9911796707
TMI Blog1968 (8) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 30t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des : "For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been paid, credited or distributed to him ........" This court in J. Dalmia v. Commissioner of Income-tax held that the expression "paid" in section 16(2) did not comptemplate actual receipt of the dividend by the member : in general, dividend may be said to be paid within the meaning of section 16(2) when the company discharged its liability and made the amount of dividend unconditionally available to the member entitled thereto. It was observed. "The legislature had not made dividend income taxable in the year in which it becomes due : by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 income is deferred is immaterial and irrelevant, At this stage we do not propose to express any opinion whether, apart from the declaration of dividend, there are other facts found by the Tribunal from which it may be legally inferred that there was payment or distribution of dividend on July 25, 1949, because the second argument raised by counsel for the bank cannot be considered without calling for a supplementary statement of the case. The High Court has observed in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the dividend warrants were handed over, we deem it necessary in the interests of justice to direct the Tribunal to submit a supplementary statement of the case under section 66(4) of the Indian Income-tax Act relating to the date on which the dividend warrants were delivered to the bank. We are of the opinion that the statements made in the statement of the case are not sufficient to enable us to determine 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year of account of the bank is the calendar year. The State of Banares in which the bank had its registered office merged with the Indian Union on December 1, 1949. The Glass Works declared a dividend at a general meeting on July 25, 1949. Cheques for Rs. 69,000 issued by the Glass Works in favour of the bank in payment of the dividend were encashed by the bank on December 31, 1949. The dividend received by the bank has been brought to tax in the assessment year 1950-51. Counsel for the bank urged that the bank cannot be assessed to tax in respect of dividend accruing to it at a time when the bank was a non-resident. It is urged that by virtue of section 14(2)(c) of the Income-tax Act, 1922, as then in force, the income. received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 non-resident it could not be brought to tax. But under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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