9911796707
TMI Blog1968 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... pealed section 16(2) and that the disputed dividend was taxable in the assessment year 1953-54 irrespective of the method of keeping accounts consistently followed by the assessee-company?" The assessee is the Punjab Co-operative Bank Ltd., Amritsar, and the dispute, which is the subject-matter of the questions under reference, is concerned with the dividend income of Rs. 14,500, received by the bank as holder of the shares of the Gwalior Forest Products Limited, Shivpuri, which declared the dividend in its annual general meeting held on 2nd of September 1952. The dividend warrants were actually received by the assessee on 12th January, 1953. The calendar year being the accounting year of the assessee bank it made a return of the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the case set up by the revenue. These are precisely the two matters which form the kernel of the two questions which are to be answered in this reference. The first provision of law which has to be noted is contained in section 13 of the Act, dealing with the method of accounting, which is to this effect : " Income, profits and gains shall be computed .......... in accordance with the method of accounting regularly employed by the assessee : ... " The other provision of law is contained in section 16 dealing with exemptions and exclusions in determining the total income, and sub-section (2) regarding dividends is to this effect : For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reaching the conclusion that the date of actual receipt of the dividend must be regarded as 2nd of September, 1952, when the dividend was declared in the annual general meeting, has not been approved by their Lordships of the Supreme Court, in J. Dalmia v. Commissioner of Income-tax. Mr. Justice Shah, as the spokesman of the Supreme Court in Dalmia's case observed that the test applied by Chief Justice Chagla in the Division Bench authority of Commissioner of Income-tax v. Laxmidas Mulraj Khataul, " . . . that because the dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable the year in which it is declared cannot be regarded as correct ". All the same, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the case to show that the assessee became entitled to the dividend income in the calendar year 1953-54. So for as the second question is concerned, it cannot legitimately be urged that section 13, which is purely permissive, can control the provisions of section 16(2). Section 13 allows an assessee to compute his gains, profits and income according to the method adopted by him in the maintenance of accounts. The tax on dividend, however, is payable in accordance with the requirements of section 16(2) of the Act. It follows that the mere acceptance by the department of the previous returns of the assessee in which the dividend income had been shown as in the assessment year in question would not sanctify this practice into a princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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