Summary

Grameen Kalyan, a company limited by guarantee, invested funds through Grameen Telecom in Grameen Phone shares under a 2011 equity participation agreement and declared its 42.65% share of the profit as dividend income. Under section 120 of the Income Tax Ordinance, 1984, the Additional Commissioner of Taxes revised its assessments for five years, treating the money as income from other sources, and the Commissioner rejected its revision applications under section 121A. After earlier High Court Division orders were set aside or recalled, the Chief Justice referred the matter to this Bench. The Court held that, as the agreement barred the petitioner from ever claiming Grameen Phone shares, it was not a shareholder and the money could not be dividend income. The section 120 proceedings were properly noticed and based on the record, and the revisions were not maintainable without payment of undisputed tax. The petitioner had also abandoned the same point for 2017-2018. The Rule was discharged and the respondents were directed to realise the unpaid tax.

Issues

1. Q1

   Whether the 42.65% share of Grameen Phone dividend passed to the petitioner by Grameen Telecom under an equity participation agreement was the petitioner's dividend income or income from other sources.

2. Q2

   Whether the orders under section 120 of the Income Tax Ordinance, 1984 revising the assessments for 2012-2013 to 2016-2017 were unlawful for want of hearing.

3. Q3

   Whether the Commissioner's rejection of the petitioner's revision applications under section 121A was lawful.

Key points

• A person who is not a shareholder of a company cannot claim money derived from that company's distributions as dividend income, since the definition of dividend in section 2(26) of the Income Tax Ordinance, 1984 refers throughout to shareholders.
• The petitioner's 42.65% share of Grameen Phone profit received through Grameen Telecom was income from other sources, not dividend income, because the agreement provided that it could never claim Grameen Phone shares.
• The section 120 proceedings were lawful: the petitioner was duly notified, and the absence of its advocate on the date of decision did not invalidate an order based on the materials on record.
• The revision applications under section 121A were not liable to be entertained because the petitioner had not paid the undisputed portion of tax as required by section 121A(4)(b).
• Having withdrawn its income tax reference on the same question for the assessment year 2017-2018, the petitioner had no case on the settled issue, and the respondents were directed to realise the unpaid tax.

Law considered

Income Tax Ordinance, 1984, section 120Income Tax Ordinance, 1984, section 121AIncome Tax Ordinance, 1984, section 2(26)Income Tax Ordinance, 1984, section 33Constitution of Bangladesh, Article 102