TMI Blog1954 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the year under reference. In the assessment year 1951-52 the Income-tax Officer ascertained the assessee's business loss at ₹ 87,042. The assessee received a gross dividend income in respect of the shares which were its stock-in-trade amounting to ₹ 1,42,884. Therefore the result was that after setting off the loss of business against dividend income under section 24(1) there remained a balance of ₹ 55,842. The assessee contended that the loss from business in shares in the preceding year, viz., ₹ 45,911, which, as already pointed out, was carried forward should be set off against the balance of the dividend income of ₹ 55,842. The Income-tax Officer refused to set off the loss contending that it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legitimately included in any of the preceding heads. Therefore, if the assessee can legitimately include any income under section 10, section 12 would have no operation, because it is only a residuary section and what Mr. Joshi has to satisfy us is that dividend income cannot be legitimately included under section 10. Now, on the facts found here that the shares of the assessee were its stock-in-trade and that dividends were paid in respect of these shares, it is difficult to understand how the dividend income did not arise to the assessee in the course of its business. The dividends which it received were incidental to the shares which it held as stock-in-trade and it received these dividends only because it was dealing in shares and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other circumstances. Mr. Joshi has also relied on the definition of total income and the contends that total income has got to be computed according to the provisions of the Act, and he says that as far as dividend income is concerned it must be computed in the manner laid down by the Income- tax Act and as a separate machinery is set up for the computation of dividend income, therefore it must be computed separately and independently of business income. That argument again is difficult to understand. There is nothing in the Income-tax Act which prevents a man doing business in shares from availing himself of the machinery laid down in the Act for the purpose of computing income from dividends. Mr. Joshi says that one important aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not any agricultural process. But this decision does not help Mr. Joshi to satisfy us that the income from shares which is received on a dividend being declared must be shown under section 12 and not under section 10. The other case on which Mr. Joshi has relied is reported in Commissioner of Income-tax v. Laxmidas Mulraj Khatau [1948] 16 I.T.R. 248. In that case we held that the dividend became the income of the assessee when the dividend was declared and not when the dividend was actually received. Now, this principle can as well be applied to an assessee who is doing business in shares. All that it means is that he would have to show his income from dividend in his business accounts at the date when the dividend is declared and not wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of those securities which was specifically charged under section 8 as part of the profits of the business of the assessee. But if the reasoning of the Madras High Court is correct, then that reasoning, far from supporting Mr. Joshi, is against him, because the ratio of that decision as we see it is that inasmuch as the Income-tax Act has provided a separate head for income from securities, that income cannot be treated as income falling under any other head. If the intention of the Legislature was that dividend should be a separate head of income as interest from securities, there was nothing to prevent the Legislature in section 6 from adding one more head to the heads included in that section and providing that dividends should be a se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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