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RIGHT OF A SHAREHOLDER ON THE PROPERTY OF THE COMPANY

Income Tax - Direct Tax Code - DTC - By: - Mr. M. GOVINDARAJAN - Dated:- 22-2-2016 - The company incorporated under the Companies Act is formed by the promoters who are also the shareholders of the company. The number of shareholders may differ according to the nature of the company. The private company has prescribed number of members (200 members as on now) and the public limited company has no maximum limit. The company is a separate legal entity and separate from its shareholders. The compan .....

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tent of the value of shares held by him. Beyond that the shareholder is not having liability. If the company is wound up the equity shareholders is having the last in the queue. The employees, secured credits, taxes etc., are given priority for settlement. If there is no excess after full settlement the equity shareholders may not get anything. The author came across on interesting Supreme Court judgment on the right of the shareholder on the property of the company which has been decided in the .....

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me tax Department claimed tax on the total dividend received. The appellant contended that the income of the tea companies to the extent of 60% agricultural income which is exempted from income tax. As such the tax proportionate to the exempted income is also to be exempted. The Department contended that the dividend is not an agricultural income and therefore the whole of income is liable to be taxed. The Supreme Court held that agricultural income as defined in the Act is obviously intended to .....

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eholders. The dividend is payable only if the company acquires profit. The dividend is not derived by a shareholder by his direct relationship with the land. Initial source which has produced the revenue is land used for agricultural purposes. The Supreme Court held that to give the words revenue derived from land the unrestricted meaning, apart from its direct association or relation with the land, would be quite unwarranted. The Supreme Court further held that a shareholder acquires a right to .....

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undoubtedly a right to participate in the profits if and when the company decides to divide them. The Supreme Court further analyzed the role of the shareholders. The shareholders of the company have the sole determining voice in administering the affairs of the company. The shareholders are having the right by the provisions of the Company Law and Articles of association to participate in the profit of the company by means of dividend. The interest of the shareholder either individually or coll .....

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