Dividend

Hi

I just read the following material in the tax book and i wanted a clarification. so here goes:-

Whenever there is a declaration of dividend or any distribution in the nature of dividend covered by sub clauses (a) to (e) of clause (22) of section 2, the company is liable to pay  tax @ 15% u/s 115-O. such dividend income is exempt in the hands of shareholders u/s 10(34). however, in the case of deemed dividend covered by sub clause (e) of section 2(22) and dividend declared/distributed by a foreign company, the shareholder is chargeable to tax under the head 'income from other sources' as section 115-O does not apply to such dividend.

Now my queries are:

1. does sub clause (a) to (d) of section 2(22) apply to foreign companies as well?

2. is an Indian company liable to pay tax u/s 115-O on the deemed dividend covered by section 2(22)(e)?

3. referring to the last part of the material, does it mean that since the shareholder would be liable to tax, the foreign company won't be?

please help...

Replies (1)

1) If you look at the definitions of foreign company, domestic company and company the answer is self explanatory.

2) 115-O is inapplicable to section 22(e).

3) Follows from 2) above

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