ACIT - CORPORATE CIRCLE 1 1, CHENNAI vs. HANSA VISION INDIA PRIVATE LIMITED, CHENNAI

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ITA 2270/CHNY/2026Status: DisposedITAT Chennai16 October 2026AY 2020-217 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the provisions of Section 10(34) and Section 115BBDA of the Income Tax Act, 1961, concerning the taxability of dividend income, were relevant. The Tribunal noted that the provision for taxability of dividend received by the assessee came into effect from Assessment Year 2021-22, whereas the current issue pertains to Assessment Year 2020-21. It was also observed that Section 10(34) applies where tax under Section 115-O and Section 115BBDA has been paid. Section 115BBDA applies to specified assessees whose total income includes dividends exceeding ten lakh rupees, declared, distributed, or paid on or before March 31, 2020. The assessee provided information demonstrating that the dividend income received was Rs. 2,41,22,450/-, and the distributing companies had paid the requisite Dividend Distribution Tax (DDT) under Sections 115BBDA/115O. The Tribunal found this information to be correct and compliant with the provisions. Therefore, the Tribunal found no infirmity in the order of the Ld. Addl. / JCIT (A) and confirmed it. The grounds raised by the Revenue were dismissed.

What were the facts?

The Revenue has filed an appeal against the order of the Ld. Addl. / JCIT (A), Thane, dated 09.02.2026, for Assessment Year 2020-21. The assessee, Hansa Vision India Private Limited, had initially filed a return declaring a loss. Subsequently, the Assessing Officer modified the intimation, making additions totaling Rs. 2,92,77,137. These additions included Rs. 2,41,22,450 on account of dividend income claimed as exempt under Section 10(34), Rs. 25,00,000 under Section 43B for prior year disallowance, and Rs. 26,54,687 under Section 36(1)(va) for delayed ESI and PF contributions. The assessee appealed to the Ld. Addl. / JCIT (A), who partly allowed the appeal. The Revenue is now appealing against the deletion of the addition related to dividend income.

What were the issues?

1. Whether the Ld. CIT (A) erred in deleting the addition of Rs. 2,41,22,450/- on account of dividend income without verifying the relevant facts regarding the date of declaration and receipt of such income, thereby rendering the order erroneous and prejudicial to the interests of Revenue? (Question of law and fact, concerning Section 10(34) of the Income Tax Act, 1961). Assessee's Contentions: The assessee claimed the dividend income as exempt under Section 10(34). The judgment does not explicitly record the assessee's arguments before the Tribunal, but their claim for exemption under Section 10(34) implies they relied on its provisions. The assessee also produced information regarding dividend income and Dividend Distribution Tax (DDT) paid by the distributing companies. Revenue's Contentions: The Revenue contended that the Ld. CIT (A) erred in deleting the addition of Rs. 2,41,22,450/- on account of dividend income without proper verification. They argued that the allowability of exemption under Section 10(34) is dependent on the applicable law based on the timing of accrual/receipt of dividend income. The Revenue prayed for the setting aside of the Ld. CIT (A)'s order and restoration of the Assessing Officer's order.

Which sections of the Income-tax Act were involved?

Section 10(34),Section 43B,Section 36(1)(va),Section 115BBDA,Section 115-O,Section 154,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE GEORGE GEORGE K. & SHRI GAGAN GOYAL

Hearing: 25.08.2026Pronounced: 16.10.2026

PER GAGAN GOYAL, AM: This is an appeal preferred by the Revenue against the order of Ld. Addl. / JCIT (A), (hereinafter referred as the ‘Ld. Addl. / JCIT (A)’), Thane dated 09.02.2026 for the Assessment Year (hereinafter referred as the ‘AY’) 2020-21. GROUDS OF APPEAL i) The Order of the Ld. CIT (A) is contrary to law, facts and circumstances of the case and hence not sustainable. The Ld. CIT (A) erred in deleting the addition of Rs.2,41,22,450/- on account ii) of dividend income without verifying the relevant facts regarding the date of declaration and receipt of such income. The Ld. CIT (A) failed to appreciate that the allowability of exemption u/s iii) 10(34) is dependent upon the applicable law based on the timing of accrual/receipt of dividend income. The Ld. CIT (A) has allowed the claim without conducting proper enquiry or iv) verification, thereby rendering the order erroneous and prejudicial to the interests of Revenue. For these and other grounds that may be adduced at the time of hearing, it is v) prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer restored.

2.

The brief facts of the case are that the appeal has been filed against the order passed by CPC, Bangalore u/s. 154 of the Income Tax Act, 1961 on 01.07.2022 for Assessment Year 2020-21. The appellant filed the return of income on 11.01.2021 declaring a loss of Rs. 1,50,63,234/-, which was processed u/s. 143(1) and refund issued on 14.05.2021. Subsequently, the AO modified the intimation and made additions aggregating to Rs. 2,92,77,137/-, resulting in a demand of Rs. 17, 35, 990/- . The additions include: (i) Rs. 2,41,22,450/- relating to dividend income claimed exempt u/s. 10(34), (ii) Rs. 25, 00,000/- u/s. 43B for prior year disallowance, and (iii) Rs. 26, 54, 687/- u/s. 36(1) (va) for delayed remittance of ESI and PF contributions. The assessee being aggrieved with this order of CPC, Bengaluru preferred an appeal before the Addl. / JCIT (A), Thane, who in turn partly allowed the appeal of the assessee. Now, the Revenue being aggrieved preferred the present appeal before us.

3.

We have gone through the intimation and rectification order passed by the CPC Bengaluru u/s. 154 of the Act, the order of the Addl. / JCIT (A), Thane and submissions of the assessee along with the grounds taken before us by the Revenue. It is observed that there is no appeal by the assessee against the order of the Addl. / JCIT (A), Thane on the issue of sustenance of disallowance of (i) Rs. 25, 00,000/- u/s. 43B of the Act for prior year disallowance, and (ii) Rs. 26, 54, 687/- u/s. 36(1) (va) of the Act for delayed remittance of ESI and PF contributions, hence got finality. The only issue before us pertains to taxability of the dividend received by the assessee amounting to Rs. 2, 41, 22, 450/-, as the assessee claimed the same as exempt u/s. 10(34) of the Act.

4.

For better discussion and ready reference on the matter under consideration. The provisions of section 10(34) and 115BBDA of the Act are being reproduced as below: -

10(34) any income by way of dividends referred to in section 115-O: Provided that nothing in this clause shall apply to any income by way of dividend chargeable to tax in accordance with the provisions of section 115BBDA: Provided further that nothing contained in this clause shall apply to any income by way of dividend received on or after the 1st day of April 2020 other than the dividend on which tax under section 115-O and section 115BBDA, wherever applicable, has been paid;

Tax on certain dividends received from domestic companies. 115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies on or before the 31st day of March 2020, the INCOME-TAX payable shall be the aggregate of— (a) the amount of INCOME-TAX calculated on the income by way of such dividends in aggregate exceeding ten lakh rupees, at the rate of ten per cent; and (b) the amount of INCOME-TAX with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income by way of dividends. (2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the income by way of dividends referred to in clause (a) of sub-section (1). Explanation. For the purposes of this section, (a) “dividend” shall have the meaning assigned to it in clause (22) of section 2 but shall not include sub-clause (e) thereof; (b) “Specified assessee” means a person other than, — (i) a domestic company; or (ii) a fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (iii) a trust or institution registered under section 12A or section 12AA or section 12AB. Tax on distributed profits of domestic companies. 115-O. (1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the INCOME-TAX chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003 but on or before the 31st day of March, 2020, whether out of current or accumulated profits shall be charged to additional INCOME- TAX (hereafter referred to as tax on distributed profits) at the rate of fifteen per cent: Provided that in respect of dividend referred to in sub-clause (e) of clause (22) of section 2, this sub-section shall have effect as if for the words “fifteen per cent”, the words “thirty per cent” had been substituted. (1A) The amount referred to in sub-section (1) shall be reduced by, (i) the amount of dividend, if any, received by the domestic company during the financial year, if such dividend is received from its subsidiary and, — (a) where such subsidiary is a domestic company, the subsidiary has paid the tax which is payable under this section on such dividend; or (b) where such subsidiary is a foreign company; the tax is payable by the domestic company under section 115BBD on such dividend: Provided that the same amount of dividend shall not be taken into account for reduction more than once; (ii) the amount of dividend, if any, paid to any person for, or on behalf of, the New Pension System Trust referred to in clause (44) of section 10. Explanation. —For the purposes of this sub-section, a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company. (1B) For the purposes of determining the tax on distributed profits payable in accordance with this section, any amount by way of dividends referred to in sub-section (1) as reduced by the amount referred to in sub-section (1A) [hereafter referred to as net distributed profits, shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits: Provided that this sub-section shall not apply in respect of dividend referred to in sub-clause (e) of clause (22) of section 2. (2) Notwithstanding that no INCOME-TAX is payable by a domestic company on its total income computed in accordance with the provisions of this Act, the tax on distributed profits under sub-section (1) shall be payable by such company. (3) The principal officer of the domestic company and the company shall be liable to pay the tax on distributed profits to the credit of the Central Government within fourteen days from the date of— (a) declaration of any dividend; or (b) distribution of any dividend; or (c) payment of any dividend, whichever is earliest. (4) The tax on distributed profits so paid by the company shall be treated as the final payment of tax in respect of the amount declared, distributed or paid as dividends and no further credit therefor shall be claimed by the company or by any other person in respect of the amount of tax so paid. (5) No deduction under any other provision of this Act shall be allowed to the company or a shareholder in respect of the amount which has been charged to tax under sub-section (1) or the tax thereon. (6) Notwithstanding anything contained in this section, no tax on distributed profits shall be chargeable in respect of the total income of an undertaking or enterprise engaged in developing or developing and operating or developing, operating and maintaining a Special Economic Zone for any assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income either in the hands of the Developer or enterprise or the person receiving such dividend: Provided that the provisions of this sub-section cease to have effect from the 1st day of June 2011. (7) No tax on distributed profits shall be chargeable under this section in respect of any amount declared, distributed or paid by the specified domestic company by way of dividends (whether interim or otherwise) to a business trust out of its current income on or after the specified date: Provided that nothing contained in this sub-section shall apply in respect of any amount declared, distributed or paid, at any time, by the specified domestic company by way of dividends (whether interim or otherwise) out of its accumulated profits and current profits up to the specified date. Explanation. —For the purposes of this sub-section, (a) “specified domestic company” means a domestic company in which a business trust has become the holder of whole of the nominal value of equity share capital of the company (excluding the equity share capital required to be held mandatorily by any other person in accordance with any law for the time being in force or any directions of Government or any regulatory authority, or equity share capital held by any Government or Government body); (b) “Specified date” means the date of acquisition by the business trust of such holding as is referred to in clause (a). (8) Notwithstanding anything contained in this section, no tax on distributed profits shall be chargeable in respect of the total income of a company, being a unit of an International Financial Services Centre, deriving income solely in convertible foreign exchange, for any assessment year on any amount declared, distributed or paid by such company, by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2017, out of its current income or income accumulated as a unit of International Financial Services Centre after the 1st day of April, 2017], either in the hands of the company or the person receiving such dividend. Explanation. —For the purposes of this sub-section, (a) “International Financial Services Centre” shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (b) “unit” means a unit established in an International Financial Services Centre, on or after the 1st day of April 2016; (c) “Convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder.

5.

In view of joint reading of sections 10(34), 115BBDA and 115O of the Act, it is observed that: -

(i) The provision of taxability of dividend received by the assessee came into the statute w.e.f. A.Y. 2021-22, whereas the issue under consideration pertains to the A.Y. 2020-21;

(ii) The provisions of section 10(34) of the Act must be applied in cases where tax under section 115-O and section 115BBDA, wherever applicable, has been paid;

(iii) As per section 115BBDA of the Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies on or before the 31st day of March 2020 and specified assessee here for the purposes of this section means an assessee other than domestic company.

6.

The assessee during the hearing before us has produced the following information, on the directions of the bench as authorized by Rule 29 of the ITAT Rules, 1963 as below: -

S. No. Name of Company Dividend income on Total DDT paid by shares held by the distributing company Respondent company

1.

R.K. Swamy BBDO Private Limited Rs. 1,05,88,000/- Rs. 28, 39,670/-

2.

BBDO India Private Limited Rs. 1,33,16,750/- Rs. 78,20,849/-

3.

Abirami Financials Services (India) Rs. 1,30,200/- Rs. 3,66,470/- Limited

4.

NKGSB Cooperative Bank Limited Rs. 87,500/-

7.

We have gone through the above table furnished by the assessee along with a paper book containing the audited financial results of the companies mentioned in the table (supra) and proof of payment of dividend distribution tax, same is found to be correct and complying the provisions of sections 115BBDA/115O of the Act, as the case may be. In view of the above facts, discussions and analysis of the relevant provisions of the Act, we do not find any infirmity in the order of the Ld. Addl. / JCIT (A), Thane, hence the same is confirmed without any change. Resultantly, the grounds raised by the Revenue are dismissed.

8.

In the result, the appeal of the Revenue is dismissed in the above terms.

Order pronounced on the 16th day of October 2026, in Chennai. (जॉजा जॉजा के.) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K.) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष /VICE PRESIDENT चेन्नई/Chennai, ददनाांक/Dated: 16th October 2026. KB आदेश की प्रततललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रतततनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.10.26 09:32:07 +05'30'

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