Vishal D. Darji (Qualified CA and CS) (162 Points)
05 September 2010Hello 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.
Sowmya P K
(Chartered Accountant)
(251 Points)
Replied 05 September 2010
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.
Vishal D. Darji
(Qualified CA and CS)
(162 Points)
Replied 05 September 2010
Thank you for the answer...
Amit Gupta
(Loosening Myself)
(1508 Points)
Replied 05 September 2010
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
Pradeep Patankar
(IFRS ( London))
(289 Points)
Replied 05 September 2010
there was no Dividend Distribution Tax on companies at that time...
n dividend was wholly taxable in the hands of shareholders.....
shivam garg
(garh)
(25 Points)
Replied 22 February 2014
CAclubindia
