TMI Blog1958 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the company went into liquidation, and on April 22, 1950, the liquidator distributed a portion of the assets among the shareholders, and the appellant was paid a sum of Rs. 26,000 under this distribution. It is common ground that this sum represents the undistributed profits of the company which had accrued during the six accounting years preceding the liquidation. It should be mentioned that there was in the State of Udaipur no law imposing tax on income, and that it was only under the Indian Finance Act, 1950, that the residents of the State of Rajasthan, in which the State of Udaipur had merged, became liable for the first time to pay tax on their income. That Act came into force on April 1, 1950. We are concerned in these proceedings with the assessment of tax for the year 1951-52, and that, under section 3 of the Act, has to be on the income of the previous year, i.e., 1950-51. Now, the dispute in the present case relates to the sum of Rs. 26,000 paid by the liquidator to the appellant on April 22, 1950. By his order dated July 3, 1952, the Income-tax Officer held that this was dividend as defined in section 2(6A)(c) of the Act, and included it in the taxable income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous years preceding the date of the liquidation, and that, in the present case, though the amounts distributed came out of the accumulated profits of the company, those profits had not been accumulated within the six previous years of the liquidation of the company. It is not in dispute that the profits which were distributed had been accumulated during the years 1943-44 to 1948-49, i.e., during the six years preceding the liquidation. The point in controversy is whether those years can be said to be "previous. years" within section 2(6A)(c) of the Act. The appellant contends that "previous year" as defined in section 2(11) of the Act means the year which is previous to the assessment year, that accordingly when there is no year of assessment, there can be no previous year, that construing the words "six previous years" in section 2(6A)(c) in the light of the definition of "previous year" in section 2(11) of the Act, the years 1943-44 to 1948-49 cannot be held to be previous years, because the Indian Income-tax Act came into force in the State of Rajasthan only on April 1, 1950, and prior to that date there was at no time any law imposing tax on income in the State of Udaipur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it uses the expression "previous year" in a sense different from that which is given to it in section 2(11), because it would be a contradiction in terms to speak of six previous years in relation to any specified assessment year. It was argued that under section 13(2) of the General Clauses Act, 1897, words in the singular should be read as including the plural, and that, therefore, the definition of "previous year" in section 2(11) could be read as meaning "previous years". But section 13 only enacts a rule of construction which is to apply "unless there is anything repugnant in the subject or context", and to read a "previous year" as "previous years" in section 2(11) would be to nullify the very definition of a "previous year" enacted therein, and such a construction must therefore be rejected as repugnant to the context. It was then suggested that all the six previous years might be regarded as previous each to the next following year if that was itself a year of assessment, and that such a construction would, consistently with the contention of the appellant, give full effect to the definition in section 2(11) of the Act. But this argument overlooks that while there may be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent from the calendar years, and the words "previous year" would be more appropriate to connote the financial year of a company. Now, it should be mentioned that when a company in liquidation distributes its current profits, that would also be not dividend as held in Burrell's case, and the law to that extent has been left untouched by section 2(6A)(c). And it has accordingly been held by the High Courts that the current profits of a company in liquidation which are distributed to the shareholders are not dividend within section 2(6A)(c), vide Appavu Chettiar v. Commissioner of Income-tax and Girdhardas Co. Ltd. v. Commissioner of Income-tax. Therefore, accumulated profits which are sought to be caught in section 2(6A)(c) would be the profits accumulated in the financial years preceding the year in which the liquidation takes place, and it is this that is sought to be expressed by the words "previous years" in section 2(6A)(c). In the present case, as the company went into liquidation on January 18, 1950, excluding the current year which commenced on April 1, 1949, the six previous years will be the years 1943-44 to 1948-49. So far, we have considered the question on the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Part B States Laws Act (III of 1951), that during the relevant period the Mewar Industries Ltd. was not a company as defined in section 2(5A) of the Act, and that therefore the distribution of assets made by that company on April 22, 1950, could not be held to be a dividend as defined in section 2(6A)(c). But that is not a question which was referred for the opinion of the High Court under section 66(1) of the Act ; nor is it even dealt with by the Tribunal and therefore cannot be said to arise out of its order. Moreover, whether the Mewar Industries Ltd. is a company as defined in the Indian Income-tax Act is itself a question over which the parties are in controversy. The definition of "company" under the Indian Income-tax Act has undergone several changes from time to time, and on the relevant date it stood as follows : " 2. (6) 'company' means --- (i) any Indian company, or (ii) any association, whether incorporated or not and whether Indian or non-Indian, which is or was assessable, or was assessed, as a company for the assessment for the year ending on the 31st day of March, 1948, or which is declared by general or special order of the Central Board of Revenue to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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