If a person receiving amount against capital Reduction after deduction of tax at source u/s 194 (Dividend)
however the person claims that amount as a capital gain and not deemed divided.
please advise in this regard that the amount received is taxable under which head ( Dividend or Capital Gain)!?
3 Replies
CA. Sourav Sarkar
(Chartered Accountant )
(24588 Points)
Replied 11 March 2021
As per section 2(22) of the Income-tax Act, 1961 (Act), any distribution of accumulated profits to the shareholders, whether capitalised or not, pursuant to capital reduction, is considered as dividend.
Nayan Koyani
(article assistance)
(36 Points)
Replied 11 March 2021
What Happens if we consider this under section 115QA as Gain!?
Kapadia Pravin
(17264 Points)
Replied 11 March 2021
Capital gain reduction is not Dividend distribution. Face value of shares go down by reduction in capital.
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