Section 115BBDA of Income Tax Act Does not Apply to Domestic Company: ITAT deletes Addition [Read Order]

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 3.07 lakhs, stating that Section 115BBDA of the Income Tax Act, 1961 does not apply to a domestic company.

The assessee Meenakshi Ventures and Holdings India Private Limited, was a company file its return of income for the Assessment Year 2019-20 admitting loss of Rs. 1,15,455/- dated 24.09.2019. The Assessee has received Dividend from shares amounting to Rs.13, 07,650/- during the year. Assessee claimed the same amount as exempt income in the Return of Income. However, while proceeding the return, the Assessing Officer issued notice under Section 143(1) of the Act rejecting the exemption claimed by the assessee and the Assessing Officer added the dividend amount of Rs.13,07,650/- to the total income resulting in tax demand of Rs. 3,59,713/.

Mr. Sai Sari Konda, representing the assessee submitted that the assessee was not covered at the relevant point of time as per the provisions of section 115BBDA of the Income Tax Act as the assessee happens to be a domestic Indian company. In the light of the above, it was submitted that the additions made by the Assessing Officer are not sustainable as the relevant provision was not in existence at the time of making the additions

A single member bench of the tribunal comprising Laliet Kumar (Judicial member) found that the assessee to be a domestic company, therefore, the provision was not applicable. It was only applicable and in fact, the limit was only applicable if the total income of an assessee, being an individual, Hindu Undivided Family or a firm, resident of India, exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies.

Further the assessee was none of them neither an individual nor Hindu Undivided Family nor a firm and therefore, this provision of the Income Tax Act was not applicable. Hence, the assessee is entitled to relief. Accordingly, the addition made by the Assessing Officer was deleted. Thus the appeal of the assessee was allowed. Accordingly, the appeal of the assessee was allowed.

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