1969 (8) TMI 5

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..... 125 1952-53 1358 B.S. Rs. 29,250 1953-54 1359 B.S. Rs. 28,125 The assessee claimed that out of the amounts set out in the table only Rs. 8,669 for the year 1357 B. S., Rs. 20,469 for the year 1358 B. S., and Rs. 21,822 for the year 1359 B. S., were taxable as dividend, and the remaining amounts were not taxable, since they were declared out of the capital gains of the company which comprised salami or premia received by it as consideration for grant of long-term mining and other leases and as compensation for compulsory acquisition of lands for public purposes. The Income-tax Officer brought the entire amount to tax declared as dividend for each of the three years in question and grossed up the amounts under section 16(2) of the I .....

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..... eceipt of income in the hands of the assessee and taxable as the income of the assessee from other sources ? (3) Whether, on the facts and in the circumstances of the case, the distribution to the assessee of the amount attributable to salamis realised by the Ukhara Estate Zamindaries (P.) Ltd., for grant of long-term leases after the 31st March, 1948, was not in the hands of the assessee, receipt of dividend within the meaning of section 2(6A) of the Indian Income-tax Act, 1922 ? " The High Court recorded answers on all the questions in the negative, following their earlier judgments in Income-tax Reference Nos. 131 of 1961 and 3 of 1964. The High Court however observed that it was agreed between the parties that the answers in the neg .....

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..... 131 of 1961 and other references, decided by this court on July 25, 1969, the only question of law raised was whether distribution of dividend out of capital gains was taxable. The scope of enquiry in this group of cases, in view of the form of the questions, is more extensive. In appeals Nos. 737 to 739 of 1968 we held that, having regard to the Explanation to section 2(6A), capital gains arising after 31st day of March, 1948 (and before the 1st day of April, 1956), were not part of accumulated profits, and if dividend be distributed to the shareholders of the company out of those capital gains, to the extent of the distribution out of the capital gains the dividend must be deemed exempt from liability to tax under section 12 as dividend i .....

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