TMI Blog1994 (1) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of income-tax and, as, according to him, the gross dividend was includible under section 5(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), especially in view of the amendment brought about by the Finance Act, 1965, to the United Kingdom Income-tax Act, 1952, under which U. K. companies deducted tax on dividends and paid the amounts deducted to the Inland Revenue as an amount, apart from its own tax liability. Reassessments were made including the gross dividend income of Rs. 56,682 and Rs. 59,076, respectively, received by the assessee, instead of Rs. 33,610 for each year. On appeal, the Appellate Assistant Commissioner took the view that as there was no provision in the Act authorising the gross dividend inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee outside India during the assessment years in question. Strong reliance in this connection was placed upon the decision in CIT v. Oriental Co. Ltd. [1982] 137 ITR 777 (Cal). On the other hand, learned counsel for the Revenue submitted that whatever might have been the position earlier, with reference to the payment of tax by the companies under the provisions of the U. K. Income-tax Act, by reason of the amendment brought about by the Finance Act of 1965, to the U. K. Income-tax Act, 1952, the United Kingdom companies deducted tax from dividend and paid the same to the Inland Revenue and tax so deducted was nothing but the income of the assessee and what had accrued or arisen to the assessee was thus not only the net dividend in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garded as having accrued or arisen or even received by the assessee. We are also fortified in this view by the decision of the Supreme Court in CIT v. Clive Insurance Co. Ltd. [1978] 113 ITR 636. Therein, a company resident in India held shares in certain United Kingdom based companies and by virtue of the exercise of option under the provisions of the U. K. Income-tax Act, 1952, to reimburse themselves the tax paid by them, the United Kingdom companies deducted income-tax from the gross dividend paid to the shareholders and the assessee during the relevant assessment year received a net dividend income of Rs. 15,266 after deduction of Rs. 9,881 at the standard rate. The petitioner claimed double taxation relief under section 49D of the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le certainty, it can be said that in respect of the dividend income of the assessee, income-tax has been paid by deduction or otherwise under the law in force in the country in which income had arisen. It may also be noticed that unless the gross amount was the income of the assessee, the question of payment of tax thereon by deduction at source by the assessee may not arise. We are, therefore, of the view that though the decision of the Supreme Court referred to above dealt with a case of the availability of relief under section 49D of the Indian Income-tax Act, 1922, yet the considerations adverted to therein with reference to the nature of the deduction and with reference to the character of the tax deducted at source being eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, an Indian shareholder receiving dividend income would be liable to pay tax on the gross income without any relief, except that he gets credit to the extent of the tax deducted at source, while an Indian shareholder owning foreign shares would be taxed only on the net dividend income and he would get double taxation relief, that is to say, the relief on the basis that the tax had been deducted at source. Indeed, the decision also suggested the interference of the Legislature. However, when a construction is possible which does not lead to an anomaly, we are of the view that that construction should be adopted in preference to the one which leads to an anomaly. We are, therefore, unable to accept and apply the principles laid down in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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