TMI Blog1970 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... d the 31st October, 1951, the said two sugar companies declared dividend on 16th January, 1952. Under the resolution passed by each of the aforesaid two sugar companies at their extraordinary general meetings held on the same date, namely, 16th January, 1952, it was decided that the dividend was to be paid to the shareholders in specie, being the shares of Dalmia Cement Ltd. held by the said sugar companies. In accordance with the said resolution and in accordance with the number of shares held by it, the assessee became entitled to receive 5,453 and a half shares of Dalmia Cement Ltd. The face value of each of these shares was Rs. 10. Immediately after the declaration of the dividend and the resolution for the payment of the dividend to be made in specie, a body of trustees was formed who took over charge of all the dividend in specie for being distributed to various shareholders. This happened on the same date as the declaration of the dividend and the resolution to pay it in specie, namely, on the 16th January, 1952. Some of the shareholders, however, objected to the payment of the dividend in specie and filed applications under the Indian company law before the High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market rate prevailing on the date when such specie was actually received. Thus the valuation, as computed by the Income-tax Officer, was confirmed. The assessee preferred a second appeal to the Tribunal. The only question that was argued on behalf of the assessee was whether the dividend received in the form of specie was assessable during the assessment year in question or, in the year in which the dividend had been declared, namely, for the assessment year 1953-54. The Tribunal, relying upon some of the observations of their Lordships of the Supreme Court in the case of J. Dalmia v. Commissioner of Income-tax, held that the income from dividend was not assessable in the assessment year 1958-59, but it was assessable in the assessment year 1953-54. It could not therefore be taxed in the assessment year in which it had been assessed, namely, for assessment year 1958-59. The assessee's appeal on this issue was allowed. It is on these facts that the question mentioned at the beginning of this order was referred by the Tribunal to this court, at the instance of the Commissioner of Income-tax. It appears to us that the order made by the Tribunal is correct. It was common groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of section 16(2) when the company discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto. In the instant case the two sugar companies had irrevocably placed the shares of Dalmia Cement Ltd. with the trustees for being distributed to the shareholders as dividend. The dividend was unconditionally available to the members entitled thereto. If, however, the members themselves chose not to take them, it cannot be said on that ground that the dividend was not available to them. Since the dividend had been declared on the 16th of January, 1952, and was unconditionally available to the assessee on the date, it was an income which fell to be taxed in the assessment year 1953-54, and not in the assessment year in which it has been assessed. It is true that the assessee itself had included that dividend income in its return for the year in question but there is no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled thereto. In the present case, however, it is not a question of the sugar companies having made a declaration of dividend in general for that by itself cannot be regarded as payment within the meaning of section 16(2). What happened in this case was that a dividend was declared on January 16, 1952. The amount was therefore made unconditionally available to the shareholders of the sugar companies on the same day, the specie was made over to the trustees to hold the same " in trust for the shareholders of the assessee (company) whose names appear on the register of the company on 16th January, 1952 ". The sugar companies had already declared the dividend and had done all that lay in their power to declare and distribute the dividend. Even the share scrips were handed over to the trustees and the trustees had been empowered to distribute the same amongst such shareholders whose names appeared on the register of the companies on the 16th day of January, 1952. If any of the shareholders objected to that course, their decision did not affect the sugar companies or the present assessee. Even that dispute was later compromised on 18th January, 1957. The declaration thus made was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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