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TMI Blog1971 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... owing question for obtaining the opinion of the High Court: "Whether, on the facts and in the circumstances of the case, the Tribunal rightly excluded the sum of Rs. 61,656 from being assessed as an extra dividend income of the assessee?" The High Court answered that question in the affirmative. Aggrieved by that decision, the Commissioner of Income-tax, West Bengal, has brought Civil Appeal No. 2347 of 1968 on the strength of the certificate issued by the High Court under section 66A(2) of the Act. But the certificate given by the High Court is not supported by any reason. Hence, the same cannot be held to be a valid certificate. Because of the invalidity of the certificate that appeal must be held to be not maintainable. In order to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-company. Aggrieved by that order, the assessee-company went up in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer and rejected the contention of the assessee-company that those shares should be valued as per their face value. Thereafter, the assessee company took up the matter in second appeal to the Appellate Tribunal. The Tribunal allowed the assessee's appeal. It held that, in order to bring any distribution within the category of dividend, it must be proved as a fact that what was distributed by the company was its accumulated profits. The Tribunal appears to have been of the view that the distribution of share scrips was not a distribution of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals in accordance with the aforementioned resolution dated November 18, 1958, that company had also been paid dividend by the parent company partly in cash and partly in shares of Gwalior Rayon and Silk Manufacturing Co. Ltd. and Hind Cycles Ltd. In the assessment of that firm also, the question arose whether it was open to the Income-tax Officer to value the shares distributed to that company at a price higher than its face value. The facts of this case and that case are identical. Therein, the Appellate Tribunal (a different Tribunal) held that it was permissible for the Income-tax Officer to do so. In appeal the Madhya Pradesh High Court upheld the decision of the Tribunal--see Ujjain General Trading Society (P.) Ltd v. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee-company in the shape of dividends. We have earlier seen that the income received by the assessee-company need not be in the shape of cash only. It may also be some other property or right which has monetary value. Therefore, when dividend is received in kind, in order to find out the true income received by an assessee, the property that has been received by him has to be valued on the basis of its market value. Otherwise it is not possible to compute the income received by him. It is well-known that the face value of shares need not be their real value at a given point of time. The market price of particular shares may be very much more than their face value or very much less. It would be wrong to say that when shares are distributed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in those years, the market value of those shares was less than their face value and the parent company valued those shares for the purpose of its income-tax on the basis of market value and riot according to their face value. The parent company appears to believe in the saying "Heads I win, tails you lose". But that is only by the way. The only question that we have to decide is what is the income received by the assessee-company during the assessment year in question--the income in the real sense. On this question there can be no two answers and the only answer is that the income received by it is the cash amount received plus the value of the shares received, the real value of the shares as on the date the assessee-company became entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idends as well as its shareholders who receive the dividend. In support of this theory of his he relied on sections 12(1A), 16(2), 18(5), 20 and 35(9) of the Act. Dividend is treated as income in view of section 12(1A). Net dividend received by the shareholder is grossed up for inclusion in the total income of the assessee under section 16(2). Section 18(5) provides for refund of the tax paid on the dividend income by the company which has distributed dividend. Section 20 provides for the issuance of a certificate showing the gross dividend, tax payable on that dividend and the net dividend. Section 35(9) empowers the Income-tax Officer to recover from the person who receives dividend the tax in respect of the same, payable by the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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