9911796707
TMI Blog1981 (9) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend that should be included in the net wealth. 2. The interim dividend seems to have been declared under regulation 96 of the Appendix to the Companies Act which appears to have been adopted by the company Nirlon Synthetic Fibres Chemicals Ltd., in its articles of association. It was declared by the directors on 20-3-1974. The income-tax deduction at source on this amount of Rs. 1,50,255 was Rs. 34,599. That tax deduction was made on 25-3-1974 and paid to the credit of the Government of India before the end of March 1974. The WTO has ascertained from the company that the said dividend warrant was handed over to the assessee in March 1974. The dividend warrant was handed over to one Vaidyanatha Iyer who in turn handed it over to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s possible for the company not to honour the resolution of the directors whereby the interim dividend is paid. The tax deducted at source has been paid over to the Government. Though section 198 of the Income-tax Act creates a fiction in that such tax deducted at source is to be treated as the income of the assessee such fiction is confined only to the administration of the Income-tax Act. The other provisions of the said Act, namely, sections 201, 202 and 205 clearly show, according to the assessee, that this deduction at source is only a mode of recovery, that the tax deducted at source is like the advance tax paid by an assessee in respect of his income. The advance tax so paid is not treated as an asset and, therefore, this tax deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the dividend has been sent to the assessee before the valuation date and, therefore, even under the ratio of the decision of the Supreme Court in J. Dalmia's case, the assessee has obtained a right to receive the dividend. It is only after such right has accrued to the assessee that the tax becomes deductible at source by the principal officer. It is submitted that the provisions of section 198 is really to deem the tax deducted at source as income received, and that the deeming is really on the question of the receipt and not on the question of treating as income. Section 2(e) of the Act, it is pointed out, defines "asset" in such a comprehensive manner that it would include property of every description. It would include also that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claration and the payment of the dividend the valuation date might intervene. It is, therefore, unnecessary to consider a distinction based upon the fact that this dividend of Rs. 1,50,255 declared on 20-3-1974 was an interim dividend. The only relevant point about its being an interim dividend is on the factual position that it has been paid by the company to the assessee. Though there was some dispute in this regard before the lower authorities there does not appear to be such a dispute on the part of the assessee any more in view of the fact that the assessee is agitating before us only the question of the includibility of the sum of Rs. 34,599 representing tax deducted at source. 8. It has been held by the Calcutta High Court in CWT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee to be a fiction for treating the sum of the tax deducted as income itself while the department has contended that it is only for the purpose of deeming a receipt of this amount which is in any event income. We do not think that it is necessary to go into an interpretation of section 198 of the said Act for the disposal of this appeal. 10. It is clear from the facts in this case and from the relevant provisions of the Income-tax Act that the tax component of the dividend of the sum of Rs. 34,559 has been deducted at source by the principal officer of the company at the time the dividend was paid to the assessee. On this particular fact the only view that is possible to take is that after the right of the assessee to receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted at source for consideration, we do not agree with the assessee that the right of the assessee for getting credit for the tax deducted at source would arise only after the valuation date and, therefore, the assessee did not have any right over this sum. Even under section 199 of the Income-tax Act, the assessee is not denied the right over this amount. It is only the adjustment of this amount against an assessment to be made under the Income-tax Act on the assessee that was guaranteed under section 199. This postponement of the adjustment or giving credit for the tax deducted at source does not convert the right of the assessee over this amount into a contingent interest. It is an interest which is vested in the assessee to be reali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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