TMI Blog1957 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act. A few relevant facts in connection with the dividend that was declared and paid in the accounting year are these. The directors of the N Ltd., by their report dated the 17th of May, 1949, recommended a dividend of ₹ 51 and a bonus of ₹ 300 per share. On the same date a notice was issued convening a general meeting of the members of the company on the 15th of June, 1949. On the 21st of May, the assessees received a sum of ₹ 1,50,000 from the N Ltd. through the firm of Ahmedabad. The same was debited by the, N Ltd. to the assessees' account at Bhavnagar on the same date. The mills declared a dividend on the 15th of June, 1949, and credited to the assessees' account in its books on the 30th of June two sums of ₹ 1,17,000 and ₹ 19,890 being the bonus and the dividend on 390 shares. This account was debited on the 15th of July, 1949, a sum of ₹ 1,035 as interest on the sum of ₹ 1,50,000 which had been debited on' the 21st of May, 1949. On the 20th of July, 1949 sum of ₹ 47,250 was credited to this account being the assessees' share in the managing agency commission. The balance of ₹ 33,105 after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable territories. With great respect to the Tribunal, we find it somewhat difficult to follow the reasoning underlying this passage. When a dividend is declared, no doubt the shareholder is entitled to receive it; but it is quite competent to a shareholder to direct that it should not be sent to him in the taxable territory, but should be sent somewhere else. If he does so direct, does it follows there from that he must be deemed to have received it first in the taxable territory and then to have sent it out. In Courts opinion, such a transaction does not by itself import any receipt in the taxable territory, constructive or otherwise and the basis on which the Tribunal came to the conclusion that there was a constructive receipt is, with respect to the Tribunal, a basis which we cannot uphold. None the less, we have yet to determine whether there was a remittance of ₹ 1,50,000 to India. Now the facts of this case, however, were very eloquent and the proximity of dates and the particular action by the parties concerned can leave little doubt in the mind of any one that the amount of ₹ 1,50,000 was actually paid to the assessees at Ahmedabad at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebt was transferred to Colombo and satisfied in Colombo, that is outside the United Kingdom, out of profits which the assessee had earned as a partner in Colombo. Obviously, therefore, there could have been no case of a remittance ; but in the case before us there was an actual remittance of money to Ahmedabad in the taxable territories and it is not a question of paying the amount outside the taxable territories to satisfy a pre-existing debt. Mr. Palkhivala also very fairly drew our attention to a case which the Department relies upon and that is the Full Bench decision of the Madras High Court in Commissioner of Income-tax v. Nadimuthu Pillai [1940] 8 ITR 249. What was decided in that case is well stated by Krishnaswami Ayyangar, J., at page 260 : A man with profits available in a foreign country and wanting to bring them into this country may find it necessary as a measure of convenience to obtain a temporary overdraft, or resort to a temporary borrowing which he proceeds to make good immediately out of his profits. In such a case, the remittance though in forma specifica is a remittance of capital, it is in truth a remittance of profits, and is taxable as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o give credit to the trustees for the tax paid by the beneficiaries either under section 18A or under section 23B and it was arising out of this order of the Tribunal that the following question has been raised at the instance of the Commissioner : (1) Whether on the facts and circumstances of the case therefore the tax paid by the beneficiaries under section 18A or section 23B of the Act could be set off against the liability of tax of the trustees in respect of the same income? We are surprised that responsible officers of the Income-ax Department should take up so unreasonable an attitude ,in matters of taxation. What was sought to be taxed in the hands of the trustees was the income which the trustees received on behalf of the beneficiaries, and the Department apparently want f*to recover the full tax both from the trustees as well as from the beneficiaries, or, in any event, to recover the full tax from the trustees and retain all advance payments made on behalf of the beneficiaries. The position in law appeared to be absolutely and entirely clear, that tax shall be levied upon the trustees under section 41(1) (to quote only the relevant part of the sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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