TaxTMI 
TaxTMI 
1971 (9) TMI 23
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....ving 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 was varying his explanations from time to time about the source of funds of the company from which the dividends were paid, but he also found that dividends were paid partly from the accumulated capital receipts of the company. He, however, took the view that in determining the real nature of a re....
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....ion 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, excluded dividends amounting to Rs. 2,344 out of the amount of Rs. 3,127. The department came up in appeal before the Tribunal and it was their contention that section 2(6A) had no relevance to the issue in dispute at all and that if the amount distributed was dividend in the ordinary parlance, it....
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....ends 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 Commissioners v. Trustees of Reid. We, accordingly, hold that from whatever sources the company might have paid them, by whatever name the paying company might have called them, the payments were in the nature of a return to the shareholders on their outlay on the shares and they had been paid periodically an....