Section 35
of Investment Incentives Order, 2001
Section 35
(1)
As soon as any amount of expansion income has become exempt under section 34, that amount shall be credited to an account to be kept by the expanding enterprise for the purposes of this section.
(2)
Where that account is in credit at the date on which any dividends are paid by the expanding enterprise out of income which has been exempted, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the account.
(3)
So much of the amount of any dividends so debited to that account as are received by a shareholder of the expanding enterprise shall, if the Collector is satisfied with the entries in the account, be exempt from tax in the hands of the shareholder.
(4)
Notwithstanding subsection (3), where a dividend is paid on any share of a preferential nature, it shall not be so exempt in the hands of the shareholder.
(5)
Any dividends debited to that account shall be treated as having been distributed to the shareholders of the expanding enterprise or any particular class of those shareholders in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit.
(6)
The expanding enterprise shall deliver to the Collector a copy of that account, made up to a date specified by him, whenever called upon to do so by notice in writing sent by him to its registered office, until such time as he is satisfied that there is no further need for maintaining the account.
(7)
Notwithstanding section 34 and subsections (1) to (6) where it appears to the
Collector that –
(a)
any amount of exempted income of an expanding enterprise; or
(b)
any dividend exempted in the hands of any shareholder, including any dividend paid by a holding company to which subsection (10) applies,
Incorporating amendments until S 5/2011
(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020
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BLUV as at 16th February 2011
ought not to have been exempted by reason of a direction under section 10 (as applied to this
Part by section 33) or the revocation under section 114 of an expansion certificate issued to the expanding enterprise, the Collector may, subject to section 62 of the Income Tax Act –
(i)
make such assessment or additional assessment upon the expanding enterprise or any such shareholder as may appear to be necessary in order to counteract any profit obtained from any such amount; or
(ii)
direct the expanding enterprise to debit its account, kept in accordance with subsection (1), with such amount as the circumstances require.
(8)
Parts XI and XII of the Income Tax Act (relating to objections and appeals) and any regulations made thereunder shall apply, with the necessary modifications, to any direction given under subsection (7) as if it were a notice of assessment given under those provisions.
(9)
Section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof which is debited to the account required to be kept for the purposes of this section.
(10)
Where an amount has been received by way of dividend from an expanding enterprise by a shareholder and the amount is exempt from tax under this section, if that shareholder is a company (referred to in this section as the holding company) which holds, at the time any dividend is declared, the beneficial interest in all the issued shares of the expanding enterprise (or in not less than such proportion of those shares as the Minister may approve), any dividends paid by the holding company to its shareholders, to the extent that the Collector is satisfied that those dividends are paid out of that amount, shall be exempt from tax in the hands of those shareholders; and section 36 of the Income Tax Act shall not apply in respect of any dividend or part thereof so exempt.
Incorporating amendments until S 5/2011
(Cleancopy) NANI/H.AFIF/fiqah _ as of 11th March 2020
29
BLUV as at 16th February 2011