Finance Act, 1973

Amendment of section 387 of Income Tax Act, 1967.

14.Section 387 of the Income Tax Act, 1967 , is hereby amended by the addition thereto of the following subsection—

“(4) (a) Where, under section 456, a body corporate is entitled to deduct income tax from any dividend, not being a dividend to which subsection (2) or (3) applies, tax shall not in any case be deducted at a rate exceeding the rate of income tax as reduced by any relief from that tax given under or by virtue of this Chapter, and the provisions of section 457 shall apply accordingly, with any necessary modifications.

(b) The rate of income tax at which any repayment of income tax for any year of assessment falls to be made shall be subject to such adjustments as may be proper in cases in which relief is given under or by virtue of this Chapter.

(c) Where, by virtue of paragraph (a), income tax is deducted from a dividend at a reduced rate, the amount to be included in respect of the dividend in any return for the purpose of sur-tax shall be an amount which bears the same proportion to the amount of the dividend as the rate of income tax deducted therefrom bears to the rate which would have been authorised to be deducted if this subsection had not been enacted.”.