Kalpesh Classes

Question ​​ (ID 01) (Dividend tax)

A Domestic Company’s Total Income was determined at a loss of Rs. 20 Lakhs for the year. It has distributed the following dividends to its shareholders in respect of the previous year. The Paid-up Capital of​​ the Company on the date was Rs. 50 Lakhs

• Interim Dividend at 10% on 31.10.PY

• Bonus Shares in the ratio 1:10 on 30.6.PY

• Final Dividend at 10% on 31.8.PY

What are the tax consequences of such distribution in the hands of the Company ?

Question ​​ (ID 02) (Dividend tax)

Suman Ltd is a Company incorporated in India. The Balance Sheet of the Company discloses the following position - 

The Company distributes the entire investment in share in species to its shareholders pro rata. Is ‘X’ a holder of 10% of the Equity Share Capital liable to​​ tax on his receipt ? If so, what is the amount liable to tax ?

Inter corporate Dividend​​ 

Question ​​ (ID 04) (Dividend tax)

Yaman Limited is a company in which 60% shares are held by Piloo Limited. Yaman Limited declared a dividend amounting to Rs. 35 lacs to its shareholders for the last financial year in its Annual General Meeting held on 10th May, Dividend distribution tax was paid by Yaman Limited on 15th May,. Piloo Limited declared on interim dividend amounting to Rs. 50 lacs on l5 October for the PY.​​ 

Compute the amount of tax on dividend payable by Piloo Limited.

What would be your answer, if 58% shares of PiIoo Limited ore held by Kafi Limited, an Indian company ? Does the position change further, if Kafi Limited is a foreign company ?​​ 

Question​​ (ID 08) (Dividend tax) (Revision ​​ / Home work)

Y Ltd. is company in which 60 per cent shares are held by P Ltd. Y Ltd. declares a dividend of Rs. 35 lakh to its shareholders for the year in its annual general meeting held on May 10. Dividend
distribution​​ tax is paid by Y Ltd. on May 15. P Ltd. declares an interim dividend amounting to Rs. 50 lakh on October 15. Compute the amount of tax on dividend payable by P Ltd. What would be your answer, if 58 per cent shares in P Ltd. are held by K Ltd., an Indian company? Does the position change further, if K Ltd is a foreign company.​​ 

Taxation of Dividend Income / Dividend from foreign subsidiary

Question ​​ (ID 07) (Dividend tax)

X Ltd is a manufacturing company located in India. Business income of the company for year under section 28 is Rs. 40 lakh. X Ltd holds shares in few companies. Amount of dividend received from these companies and other related information are given below-

On September 1, X Ltd declares a dividend of Rs. 5 lakh for its own shareholders. Find out income-tax and dividend tax liability of X ltd for the year on the​​ assumption that India has ADT agreement with Country C and as per agreement dividend income is taxable in India and not in Country C.​​ 

Loan to Specified Shareholder 2(22)(e)

Question  ​​​​ (ID 03) (Dividend tax)

X Ltd. gives the following information for the year:

Compute the tax liability of the company under section 115-O (tax on distributed profits).

Question ​​ (Dividend tax) (ID 05) (Revision ​​ / Home work)

MNO Ltd. is a company in which the public are not substantially interested. K is a shareholder of​​ the company holding 15% of the equity shares. The accumulated profits of the company as on 31.3. amounted to ​​ 10,00,000. The company lent ​​ 1,00,000 to K by an account payee bank draft on 1.10. The loan was not connected with the business of the company. K​​ repaid the loan to the company by an account payee bank draft on 30.3. Examine the effect of the borrowal and repayment of the loan by K on the computation of his total income.

Question ​​ (Dividend tax) (ID 06) (Revision ​​ / Home work)

Parimal, Managing Director of Heavens Engg. Pvt. Ltd. holds 70% of its paid up capital of ​​ 20 Lacs. The balance as at 31.3 in General Resreve was ​​ 6 Lacs. The company on 1.7 gave an interest – free loan of ​​ 5 Lacs to its Supervisor having salary of ​​ 4,000 p.m., who in turn on​​ 15.8. advanced the said amount of loan so taken from the company to Shri Parimal. The Assessing Officer had taxed the amount of advance in the hands of Parimal. Is the action of Assessing Officer correct ?

Question ​​ (Dividend tax) (ID 09)​​ 

Dhaval is in​​ business of manufacturing customized kitchen equipments. He is also the Managing Director and held nearly 65% of the paid-up share capital of Aarav Ltd. A substantial part of the business of Dhaval is obtained through Aarav Ltd. For this purpose, Aarav Ltd. passed on the advance received from its customers to Dhaval to execute the job work entrusted to him. The Assessing Officer held that the advance money received by Dhaval is in the nature of loan given by Aarav Ltd. to him and accordingly is deemed dividend within the meaning of provisions of section 2(22)(e) of the Income-tax Act, 1961. The Assessing Officer, therefore made the addition by treating advance money as the deemed dividend income of Dhaval. Examine whether the action of the Assessing Officer​​ is tenable in law.

Question ​​ (Dividend tax) (ID 10)​​ 

HLI Private Limited is a company with three shareholders H (40%), L (20%) and I on behalf of his HUF (40%). I (HUF) is a Hindu Undivided Family whose members are Mr. I, Mrs. I and their two sons, G and​​ J. The company gave a loan of 9 Iakhs to I (HUF) on 30th​​ April, ​​ on which date the accumulated profits of the company was 6 Iakhs. What is the tax consequence of this transaction ?

List of Important Question to be glanced for Revision before exam.

Wishing You all the best for exams.​​