The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) comprising Shri Vikas Awasthy, Judicial Member & Shri Gagan Goyal, Accountant Member has held that the dividend income received by the assessee, a builder, which is not subject to Dividend Distribution Tax (DDT) shall be assessable as “Income from Other Sources” under the provisions of the Income Tax Act, 1961.
The assessee is a developer and builder. The assessee has not carried out any business activity during the period relevant to assessment year under appeal. During the period, the assessee had received dividend income from Zoroastrian Cooperative Bank. In the original return of income the assessee had claimed dividend income as exempt. Since dividend was not subject to Dividend Distribution Tax, in the revised return the assessee has shown dividend income as Income from Business. The Assessing Officer and the CIT(A) have held that the dividend income is taxableas Income from Other Sources.
While considering the second appeal, the Tribunal observed that the assessee has assailed change of head of income in respect of dividend income received from Zoroastrian Co-operative Bank. The assessee has not claimed dividend income as exempt from tax.
“Since, the said dividend income was not subject to Dividend Distribution Tax the assessee has offered dividend income to tax as Business Income. The Assessing Officer has held the same as ‘Income from Other Sources’. Taking into consideration the nature of activities carried out by the assessee, dividend income received cannot be held to be business income of the assessee. Therefore, in our considered view the authorities below have rightly assessed dividend income as ‘Income from Other Sources’. The Ground No.3 of appeal lacks merit, hence, dismissed,” the Tribunal said.
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