Meenakshi Ventures and Holdings India Private Limited Vs ITO (ITAT Hyderabad)
Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Hyderabad provided clarity on the applicability of Section 115BBDA of the Income Tax Act, 1961, to domestic companies. The case, Meenakshi Ventures and Holdings India Private Limited vs. The Income Tax Officer, centered on whether the provisions of Section 115BBDA, which imposes additional tax on dividends exceeding ten lakh rupees, are applicable to domestic companies. The ITAT concluded that these provisions do not apply to domestic companies, thereby deleting the addition made by the Income Tax Officer.
Background of the Case: Meenakshi Ventures and Holdings India Private Limited, the assessee, filed its return of income for the Assessment Year 2019-20, declaring a loss of Rs. 1,15,455 and claiming an exemption on dividends amounting to Rs. 13,07,650. The Assessing Officer (AO) issued a notice under Section 143(1) of the Income Tax Act, rejecting the claimed exemption and adding the dividend amount to the total income, resulting in a tax demand of Rs. 3,59,713.
Appeal and Proceedings: Aggrieved by the AO’s decision, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The CIT(A) granted partial relief, limiting the exemption to Rs. 10,00,000 as per Section 115BBDA, and added Rs. 3,07,650 to the total income, resulting in a tax demand of Rs. 92,250. The assessee then appealed to the ITAT Hyderabad.
