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TMI Blog1982 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ct ", this amount had suffered tax because it was undistributed profits at the hands of the company. Where, therefore, after such suffering of tax it is distributed to the qua shareholders of the company, the further tax sought to be levied, will amount to double taxation. This claim was rejected by the Revenue as seen from the proceedings of the Commissioner of Income-tax by the ultimate order in revision dated March 30, 1979. It is this which is sought to be revised under article 226 of the Constitution of India. In Civil Revision Petitions Nos. 130 and 131 of 1980, except that they relate to different assessees, the points are one and the same. Mr. K. Srinivasan, the learned counsel for the petitioners, states that it is a salutary p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t .P. 112 (SC) and it is pointed out that double taxation is also permissible. Here, section 56 of the Act talks that when the profit is distributed to the shareholders, it partakes the character of benefits and that has nothing to do with the company paying tax under section 104 of the Act. The forerunner of the present section 104 is section 23A of the 1922 Act. As to what exactly is the position with regard to this can be gathered from the following passage at page 737 of Kanga and Palkhivala's The Law and Practice of Income Tax, Seventh Edition, Vol. "Scheme and Object : The scheme of section 23A of the 1922 Act was examined by the Supreme Court in CIT v. Afco Ltd. [1963] 48 ITR 76. Before the amendment of that section in 1955, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irtue of the definition of dividend in section 2(22), the accumulated profits would attract tax when they reach the shareholder in certain capitalized forms, and similarly any distribution made to shareholders on liquidation out of the accumulated profits of all past years would also be chargeable as dividend income. Thus, the scope for reduction of tax by using the cloak afforded by company law is now very restricted." If really this be the object, the fact that profits have not been distributed within 12 months immediately following the expiry of the previous years, would mean section 104 of the Act is automatically attracted. Therefore, that income, namely, undistributed profits which ought to have been distributed within the time-limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act is to charge all income with tax, but in the hands of the same person only once. There could be double taxation if the Legislature distinctly enacted it, but upon general words of taxation, and when you have to interpret a taxing Act, you cannot so interpret it as to tax the subject twice over to the same tax. Thus, if an association or unregistered firm is taxed in respect of its income, the same income cannot be charged again in the hands of the members, individually and vice versa." It is this principle which, in my considered view, should be made applicable to this case as well. Needless for me to say that this is because the character of the income does not get changed as contended on behalf of the Revenue as though ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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