TMI Blog1970 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... swering the following question referred to it by the Income-tax Appellate Tribunal in the negative and in favour of the assessee: "Whether, on the facts and in the circumstances of the case, the income from dividends declared during the relevant previous years was rightly included in the total income of the company for the assessment years 1956-57 and 1957-58 ?" The assessee is a limited company having considerable investment in shares. For the assessment year 1956-57 an amount of Rs. 1,843 was assessed as income on account of dividends in the hands of the company while for the assessment year 1957-58 no income was assessed on account of dividends. The Income-tax Officer found that dividends amounting to Rs. 40,562 (net) had been decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5,000 during the year ending June 30, 1956. These dividends had been declared in favour of the assessee. He, therefore, on proper calculation included the dividend amount of Rs. 48,063 for the assessment year 1956-57 and an amount of Rs. 25,281 for the assessment year 1957-58. When appeals were taken to the Tribunal by the assessee the controversy centered on the question whether the dividends were to be included during the relevant assessment years unless they had been received by the assessee since it was following the cash system of account or whether mere declaration of dividends amounted to a payment unless qualified by any condition. The Tribunal only accepted the contention of the assessee that if dividends had to be included on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax held that the expression "paid" in section 16(2) did not contemplate actual receipt of the dividend by the shareholder. Generally the dividend could be said to have been 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 said that the legislature had not made dividend income taxable in the year in which it became due; by express words of the statute it was taxable only in the year in which it was paid, credited or distributed or was deemed to be paid, credited or distributed. The other cases which have been referred to and in which the above view has been reiterated are Ramesh R. Saraiya v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the Income-tax Appellate Tribunal to submit a supplementary statement of case "with regard to the point of time when the dividend warrants were delivered to the assessee". The Tribunal has submitted a statement of case, and has observed that there is no information on record as to when the dividend warrants were handed over to the assessee. In the absence of any evidence to show that the dividend warrants were handed over to the assessee within the years of account ending June 30, 1955, and June 30, 1956, it cannot be held that the assessee is liable to pay income-tax on the dividends received by it. The burden of proving that an amount was taxable because it was received in the year of account lay upon the department, and in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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