M/s. Trailer Limited is an Indian company. It distributed dividend to its shareholders amounting to 2,50,000 for the financial year 2024-25 in…

M/s. Trailer Limited is an Indian company. It distributed dividend to its shareholders amounting to 2,50,000 for the financial year 2024-25 in December 2025 and dividend of 4,50,000 for the financial year 2025-26 in March 2026. Assume that all the amounts of dividends on investment in shares by Trailer Limited have been received before 31st March 2026. Trailer Limited has made investment in shares of Indian and foreign companies. During the financial year 2025-26, Trailer Limited earned dividends from different companies as follows: Name of the company Status of the company Shareholding held by Trailer Limited Date of declaration of dividend by the company Gross amount of dividend in ₹ Interest Expenditure on loan borrowed for investment in shares by Trailer Limited Peter Ltd. Indian Company 12% 01.07.2025 3,00,000 66,000 Queen Ltd. Indian Company 21% 01.11.2025 5,00,000 1,05,000 Xylo Inc. Foreign company 15% 10.02.2026 4,80,000 1,20,000 A search was made under section 132 of the Income-tax Act, 1961 on M/s. Trailer Limited. The search was initiated on 26.02.2026 and concluded on 06.03.2026 when the last of authorizations executed. M/s. Trailer Limited received a notice under section 143(2) for A.Y. 2024-25, the assessment proceedings for which in the faceless manner was ongoing at the time of search. A notice under section 148 was also issued for A.Y. 2021-22 to the company as per the provisions of the Act, the proceedings for which were also pending on the date of search. The company has made an appeal before the Commissioner of Income-tax (Appeals) for the A.Y. 2016-17 for a matter relating to a business deduction, which was dismissed by the CIT (Appeals) on 20.12.2025 and order u/s 250 was communicated on the same date to the company. The company decided to go for further appeal on this matter in the ITAT. Based on the above facts, choose the most appropriate answer to Q.1 to Q.5 below: