Dividend Distribution Tax

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Chinmay (Querist)
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19 January 2010 Dear all,
I have a query regarding tax on dividend distributed by a company out of share of profits received from a firm.

ABC Pvt Ltd company is a partner in a partnership firm. ABC receives share of profit from the firm. This profit will be tax free in the hands of the company.
When ABC Pvt Ltd distributes this as dividend whether it has to pay Dividend Distribution Tax?
Or can ABC increase the amount of investment in the firm in it's books?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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21 January 2010 115-O. (1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003, whether out of current or accumulated profits shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) at the rate of 91[fifteen] per cent.]

So as such no exemption to dividend declared out of exempt income. So DDT is payable

Chinmay

Chinmay (Querist)
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21 January 2010 Thank You.

Can a private limited co. be a working partner in partnership firm through it's MD or director?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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22 January 2010 No i dont think so as remuneation should be paid to partner

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