UNNATHAN SHEKHAR,MUMBAI vs. ACIT CIRCLE 15(1)(2), MUMBAI

ITA 7930/MUM/2026Status: DisposedITAT Mumbai08 October 2026AY 2013-147 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer (AO) had misunderstood the figures in the balance sheet. The AO mistakenly picked up the proposed dividend to be distributed in the next financial year (FY 2013-14) instead of the actual dividend received by the assessee in the current financial year (FY 2012-13, AY 2013-14). The Tribunal noted that the assessee had received a dividend of Rs. 1,02,83,600 on 14.08.2012, which was approved by the AGM held on 03.08.2012. This amount was declared in the return of income and claimed as exempt under Section 10(34). The AO had incorrectly used a proposed dividend of Rs. 41,13,440 for FY 2013-14 to reduce the exemption. The Tribunal found that the actual dividend received by the assessee during the assessment year 2013-14 was Rs. 1,02,83,600. Therefore, the AO was directed to allow the claim of exemption under Section 10(34) for the dividend receipt of Rs. 1,02,83,600 and set aside the disallowance of Rs. 62,16,690. The ratio decidendi is that dividend exemption under Section 10(34) is to be considered based on the actual receipt of dividend during the assessment year, and figures of proposed dividends for subsequent years should not be used to reduce the exemption for the current year.

What were the facts?

The assessee, Unnathan Shekhar, filed an appeal against an order dated 09-06-2026 passed by the National Faceless Appeal Centre (NFAC), which upheld an assessment order dated 31-03-2016 passed under Section 143(3) of the Income Tax Act, 1961. The assessment year in question is 2013-2014. The dispute concerns the denial of exemption for dividend income amounting to Rs. 62,16,690. The assessee had reported a total dividend income of Rs. 1,03,34,660 and claimed exemption under Section 10(34). The Assessing Officer (AO) examined the annual report of M/s Galaxy Surfactants Limited, from which the dividend was received, and calculated an estimated dividend of Rs. 41,13,440 based on proposed dividend figures for FY 2013-14, leading to the rejection of exemption to the extent of Rs. 62,16,690. The CIT(Appeals) also upheld this rejection.

What were the issues?

1. Whether the NFAC erred in denying the claim of exemption in respect of dividend income to the extent of Rs. 62,16,690 under Section 10(34) of the Income-tax Act, 1961, as a question of law? 2. Whether the NFAC erred in referring to information relating to proposed dividend as appearing in the audited financial statements for financial year 2012-13, when the dividend in question of Rs. 1,02,83,600 relates to financial year 2011-12, was approved at the AGM held on 03.08.2012, and received by the appellant on 14.08.2012, as a question of mixed law and fact? Assessee's Contentions: - The dividend of Rs. 1,02,83,600 relates to FY 2011-12, approved on 03.08.2012, and received on 14.08.2012, falling within AY 2013-14. The AO mistakenly picked up proposed dividend figures for FY 2013-14 from the balance sheet of M/s Galaxy Surfactants Limited. - The AO incorrectly calculated the assessee's dividend income by applying the shareholding percentage to the proposed dividend for the subsequent financial year. Revenue's Contentions: - The Ld. DR relied upon the assessment order and the order of the Ld. CIT(Appeals).

Which sections of the Income-tax Act were involved?

Section 10(34),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI

Before: SHRI PAWAN SINGH & SHRI RAKESH KUMAR LODHA

For Appellant: Shri Nitesh Joshi, Adv
For Respondent: Shri Vikas Chandra, Sr
Hearing: 29.09.2026Pronounced: 08.10.2026

PER : Shri Rakesh Kumar Lodha, Accountant Member: The present appeal filed by the Assessee against an order dated 09- 06-2026 passed by National Faceless Appeal Centre u/s 250 of the Income Tax Act, 1961 (in short, the Act), for the assessment year 2013-

ITA NO. 7930 MUM 2026 UNNATHAN SHEKHAR AY 2013-2014 14, arising out of an assessment order under Section 143(3) of the Act dated 31-03-2016. 2. The appellant-assessee has raised the following grounds of appeal:

The Appellant files the present appeal under section 362 of the Income-tax Act, 2025 (the Act) against the appellate Order dated 09.06.2026 passed by the Nation

The order continues below.

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