DCIT-3(1)(1),MUMBAI, AAYAKAR BHAWAN vs. EXPORT IMPORT BANK OF INDIA, MUMBAI

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is an entity established by an Act of Parliament titled the Export-Import Bank of India Act, 1981. The entire capital of the assessee is subscribed by the Government of India. The main object of the assessee is to facilitate export.

The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee following the decision of the Tribunal rendered in the assessee’s own case for the assessment years 2010–11 to 2015–16, which in turn followed the decision of the Tribunal in Life Insurance Corporation of India vs. JCIT. Accordingly, the learned CIT(A) held that the provisions of section 115- O of the Act are not applicable, as the amount transferred to the credit of the Central Government is not a distribution of dividend by the assessee, but a mandatory transfer of funds in terms of section 23(2) of the Exim Act, 1981,

During the hearing, apart from placing reliance upon the order passed by the AO under section 237 of the Act, the learned Departmental Representative did not bring any material on record to controvert the findings of the learned CIT(A), which are based on the decision of the Coordinate Bench of the Tribunal in the assessee’s own case.

On the other hand, the learned Authorised Representative (“learned AR”) vehemently relied upon the order passed by the Coordinate Bench of the Tribunal in the assessee’s own case for the assessment years 2010–11 to 2015–16.

Having considered the submissions of both sides and perused the material available on record, we find that the learned CIT(A), while deciding this issue in favour of the assessee, observed as follows: -

Before coming to the merits of the present ca se, we would like to reproduce the observation of the Hon'ble Supreme Court in the case of Keshavji Raji & Co. v. CIT at page 11 as under: "When words acquire a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense when used in a subsequent legislation in the same or similar context. In view of the above observations, the ordinary meaning of the word 'dividend' as declared by the Apex Court in the case of Nalin Behari Lall Singha (supra) has to be assumed tor the purpose of Section 2(22) of the Act since the Legislature has not deviated, expressly or impliedly, from the meaning declared by the Apex Court.

In the present case, the assessee is the creation of Life Insurance Corporation Act, 1956. Section 5 of the said Act provides that original capital of the Corporation would be 5 crores of rupees which shall be provided by the Central Government. This Section reads as under: "5. Capital of the Corporation.-(!) The original capital of the Corporation shall be five crores of rupees provided by the Central Government after due appropriation made by Parliament by law for the purpose, and the terms and conditions relating to the provisions of such capital shall be such as may be determined by the Central Government. (2) The Central Government may, on the recommendation of the Corporation, reduce the capital of the Corporation to such extent and in such manner as the Central Government may determine. Reading of above Section clearly shows that capital of the company is not divided into shares and therefore Central Government cannot be said to be shareholder. The position of the Central Government is akin to the sole

The decisions relied upon by the senior departmental Representative does not help the case of revenue. In the case of Kantilal Manilal (supra), the Hon'ble Supreme Court has held that distribution of the right to shares of bank of India to its shareholders amounted to distribution of dividend. That means that dividend can be distributed in cash or kind. To the same effect is the decision of Hon'ble Madhya Pradesh High Court in the ca se of Ujjain General Trading Society (P.) Ltd. v. CIT (1968) 67 ITR 315. In the case of Smt. Mrudulaben B. Patel v. Asstt. CIT (2003) 85 ITD 463 (Ahd.) (SMC), the question was whether any part undisclosed income of a company received by director could be said to be income chargeable to tax. In the case of Kishanchand Chellaram v. CIT (1962) 46 ITR 640 (SC), the question was whether payment made as dividend by a company to its shareholders would lose the character of dividend merely because it was paid out of capital. In all these, there existed share capital of company as well as shareholders. Thus, the facts of those cases were entirely different from the present case inasmuch as in the present case neither there exists share capital nor shareholder.

Having held that payment by assessee to Central Government is not dividend, it i s not necessary for us to deal with the other arguments of the parties since payment of dividend is the condition precedent for invoking the provisions of Section 115-0. Accordingly, it is held that the provisions of Section 115-0 of the Act were not applicable to the present case. Consequently, the assessee could not be declared as assessee in default under Section 115Q of the Act. In view of the same, the orders of both the authorities below are quashed. The payment, if recovered, shall be refunded to the assessee in accordance with law. 18 In the result, appeal of the assessee is allowed." Considering the peculiar facts of the case as decided by the co-ordinate bench of Tribunal in the case of Life Insurance Corporation of India Vs. JCIT, I am inclined to hold that in this case the provisions of Section 115-O of the Act are not applicable as this is not a distribution of dividend by the appellant but a mandatory transfer of funds in terms of Section 23(2) of the Exim Act and, therefore, provisions of Section 115-0 of the Act are not applicable to the present case. Since the facts of the case are binding precedent of the jurisdictional Tribunal, the appellant's application u/s.237 of the Income-tax Act is admissible. Consequently, the addition of Rs.3,63,00,000/- made by the A.O. u/s.2(22) is found to be unjustified and is hereby deleted. Accordingly, Ground No.1 of the appeal is allowed.”

From the perusal of the findings of the learned CIT(A), it is evident that the learned CIT(A) followed the judicial precedents in assessee’s own case

In its appeals for the assessment years 2000–01, 2001–02 and 2003– 04 to 2006–07, the Revenue has raised an identical ground challenging the deletion of dividend distribution tax under section 115-O of the Act. From the perusal of the impugned order in the Revenue’s appeal in these years, we find that the learned CIT(A), following the decision of the Coordinate Bench of the Tribunal in assessee’s own case cited supra, arrived at the conclusion that the provisions of section 115-O of the Act are not applicable, as the amount transferred to the credit of the Central Government is not a distribution of dividend, but a mandatory transfer of funds in terms of section 23(2) of the Exim Act, 1981. Since a similar issue has already been adjudicated by us in the assessee’s appeal for the assessment year 1999–2000, our findings/conclusion rendered therein shall apply mutatis mutandis to the appeals filed by the Revenue for the assessment years 2000–01, 2001–02,

In the result, all the appeals by the Revenue are dismissed. Order pronounced in the open Court on 30/03/2026