Meaning of “Distributed”

The meaning of distributed under section 104 to 109 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 High Court tried to explain the meaning of distributed.

The phrase ‘distributed’ used in section 104 to 109 of the Income Tax Act came up before hon’ble Karnataka High Court in Mysodet (p.) Ltd. Vs. CIT [1990] 51 taxman 175/182 ITR 235 (Kar.) and it explained.

Meaning: The true effect of the expression ‘distributed‘ could be properly understood by a close examination of section 104 itself in that, in the earlier part of the section, the expression used is ‘distributed dividend’ which does not bear a proper proportion to the distributable profits while, in the latter part of the section, the expression used is ‘actually distributed’.

Therefore, the legislature itself has borne in mind that the expression used in the earlier part, namely, ‘distributed’ would not necessarily mean ‘actually distributed’ while, in the latter part the expression ‘actually distributed’ means distributed in fact as opposed to distribute in a hypothetical or theoretical sense.

Meaning of distributed defined by court

[Chapter XI omitted by the Finance Act, 1987, w.e.f. 1-4-1988. While sections 95 to 103 were omitted by the Finance Act, 1965, w.e.f. 1-4-1965, sections 104 to 109 were omitted by the Finance Act, 1987, w.e.f. 1-4-1988.]

Income-tax on undistributed income of certain companies.

104. [Omitted by the Finance Act, 1987, w.e.f. 1-4-1988.]

In this article, you can get guidance from high courts on the meaning of distributed under section 104 to 109 of the Income Tax Act.

Updated up to Finance Act 2021