1961 (3) TMI 128

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... y and had as its karta, Shri J. Dalmia, and the assessee held 1,500 shares in the company Messrs. Govan Brothers (Rampur) Ltd. The directors of that company at a meeting held on August 30, 1950, declared an interim dividend of ₹ 275 per share which constitutes the disputed amount of ₹ 4,12,500. The payment of this interim dividend was made by a warrant issued on December 28, 1950, i.e., during the relevant accounting period. The view of the lower authorities that in spite of the fact that the dividend was declared by the directors on August 30, 1950, the dividend was liable to be included in the assessment year 1952-53 was upheld by the Appellate Tribunal. The decision was based on a distinction drawn between dividend declare .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... case the directors of a company passed a resolution declaring an interim dividend payable on a future date, but before that date arrived the directors resolved that, having regard to certain litigation then pending, the payment of the dividend should be postponed. The directors had requested the company's bankers to set aside out of moneys in their hands under a special account entitled interim dividend account a sum sufficient to cover the dividend, pending the company's instructions, but on the termination of the litigation the company claimed a declaration that neither they nor their bankers were bound to apply the sum in payment of the dividend. On these facts it was held by Joyce J. that the money need not be applied in paym .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... im dividend. Thus the word declare is used in article 74 as compared with the word pay in article 96 of Table A . It appears to me to be doubtful whether the use of the word declare in this article gives such a declaration the same status as the formal declaration of annual dividend at the company's general meeting. The matter is dealt with by Halsbury's Laws of England, third edition, volume 6, paragraph 778, as follows: A final dividend can, as a general rule, only be sanctioned at the annual meeting, when the accounts are presented to it, and the articles usually contain a specific provision to this effect, and also that no dividend shall exceed the amount recommended by the directors. A power to declare interim di .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X