INCOME TAX ACT, 1961

Section 10(34)

Exemption under section 10(34) - Dividend income - Dividend earned on property hold under trust -

Assessee, being AOP trust under section 12A, was assessed under section 143(3). Assessee earned dividend income and claimed the same to be exempt under section 10(34). AO denied the same in view of fact that dividend was earned on property held under trust and it was available for application of income. It would not be optional for assessee trust to avail exemption. Held: This issue was squarely covered in assessee's favour by decision of this Tribunal in Jamshedji Tata Trust ((2014) 44 Taxmann.com 447 (Mum) : 2014 TaxPub(DT) 1932 (Mum-Trib), wherein Coordinate Bench drawing analogy from the decision in CIT v. Divine Light Mission ((2005) 278 ITR 659 (Del) : 2005 TaxPub(DT) 220 (Del-HC) held that dividend income being exempt under section 10(34) could not be brought to tax by applying the provisions of sections 11 to 13. Amendment to section 11 by way of insertion of clause (7) by Finance Act, 2014 to nullify the effect of this decision is applicable only with effect from 1-4-2015 and do not apply to this year. Therefore, following the decision of case, dividend income was not liable to tax.

Followed:CIT v. Divine Light Mission. (2005) 278 ITR 659 (Del) : 2005 TaxPub(DT) 220 (Del-HC) and Jamsetji Tata Trust v. Jt. Director of Income Tax (Exemptions) (2014) 44 Taxmann.com 447 (Mum) : 2014 TaxPub(DT) 1932 (Mum-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 11

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