TMI Blog1971 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 3,127 from Ukhra Estate Zamindaries Ltd., and while submitting his return of income, claimed that these dividends were not taxable because they came out of the funds of the company which were not in any sense taxable profits. Before the actual assessment was made, the assessee went on giving slightly different explanations about the source of the funds from which dividends were declared, but his main contention was that the said dividends had been distributed by the company out of its capital gains which arose to the company after 31st March, 1948, and that dividends under section 2(6A) did not include any distribution by the company of capital gains arising after 31st March, 1948. The Income-tax Officer thought that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the category of dividend under section 2(6A). He realised that the definition of dividend in section 2(6A) was not exhaustive and that the distribution of current profits was left out of its ambit, but he took the view that distribution of current profit became income apart from the definition of dividend whereas distribution of accumulated profits became income only by virtue of the definition under section 2(6A). And since according to him by virtue of the definition in section 2(6A) certain accumulated capital gains, i.e., those arising before 1st April, 1946, and after 31st March, 1948, were excluded from the category of dividends, distribution of such gains could not be taxed in the hands of the shareholders. He, accordingly, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich they are paid. We accepted the departmental contention and held that the Appellate Assistant Commissioner erred in presuming that dividends in order to be taxed as dividend must come within the definition of section 2(6A). We took the view that section 2(6A) was concerned only with deemed dividends and that the exclusion of certain capital gains from accumulated profits for the purposes of section 2(6A) had no bearing on the issue in dispute. We also held that the ratio of the decision in Bacha F. Guzdar v. Commissioner of Income-tax was applicable to all cases in which dividends are paid from sources which are not liable to income-tax like agricultural income and also relied on the House of Lords' decision in Inland Revenue Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
