TMI Blog1977 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... not Rs. 1,05,000 ?" The assessee is a private limited company. Its accounts are closed at the end of each calendar year. The calendar year with which we are concerned is 1958 for which the assessment year is 1959-60. For the calendar year 1957, the assessee made up its accounts and its audited balance-sheet was passed by the shareholders in the annual general meeting of the company held on December 4, 1958. In the report accompanying the accounts, the directors recommended the distribution of Rs. 1,05,000 as dividends. In the aforesaid annual general meeting the aforesaid recommendation as to declaration of dividends was approved by the shareholders. The company had an account called "dividend account". In that account, the undistrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in excess of 6% of the paid-up capital of the company. The paid-up capital of the company before us was Rs. 3 lakhs. Any distribution in excess of Rs. 18,000 was thus liable to be followed by the withdrawal of rebate in the manner provided under clause (c) of the second proviso. The Income-tax Officer took into consideration this proviso. He held that the company had declared Rs. 1,05,000 as dividends and this amount was to be taken into consideration for withdrawing the rebate. On the computation made by him, the Income-tax Officer withdrew Rs. 21,300 out of the rebate. Appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner who held that the expression "a company which has distributed to its shareholders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of law with which we are concerned. Mr. Pal also argues that we should hold that the expression "a company which ...... has distributed ...... dividends" means a company which has declared dividends by following the dissenting judgment of Bachawat J. in the aforesaid Supreme Court case. At pages 15 and 16 of the report, Bachawat J. says that the word "distributed" is not synonymous with the word "paid or credited" and under section 12(1A) of the Indian Income-tax Act, 1922, and section 8 of the Income-tax Act, 1961, the declaration of dividend is crucial even for the purposes of assessment of the shareholders and the legislature now recognises that the distribution of the normal dividend takes place on the declaration of the divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payable at a fixed rate........" The expression used is a "a company which has distributed to its shareholders...... dividends". The words "has distributed" cannot mean "has declared". Further, the aforesaid expression is unambiguous and it connotes the idea that, after the declaration of dividends, the company has actually or constructively distributed the dividends to its shareholders. Though Rs. 1,05,000 was declared as dividends, Rs. 47,000 was only distributed by the company. Therefore, the Tribunal was right in holding that Rs. 47,000 and not Rs. 1,05,000 was distributed as dividends. We accordingly return our answer in the affirmative and in favour of the assessee. There will be no order as to costs. PYNE J.-I agree. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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