Income Tax Act, 2025
Section 235: Relief to shareholders in respect of agricultural income-tax attributable to
235. Relief to shareholders in respect of agricultural income-tax attributable to
dividends.—[Omitted by the Finance (No. 2) (Act, 32 of 1971), s. 28 (w.e.f. 11972). Prior to its
omission, it was amended by the Taxation Laws (Amendment) (Act, 42 of 1970), s. 41 (w.e.f. 11971)
and with retrospective effect from 11962, the Finance Act, (13 of 1966), s. 27 (w.e.f. 11966) and the
Finance Act, 10 of 1965, s. 55 (w.e.f. 11965).]
236. Relief to company in respect of dividend paid out of past taxed profits.—(1) Where
in respect of any previous year relevant to the assessment year commencing after the 31st day of
March, 1960, an Indian company or a company which has made the prescribed arrangements for the
declaration and payment of dividends within India, pays any dividend wholly or partly out of its profits
and gains actually charged to income-tax for any assessment year ending before the 1st day of April,
1960, and deducts tax therefrom in accordance with the provisions of Chapter XVIIB, credit shall be
given to the company against the income-tax, if any, payable by it on the profits and gains of the previous
year during which the dividend is paid, of a sum calculated in accordance with the provisions of subsection (2), and, where the amount of credit so calculated exceeds the income-tax payable by the
company as aforesaid, the excess shall be refunded.
(2) The amount of income-tax to be given as credit under sub-section (1) shall be a sum equal to ten
per cent of so much of the dividends referred to in sub-section (1) as are paid out of the profits and gains
actually charged to income-tax for any assessment year ending before the 1st day of April, 1960.
Explanation 1.—For the purposes of this section, the aggregate of the dividends declared by a
company in respect of any previous year shall be deemed first to have come out of the distributable
income of that previous year and the balance, if any, out of the undistributed part of the distributable
income of one or more previous years immediately preceding that previous year as would be just
sufficient to cover the amount of such balance and as has not likewise been taken into account for
covering such balance of any other previous year.
(Act, 42 of 1970), s. 41 (w.e.f. 11971)
and with retrospective effect from 11962, the Finance Act, (13 of 1966), s. 27 (w.e.f. 11966) and the
Finance Act, 10 of 1965, s. 55 (w.e.f. 11965).]
236. Relief to company in respect of dividend paid out of past taxed profits.—
Where
in respect of any previous year relevant to the assessment year commencing after the 31st day of
March, 1960, an Indian company or a company which has made the prescribed arrangements for the
declaration and payment of dividends within India, pays any dividend wholly or partly out of its profits
and gains actually charged to income-tax for any assessment year ending before the 1st day of April,
1960, and deducts tax therefrom in accordance with the provisions of Chapter XVIIB, credit shall be
given to the company against the income-tax, if any, payable by it on the profits and gains of the previous
year during which the dividend is paid, of a sum calculated in accordance with the provisions of subsection
The amount of income-tax to be given as credit under sub-section
shall be a sum equal to ten
per cent of so much of the dividends referred to in sub-section
as are paid out of the profits and gains
actually charged to income-tax for any assessment year ending before the 1st day of April, 1960.
Explanation 1.—For the purposes of this section, the aggregate of the dividends declared by a
company in respect of any previous year shall be deemed first to have come out of the distributable
income of that previous year and the balance, if any, out of the undistributed part of the distributable
income of one or more previous years immediately preceding that previous year as would be just
sufficient to cover the amount of such balance and as has not likewise been taken into account for
covering such balance of any other previous year.