TMI Blog1968 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... end on its shares in respect of its year of account ending September 30, 1948. The Indian State of Benares merged with India and the territory became part of the taxable territories with effect from December 1, 1949. The Income-tax Officer, Benares District, brought to tax the dividend received by the bank from the Glass Works in the assessment year 1950-51. The Appellate Assistant Commissioner affirmed the inclusion of the dividend in the bank's income for the year in question. In appeal to the Income-tax Appellate Tribunal, Counsel for the bank tendered in evidence a certificate dated November 18, 1954, from the Glass Workes "that a sum of Rs. 69,000 (rupees sixty-nine thousand only) was paid as dividend to the Benares State Bank Ltd. for the year ended 30th September, 1948, on 31st December, 1949". Relying upon the recitals in the certificate that the dividend of Rs. 69,000 was received by the bank on December 31, 1949, at Ramnagar, which was then part of the taxable territories, the Tribunal confirmed the order of assessment. In the opinion of the Tribunal, under section 4(1)(a) of the Income-tax Act, 1922, the income, profits and gains received by the bank in the taxable te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income tax where Subba Rao J., delivering the majority judgment of the court, observed at page 9: "The expression 'distribution' connotes something actual and not notional. It can be physical ; it can also be constructive. One may distribute amounts between different shareholders either by crediting the amount due to each one of them in their respective accounts or by actually paying to each one of them the amount due to him." After referring to the judgments of this court in J. Dalmia's case and Ramesh R. Saraiya's case was observed : "The same meaning must be given to the word 'distribution'. The only difference between the expression 'paid' and the expression 'distribution' is that the latter necessarily involves the idea of division between several persons which is the same as payment to several persons." This court expressly dissented in J. Dalmia's case from the view of the Bomay High Court in Commissioner of Income-tax v. Laxmidas Mulraj Khatau that as soon as dividend is declared by a company it becomes income of the assessee : it is chargeable to tax as income of the year in which it is so declared, and the fact that the actual payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question raised by the Tribunal. We may invite the attention of the Tribunal to the decisions of this court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax and Keshav Mills Co. Ltd. v. Commissioner of Income-tax which have consistently laid down the rule that, in submitting a supplementary statement of the case, the Tribunal will restrict itself to the evidence on the record and will not be entitled to take any additional evidence. The Tribunal will submit a supplementary statement of the case within three months from the date on which the order of this court is received by the Tribunal. The appeal to be placed for hearing after the supplementary statement of the case is received. [The Tribunal submitted the supplementary statement of case called for.] S. T. Desai, Senior Advocate (Mrs. A. K. Varma, Advocate, and J. B. Dadachanji, Advocate, of J. B. Dadachanji and Co., with him), for the appellant. Jagdish Swarup, Solicitor-General of India (S. K. Aiyar, R. N. Sachthey and B. D. Sharma, Advocates, with him), for the respondent. JUDGMENT The judgment of the court was delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time being comprised in the Provinces of India, but excluding the merged territory of Cooch-Behar ...... Provided that the taxable territories shall be deemed to include-- (a) the merged territories-- (i) as respects any period after the 31st day of March, 1949, for any of the purposes of this Act, and...." The State of Benares, after merger on December 1, 1949, with the Dominion of India, formed part of the State of Uttar Pradesh and was on that account part of the taxable territories by virtue of the definition contained in section 2(14A) of the Indian Income-tax Act. Assuming that the dividend accrued within in Indian State, it was received by the bank in the taxable territories on December 31, 1949, and by the express words contained in section 14(2)(c) of the Indian Income-tax Act, 1922, before it was omitted by the Taxation Laws (Extension to Jammu and Kashmir) Act, 1954, it was not exempt from liability to payment of tax even if the right thereto had accrued to the bank in an Indian State. It was then urged that the dividend must be deemed to have been received by the bank on July 25, 1949--the day on which it was declared and on that date the bank being a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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