DDT cannot be charged to tax in a different year merely for Mistake of Assessee

M/s Drawmet Wires Pvt. Ltd. Vs. ACIT (ITAT Jaipur)

It is settled proposition of law that DDT is chargeable only in the year when it is declared, distributed or paid and not prior to that. In the case on hand the assessee has produced all relevant record to show that the dividend was proposed by the Board of Directors in the meeting held on 28.08.2010 which was approved by the share holders in the Annual General Meeting held on 29.09.2010. Though the assessee has shown the dividend liability in the balance sheet for the F.Y. 2009-10 relevant to the A.Y. 2010-11 however, when this fact is not disputed by the authority below that the dividend in question was proposed on 28.08.2010 which was finally declared on 29.09.2010 and paid on 01.10.2010 then the instance of charge ability of dividend distribution tax arises only on declaration of dividend on 28.09.2010 which is prior to the date of payment on 01.10.2010. Therefore, the liability on account of DDT would arise only in the A.Y. 2011-12 and not in the A.Y. 2010-11. Though the assessee has committed various mistakes in giving the details in the return of income as well as in the challan under which the tax was paid regarding the date of payments, the date of distribution however, when the assessee has brought on record the relevant evidence to show that the dividend was actually declared on 28.09.2010 then this cannot be charged to tax u/s 115 O in the year under consideration merely on the basis of mistakes committee by the assessee. Accordingly, we set aside the impugned orders of the authority below and allow the claim of the assesse that no dividend is chargeable to tax during the year under consideration.