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1998 (1) TMI 405 - SC - Companies LawWhether the interim dividend declared by the board of directors in the previous year relevant to the assessment year 1951 -52 was to be taxed in that year or was the interim dividend liable to be taxed in the assessment year 1952-53 because the payment was made in that previous year? Held that:- Appeal allowed. The nature of the interim dividend is such that it gives no right to the shareholders to receive it merely on the passing of the resolution by the board of directors whereas on a dividend being declared by the company in general meeting a vested right accrues to the shareholders. This being so, if the company in general meeting had declared a dividend on 6-12-1962 and the same was distributed in January 1963, then the aforesaid Explanation 3 would have been applicable. But in the present case, the decision of the board of directors on 6-12-1962 to pay interim dividend cannot be construed as meaning declaration of dividend by the company. This being so what would be relevant is the distribution of the dividend in January 1963, thereby attracting the provisions of clause (i)( c) of the second proviso and the income-tax authorities were, therefore, right in reducing the rebate in the manner in which they did for the assessment year 1964-65.
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