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Maganlal Sankalchand Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil (Income-tax) Reference No. 9 of 1958
Judge
Reported in1971WLN(UC)19
AppellantMaganlal Sankalchand
RespondentThe Commissioner of Income-tax
Excerpt:
income tax act, 1922 - dividend--whether a moiety of the net dividend income requires to be grossed up.;we answer the question as follows: 'a moiety of the net dividend income of rs. 1,73,839/- is to be grossed up at the full indian rate applicable to the company for the financial year 1949-50 in which the dividend was paid. - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence - appellant was arrested on 30.11.1998 when the 1986 act was in force and under clause (h) of section 2 a juvenile was described to mean a child..........assessee is a hindu undivided family. the assessment year is 1950-51 and the relevant accounting year the assessee was a share-holder of the associated stone industries (kotah) ltd. ramganjmandi, (hers inafter referred to as the company). the assessee received from the company a divided of rs. 1,73,839/- declared by the said company on 29.9.1949 out of its profits for the year ended 30.9,49. the assessee had income from other sources also.3. in the course fo assessment for the year the income-tax officer included the said dividend income received by the assessee and subjected it to tax after giving the appropriate rebate under the part b states (txation concession) order, 1960 (hereinafter referred to as the concession order), the income-tax officer also grossed up the said dividend at.....
Judgment:

Jagat Narayan, C.J.

1. This is a reference under Section 66(1) of the Indian Income-tax Act, 1922.

2. The assessee is a Hindu undivided family. The assessment year is 1950-51 and the relevant accounting year the assessee was a share-holder of the Associated Stone Industries (Kotah) Ltd. Ramganjmandi, (hers inafter referred to as the Company). The assessee received from the Company a divided of Rs. 1,73,839/- declared by the said Company on 29.9.1949 out of its profits for the year ended 30.9,49. The assessee had income from other sources also.

3. In the course fo assessment for the year the Income-tax Officer included the said dividend income received by the assessee and subjected it to tax after giving the appropriate rebate under the Part B States (Txation Concession) Order, 1960 (hereinafter referred to as the Concession Order), The Income-tax Officer also grossed up the said dividend at the concessional rate of 16 pies per rupee. Under para 12 of the said order only 50% of the dividend was grossed and taxed as the income of the Company out of which the divined was declared for the period 1.10.48 to 30.9.49. The Income-Tax Officer pasted his order on 27.3.53,

4. The assessee preferred an appeal to the Appellate Assistant Commissioner, who by his order dated 15th October, 1954, confirmed the order of the Income-tax Officer.

5. Thereafter the assessee preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal by its order dated 12th March 1957 dismissed the appeal of the assessee.

6. There after on the application of the assessee the Tribunal referred three questions to the High Court by its order dated 14th December, 1957. The second and the third question have since been given up and the only question which remains to be answered is-

Whether a moiety of the net dividend income of Rs. 1,73,839/- requires to be grossed up and if so, at what rate of tax, if any

The High Court upheld the view taken by the Tribunal and answered the above question against the assessee on the ground that there was no definite evidence as the total income of the Company witting the meaning of the Indian Income-tax Act on account of which the rates of tax applicable to it could be ascertained, The High Court therefore refused to answer the second part of the above question en the ground that it was merely a hypothetical question. The High Court however observed that prima facie it appeared that the claim of the assessee was correct and the grossing up, in case it had to be done, had to be made at the full rate of tax applicable to the total income of the Company for the financial year for which the dividend was paid without taking into account any rebate allowed.

7. On a certificate of appeal granted by the High Court the assessee went up to the Supreme Court. By its judgment dated 8th May 1964 the appeal was accepted, the order and the judgment of the High Court were set aside and the case was remanded to the High Court with the direction that the High Court should call for a supplementary statement of the case and dispose of the reference in accordance with the judgment of the Supreme Court in Commissioner of Income-tax v. Anant Rao B. Kamat : [1964]53ITR307(SC) .

8. A supplementary statement of the case was thereupon called and has been received. This statement shows that the Company has since been assessed to income-tax for the assessment year 1949 50 and that the dividend amounting to Rs. 1,73.839/- was paid out of the profits for the year 1948-49-

9. Having regard to the decision of the Supreme Court in Commissioner of Income-tax v. Anant Rao B. Kamat : [1964]53ITR307(SC) we answer the question as follows:

A moiety of the net dividend income of Rs. 1,73,839/- is to be grossed up at the full Indian rate applicable to the company for the financial year 1949-50 in which the dividend was paid.

On behalf of the Department it is contended that costs should be mad easy as the assessment of the company was made on giving notice under Section 34 of the Income-tax Act, 1922. We do not see sufficient reason to deprive the assessee of its costs on this ground. We accordingly direct that the assessee will be entitled to recover the costs of this reference from the Department We assess the costs of the reference at Rs. 100/-. The assessee will also be entitled to get the costs of the appeal in the Supreme-Court.


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