Report No. 12
Chapter XIX
Tax Deemed to have been Paid on Dividends
246. Tax deemed to have been paid on dividends.-
(1) Any sum by which a dividend has been increased under section 59[Section 16(2), main para, later half] shall be treated as a payment of income-tax (exclusive of super-tax) by the shareholder ; and credit shall be given to him therefor on the production of the certificate furnished under section 167 [20], in the assessment, if any, made for the assessment year referred to in clause (b) of subÂsection (2):
[Section 18(5), main para., earlier half, part]
[Section 18(5), main para., latter half, part]
Provided that, where such shareholder is a person whose income is included under the provisions of section 63 or 64 [clause (c) of sub-section (1) of section 16], section 67 [section 16(3)], section 96 [44D] or section 97 [44E] in the total income of another person, the payment shall be deemed to have been made by, and the credit shall be given to, such other person:
[Section 18(5), 2nd proviso, part]
Provided further that where any share in a company is owned jointly by two or more persons not constituting a partnership, the credit may be given to each such person in the same proportion in which the dividend on such share has been included in his total income:
[Section 18(5), 3rd proviso, part]
Provided further that where any share in a company is owned by two or more persons constituting a partnership and the firm is a registered firm or an unregistered firm assessed under the provisions of section 190(b) [23(5)(b)], the credit may be given to each such person in the proportion in which the profits of the firm are shared by him.
(2) The provisions of sub-section (1) shall not apply unless the following conditions are fulfilled:-
(a) the company is assessed to income-tax in India or elsewhere; and
(b) the dividend is included in the total income of the shareholder or other person to whom credit is to be given, as assessed for the assessment year immediately following the previous year of which the dividend is deemed to be the income.
[Section 49B(1), part]
(3) For the purposes of sub-section (1), income-tax shall be deemed to include gricultural income-tax assessed on a company by any State Government, and where any shareholder proves that the company has been so assessed to agricultural income-tax, he shall be entitled to the reduction from the tax payable by him under this Act of a sum equal to-
(a) the appropriate agricultural income-tax (reduced by the amount of refund, if any, allowed to him by the State Government), or
(b) the appropriate Indian Income-tax on the amount of the dividend which has not been increased under section 59, [Section 16(2), main para, latter half] whichever is the less.
Explanation.-In this sub-section,-
(a) "appropriate agricultural income-tax" means such proportion of the agricultural income-tax as the amount of dividend which has not been increased under section 59 [section 16(2), main para, latter half) bears to the total profits of the company assessed to agricultural income-tax; and
(b) "appropriate Indian Income-tax" means such proportion of the income-tax payable by the shareholder under this Act as the amount of dividend which has not been increased under section 59 [section 16(2) main para, latter half] bears to the total income of the shareholder.
[Section 49B(2)]
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