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TMI Blog1972 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 1955-56 and 1957-58, the relevant account years being calendar years 1954 and 1956. In these two years the assessee had received the respective sums of Rs. 59,149 and Rs. 56,766 by way of dividend income, accrued without the taxable territories, i.e., income in the United Kingdom. The claim of the assessee under section 49D(1) was that it was resident in the taxable territories in the year of account. In respect of the above dividend income deduction had been made and the assessee had paid income-tax under the law in force in the United Kingdom. For this reason the assessee was entitled to deduction from the Indian income-tax payable by it in accordance with the scheme of section 49D(1). The Income-tax Tribunal decided the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the relief as provided under section 49D(1) in respect of the dividend income of Rs. 1,21,636 received from the English companies and/or Rs. 11,536 received from the American companies for the assessment year 1955-56 ? " In support of these two references, on behalf of the revenue, Mr. Hajarnavis argued that under section 184 of the United Kingdom Income Tax Act the company pays tax on profits and gains made by the company. The company is authorised and entitled to make deductions at standard rates from dividends payable to shareholders. The dividends paid to these assessees were never taxable in the hands of the assessee (shareholder) or otherwise. There was no statutory provision for taxing the dividend income nor was any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deducted from the dividend amounts payable to a member constitute, under the law and system of taxation in U.K., payment of income-tax by the member and are treated and recognised as such. The provisions of the statute and the judicial decisions make the position quite clear. Section 184 of the English Income Tax Act, 1952, empowers the company to deduct tax at the standard rate from the dividend payable to its members. Section 199 of the English Act which deals with Explanations of income-tax deductions to be annexed to dividend warrants, etc., refers to such deduction specifically as deduction of income-tax. Again, in section 493 of the English Act deduction under section 184 from the dividend income is categorically described as deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imanlal J. Dalal & Co.). Following the above practice, our findings in the present two references are as follows: The dividend income of Rs. 59,149 for the assessment year 1955-56 and the dividend income of Rs. 56,766 for the assessment year 1957-58 made by the assessee in Income-tax Reference No. 33 of 1964 was income which accrued during the relevant years without the taxable territories and the assessee had paid in the United Kingdom with which there was no reciprocal arrangement for relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in the United Kingdom. The assessee shall be accordingly entitled to the deduction from the Indian income-tax payable by him of a sum calculated as provid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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