TMI Blog1956 (8) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be delivered, an application was made that counsel for the Commissioner of Income-tax could not appear as he had no knowledge of the date fixed. Notice was issued on this application, and 31st July, 1956, was fixed for hearing. The assessee did not seriously contest the application for rehearing and the only prayer was that if the case was to be reheard, it should be heard on the merits on the date fixed, namely, 31st July, 1956. As the judgment had not been delivered, we thought it best to hear both parties on the merits, and did so on 31st July, 1956. The facts, which have led to this reference, are these: The assessee was being assessed to income-tax for the assessment year 1951-52, the relevant account period being the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... His appeal to the Appellate Tribunal was also dismissed. Thereupon, he made an application for reference in the matter to this Court, and the Appellate Tribunal has referred the following question to us for reply Whether on the facts and in the circumstances of this case, the aforementioned sum of ₹ 26,000 was liable to be taxed in the assessee's hands as 'dividend' within the meaning of that term in section 2 (6A) (c) of the Income-tax Act . Section 2 (6A)(c) reads as follows: 'Dividend' includes any distribution made to the shareholders of a company out of accumulated profits of the company on the liquidation of the company: Provided that only the accumulated profits so distributed which arose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of that term in section 2(6A)(c) if there is an assessment year following the previous year. If there is no assessment year, there can be no previous year , and as in this case there can be admittedly no assessment year before 1st April, 1950, in that territory, there can be no previous year also. The argument so put appears plausible. But a close consideration of section 2(6A)(c) will show that the intention of the Legislature was not, in this section, to relate each of the six previous years necessarily to an immediately following assessment year . The words previous years appear to have been used in the proviso with the idea of indicating the accounting years of the company and not merely six calendar years before the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be an assessment year immediately following the accounting year for each of the six years. What, after all, in substance is the meaning of the words previous year in section 2(11)(i)(a )? These words really mean the financial year or the accounting year, and for purposes of chargeability to income-tax they are related to an immediately following year called the assessment year. When, therefore, the proviso to section 2(6A)(c) has used the words previous years , they can only mean the six financial or accounting years immediately preceding the date of liquidation. What the assessee wants us to hold is that six previous years mean not only the six accounting years immediately preceding the date of liquidation, but that there must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s years before it can be said that there were six previous years of the company must fail. It was urged that we must not treat any word in the statute as surplusage and must give meaning to all the words to be found in the proviso. From what we have said above, it will be obvious that we are not treating the words previous years as surplusage. We are giving a meaning, to them; but in the context in which these words have been used, it is obvious that they do not mean that there must be an assessment year immediately following each previous year out of six. We may in this connection refer to Commissioner of Income-tax, Madras v. K. Srinivasan [1953] 23 ITR 87. In that case, the interpretation of the words end of the previous year i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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