Meaning of “Any other sum chargeable under the provisions of this act”

The meaning of any other sum chargeable under the provisions of this act under section 194 to 206c of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble Supreme Court and Authority Tribunal tried to explain the meaning of any other sum chargeable under the provisions of this act.

Meaning of any other sum chargeable under the provisions of this act defined by court

The phrase ‘any other sum chargeable under the provisions of this act’ used in section 194 to 206C of the Income Tax Act came up before various high courts as detailed under :

1. Hon’ble Supreme Court explained the meaning of ‘any other sum chargeable under the provisions of this act ‘ while delivering judgment in Transmission Corpn. Of A.P. Ltd. Vs. CIT [1999] 105 taxman 742/239 ITR 587 (SC) as under :

Meaning : The scheme of sub-sections (1), (2) and (3) of section 195 and section 197 leaves no doubt that the expression ‘any other sum chargeable under the provisions of this act’ would mean ‘sum’ on which income-tax is leviable. In other words, the said sum is chargeable to tax and could be assessed to tax under the act.

2. Hon’ble AAR- New Delhi explained the meaning of ‘any other sum chargeable under the provisions of this act ‘ while delivering judgment in Headstart Business Solutions (p.) Ltd., In re [2006] 285 ITR 530/155 TAXMAN 639/204 CTR 519 (AAR – New Delhi) as under :

Meaning : The expression ‘any other sum chargeable under the provisions of this act’ in section 195(1) contemplates not only amounts, the whole of which are taxable without deduction, but also amounts of a mixed composition, a part of which only might turn out to be taxable income as well as other disbursements which are of the nature of gross revenue receipts, are yet sums chargeable under the provisions of the act and come within the ambit of section 195(1).

3. Hon’ble ITAT- Mumbai explained the meaning of ‘any other sum chargeable under the provisions of this act ‘ while delivering judgment in Maharashtra State Electricity Board vs. Dy. CIT [2004] 90 ITD 793 (Mum. – Trib.) as under :

Meaning: The expression ‘chargeable under the provisions of this act’ cannot include an income, which in terms of the specific provisions of the applicable dtaa, is not exigible to tax in India.

Section 194 to 206c of the Income Tax Act

Dividends.

194. The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment by any mode in respect of any dividend or before making any distribution or payment to a shareholder, who is resident in India, of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend, income-tax 43[at the rate of ten per cent] :

Provided that no such deduction shall be made in the case of a shareholder, being an individual, if—

(a) the dividend is paid by the company by any mode other than cash; and

(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed five thousand rupees:

Provided further that the provisions of this section shall not apply to such income credited or paid to—

(a) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial interest;

(b) the General Insurance Corporation of India (hereafter in this proviso referred to as the Corporation) or to any of the four companies (hereafter in this proviso referred to as such company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest;

(c) any other insurer in respect of any shares owned by it or in which it has full beneficial interest;

[(d) a “business trust”, as defined in clause (13A) of section 2, by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10;

(e) any other person as may be notified by the Central Government in the Official Gazette in this behalf.]

[***]

In this article, you can get guidance from high courts on the meaning of any other sum chargeable under the provisions of this act under section 194 to 206c of the Income Tax Act.

Updated up to Finance Act 2021