AIR 2017 SUPREME COURT 4856 ::2017 (10) SCC 764 ::(2017) 12 Scale 13 ::AIR 2018 SC (Civil) 386

Supreme Court Of India

(From : 2006 Tax LR 776 (Cal) and 2008 Tax LR 28 (Gau))

Hon'ble Judge(s): A. K. Sikri, Ashok Bhushan , JJ

Income-Tax Act (43 of 1961) , S.115O— Constitutional validity - S.115-O pertaining to declaration, distribution or payment of dividend by domestic company - Is intra vires - Pith and substance of legislation is covered by Entry 82 of List I of Seventh Schedule of Constitution - Hence, provision of S. 115-O is not beyond legislative competence of Parliament - But limitation put by High Court that additional tax could be levied only on 40% of dividend income - Erroneous and set aside. Constitution of India , Art.14, Sch.7 List I Entry 82, Sch.7 List II Entry 46— @page-SC48572006 Tax LR 776 (Cal), Partly Reversed.Doctrine - Pith and substance - Applicability. Entry 82 of List I embraces entire field of 'tax on income'. What is excluded is only tax on agricultural income which is contained in Entry 46 of List II. Income as defined in S. 2(24) of 1961. Act is inclusive definition including specifically 'dividend'. Dividend is statutorily regulated and under article of association of companied are required to be paid as per Rules of companies to shareholders. S. 115-O pertains to declaration, distribution or payment of dividend by domestic company and imposition of additional tax on dividend is thus clearly covered by subject as embraced by Entry 82. Provisions of S. 115-O cannot be said to be directly included in field of tax on agricultural income....