4 if an enterprise declares dividend to its share holders after the balance sheet date, the enterprise should notes recognize those dividends as a liability at the balance sheet date unless statute requires otherwise such dividends should be disclosed in not therefore as per accounting standard, the assessee is not required to recognize the dividend declared after the balance sheet date as a liability at the balance sheet date. The AR has submitted that no tax liability on account of DDT arises during the assessment year under consideration as the dividend in question was declared on 29.09.2010 which fall for the A.Y. 2011-12. 7. On the other hand, the DR has submitted that the assessee itself has declared this fact of declaration of dividend in the return of income and further the dividend pertains to the financial year relevant to the assessment year under consideration, therefore, the dividend distribution tax is applicable in the assessment year under consideration. He has further submitted that the case law relied by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of another company, if such other company holds more than half in nominal value of the equity share capital of the company. ( 1B) .. ( 2) ( 3) .. ( 4) .. ( 5) . ( 6) . Provided that the provisions of this sub-section shall cease to have effect from the 1st day of June, 2011. Section 115 O postulates the DDT being an additional income tax which is levied only on the amount declared, distributed or paid by way of dividend. It contemplates the instance of chargeability to tax on the amount of dividend only when it is declared, distributed or paid. Hence, the instance of charge/levy of tax u/s 115 O is the declaration, distribution or payment of dividend and not relate back to the year for which the dividend is declared, distributed or paid. The instance for charge of DDT dependents on the declaration, distribution or payment and not to the year for which it is declared, distributed or paid. Sub-section (1A) of section 115 O further clarifies that the amount of dividend so declared, distributed or paid shall be reduced by the amount of dividend if any received by the domestic company from its subsidiary during the financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for management of a company limited by shares. Regulation 85 there under stipulates that the company, in the general meeting, may declare dividend, 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 provides that the company in the general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits, but no dividend shall exceed the amount recommended by the Directors. The Supreme Court in Commissioner of Income Tax vs Express Newspapers Limited referred with approval to its earlier judgment in J. Dalmia vs. Commissioner of income Tax, and to Articles 85 and 86 of Table A of the I Schedule to the Companies Act, to hold 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 in its general meeting. It is evident, therefore, that the power of the board of Directors is only to recommend dividend; and it is for the shareholders of the company, in the general meeting, to declare dividend. It is not in dispute that dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is authorised by the law, as is the mandate of Act. 265 of the Constitution of India. A sense of fair play by the field officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance. If authority is needed even for justifying this approach to the taxpayers, one need not look beyond the circulars issued by the CBDT itself. In Circular No. 14, which has been taken note of by the Hon ble Bombay High Court in the case of Dattatraya Gopal Bhotte vs. CIT [(1984) 150 ITR 460 (Bom)], the Board has these words of advice for the field officers : ..................Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist taxpayer in every reasonable way, particularly in the matter of claiming and securing any relief and in this regard the officers should take initiative in guiding the taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would in the long run benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e granted by rectifying the errors and quashing the demand of ₹ 39,51,220/-. 3.(a) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not allowing the credit for the Dividend Distribution Tax paid amount to ₹ 32,38,706/- on the simple plea that the challan was wrongly paid through TAN instead of PAN. The Action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing credit of DDT paid amounting to ₹ 32,38,706/-. ( b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not allowing the credit for the Dividend Distribution Tax paid amount to ₹ 32,38,706/- on the simple plea that the challan was deposited for the A.Y. 2010-11 and not for the year under consideration. However, other facts on record, beyond doubt, do confirm that the Challan pertains to A.Y. 2011-12. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the credit of DDT paid amounting to ₹ 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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