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Interpretation of the term "previous years" in section 2(6A)(c) of the Income-tax Act, 1922. Analysis: The judgment by the Rajasthan High Court involved a reference made by the Income-tax Appellate Tribunal regarding the taxation of a sum received by the assessee from a company in liquidation. The key issue revolved around the interpretation of the term "previous years" in section 2(6A)(c) of the Income-tax Act. The assessee argued that since there was no income-tax in the relevant territory before the company's liquidation, the accumulated profits received should not be considered as dividend and taxed. The Income-tax Officer treated the amount as dividend, leading to appeals and the reference to the High Court. The High Court analyzed the provisions of section 2(6A)(c) and section 2(11)(a) of the Act. The contention was whether the term "previous years" should be linked to an immediately following assessment year. The court delved into the legislative intent behind the use of the term and concluded that the intention was to cover the six accounting years preceding the date of liquidation, not necessarily tied to specific assessment years following each accounting year. The court emphasized that the context of the provision indicated that the focus was on the accounting years of the company. The court also referred to a previous decision to support its interpretation, highlighting that the term "previous year" in tax statutes does not always require a direct correlation with an assessment year. The judgment emphasized that the words "previous years" in the context of section 2(6A)(c) simply referred to the six accounting years before liquidation and did not necessitate an assessment year immediately following each of those years. The court rejected the argument that there must be an assessment year following each of the six previous years for taxation purposes. In conclusion, the High Court held that the sum received by the assessee was liable to be taxed as dividend under section 2(6A)(c) of the Income-tax Act. The judgment provided a detailed analysis of the legislative intent behind the provision and clarified that the term "previous years" should be understood in the context of accounting years rather than being strictly tied to assessment years.
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