Whether the sum of Rs received by the assessee as dividend in the account year 1944 45 relevant for the assessment year 1945 46 has been lawfully taxed in the assessment year 1945 46?
1,90,000 paid to the shareholders during the year 1944 45 as per details given below viz 1941 42 1942 43 1943 44 Total Mr. inch and Chellaram 10,000 36,000 30,000 76,000 Mr. Shewakram Kishinchand 5,000 18,000 15,000 38,000 Mr. Lokumal Kishinchand 5,000 18,000 15,000 38,000 Mr. Murli Tahilram 5,000 18,000 15,000 38,000 Total 25,000 90,000 75,000 190,000 was sanctioned by the General Body inadver tently without taking into companysideration the Companys liability for taxation, including E. T. and all the shareholders having been fully apprised of the bona fide mistake it is hereby unanimously resolved that such dividend inadvertently paid be companysidered as loan to such individual shareholders and be paid back to the Company forthwith, and the company sideration of any dividend to the shareholder be deferred to the next Annual General Meet ing.
If number, companyld only the dividends that companyld have been paid out of the profits or a part thereof be taxed in the assessment year 1945 46 ?
Appeals from the judgment and order dated September 26,1955, of the Bombay High Court I. T. R. No.
The resolution read as follows The numberice dated 25th November, 1947 calling the Extraordinary General Body Meeting for today, was placed on the table.
In each set of questions the appropriate amount received and the name of the assessee was incorporated in the second question .
In appeals to the Appellate.
30,000/ were credited in the companypanys books of account to Kishinchand and Rs.
15 000/ were credited to the accounts of each of the other there shareholders.
Even though this resolution was passed, and the proceedings for assessment before the Income Tax Officer were number disposed of the assessees did number file revised returns excluding the amounts credited as dividend, number did they claim before the Income Tax Officer that those amounts number being income were number liable to tax.
The Judgment of the Court was delivered by SHAH, J. This is a group of appeals against orders passed by the High Court of Bombay in Income Tax Reference under s. 66 1 of the Indian Income Tax Act.
462 to 465 of 1960.
Pursuant to this resolution, on September 29, 1944, Rs.
Chellsons Ltd. a Private Company was incorporated in April 1941.
On December 4,1947, at an Extraordinary General Meeting another resolution purporting to reverse the earlier resolutions dated July 10, 1943 and July 15, 1944, was passed by the companypany.
At the instance of the assessees the Appellate Tribunal referred in each of the four cases the following two questions Whether the shareholders of the companypany at the meeting held on December 4, 1947 companyld reverse the resolutions passed on July 10, 1943 and July 15, 1944 ?
Kishinchand, Shewakram and Lokumal were directors of the companypany.
At a General meeting of the shareholders of the companypany held on July 10, 1943, it was resolved to declare dividend at 60 per cent on the shares of the companypany and for the purpose of that of declaration the profits of the year 1941 43 were included in the profit of the year 1942 43.
The Appellate Assistant Commissioner rejected this plea.
Assistant Commissioner, the assessees companytended that the amounts credited by the Company to their accounts in respect of the years 1941 42, 1942 43 and 1943 44 were number, in view of the subsequent resolution, liable to be taxed as dividend income.
April 19.
CIVIL APPELLATE JURISDICTION Nos.
Whereas the sum of Rs.
Against the order of the High Court these four appeals have been preferred by the assessees.
Another meeting of the shareholders was held on July 15, 1944, and it was resolved to declare dividend at 60 per cent on the shares out of the profit of the companypany for 1943 44.
46,000/ were credited in the books of the companypany to the account of Kishinchand Chellaram on March 31, 1944 and Rs.
The adjustment in this regard will number be made in the books of the Company as on 6th April, 1947.
The shareholders of the companypany at the material time were Kishinchand Chellaram holding 6 shares and Shewakram Kishinchand, Lokumal Kishinchand and Murli Tabilram each holding three shares.
Pursuant to this resolution, Rs.
23,000/ were credited to each of the other three shareholders.
D. Karkhanis and D. Gupta for the respondents.
22 of 1955.
By his order dated January 1, 1950, the Income Tax Officer brought the income returned by the assessees including the amounts credited to them as dividends, for the three years to tax.
N. Rajagopal Sastri, J. K. Hiranandi and N.H. Hingorani for the appellants.
In their respective returns for the assessment year 1945 46, Kishinchand, Showakram, Lokumal and Murli who will hereinafter be companylectively called the assessees included the amounts credited to them in the companypanys books of account as dividends for the three years 1941 42 to 1943 44.
