Hello friends,
Can anyone explain in detail the famous case of Mrs. Bacha F. Guzdar vs. CIT.
The case says that the Dividend received by the shareholder is not exempt u/s 10(1).
I am a bit confused if the income recd by the shareholder is exempt u/s 10(34).
Thanks.
Hi
This case was decided when there was no Dividend Distribution Tax on companies.
Dividend received from a company having agricultural income does not have the character of agricultural income in the hands of the shareholders. This is because of the separate legal entity concept.
Hence such income WAS taxable as dividend income.
Now, with the introduction of Section 10(34), dividend received from a company is exempt as dividend income because tax for the same is paid by the company as DDT/CDT u/s 115 O.
Thank you for the answer...
Basically it says company has its own income and its shareholder have their own..no matter if the income earned by the company is tax free, it can be (dividend) taxable in the hands of shareholder
there was no Dividend Distribution Tax on companies at that time...
n dividend was wholly taxable in the hands of shareholders.....
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