9911796707
TMI Blog1967 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances hereinafter related. During the accounting year ended on March 31, 1952 (the assessment year being 1959-60), the assessee held 4,58,071 shares in a company known as Pilani Investment Corporation Ltd. and became entitled to receive as dividend Rs. 1,83,228.40 at the rate of 40p. per share, namely, the declared rate of dividend. This dividend was paid to the assessee in the form of, (a) 13,087 shares of Gwalior Rayon and Silk Manufacturing Co. Ltd. @ Rs. 10 per share 1,30,870.00 (b) 416 shares of Hind Cycles Ltd. @ Rs. 125 per share 52,000.00 (c) In cash 358.40 ------------------------------ Rs. 1,83,228.40 ------------------------------ The Income-tax Officer valued the shares of Gwalior Rayon and Silk Manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls the release by the company to its shareholders of all or any part of the assets of the company. " In order, therefore, to bring any distribution within the category of dividend it must be proved as a fact that what was distributed by a company was its accumulated profits. In the instant case, no such thing has been done. On the contrary, although the department is trying to value the share scrips, according to the market value when they have reached the hands of the assessee, in the hands of the distributing company, however, the said share scrips have been accepted to be of the value put upon them by the distributing company. The department, obviously, cannot adopt two standards of value in respect of the same item. The departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. The question of a further valuation cannot arise. " In the view taken, the Tribunal ordered deletion of the sum of Rs. 61,656 from assessment. Aggrieved by the order of the Tribunal, the revenue asked for and obtained a reference to this court on the following point : " Whether, on the facts and in the circumstances of the case, the Tribunal rightly excluded the sum of Rs. 61,656 from being assessed as an extra dividend income of the assessee ? " In contending for a negative answer to the question, the learned counsel for the revenue relied upon the decision of the Supreme Court in Kantilal Manilal v. Commissioner of Income-tax. What happened in that case was that the Bank of India, which had passed a resolution for increasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s among the shareholders. Such a distribution would, undoubtedly have been distribution of dividend. If, instead of selling the right in the market and then distributing the proceeds, the mills directly transferred the right, the benefit in the hands of the shareholders was still dividend. " The Supreme Court further observed: " Dividend need not be distributed in money; it may be distributed by delivery of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the company was its accumulated profit. It does not appear that in the hands of Pilani Investment Corporation Ltd., the accumulated profit, in the shape of shares of Gwalior Rayon and Silk Manufacturing Co. Ltd., and Hind Cycles Ltd., was taken by the income-tax authorities at a figure higher than the figure put upon them by the corporation. On the contrary, the Tribunal found the share scrips in the hands of the corporation were accepted to be of the value put upon them by the corporation. If the accumulation be of a particular value, it cannot, assume a different value on distribution. Then again, the assessee was entitled to dividend at the rate declared by the Pilani Investment Corporation Ltd. It could not aspire for more and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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