Appeal by special leave from the judgment and order dated October 3, 1963 of the Madras High Court in Writ Petition No.
4,11,700 which was retained by the liquidators from the distribution made to the shareholders.
T. Desai, N. D. Karkhanis and R. N. Sachthey, for the appellant.
After some companyrespondence the Income tax Officer, Salem by his order, dated October 18, 1962, finally called upon the liquidators to pay Rs.
97 of 1965.
V. Viswanatha Sastri, B. R. Agarwal and H. K. Puri, for the respondent.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Out of the proceeds realized by sale of its assets, the liquidators of the Company distributed on March 30, 1960 Rs.
Holding that the demand made by the Income tax Officer was number in companyformity with the law in that the amount of Rs 8,50,000 which had been distributed companyld number be deemed to be distributed as dividend without determining whether any portion of the amount represented capital gains, which arose out of the sale of capital assets companysisting of lands from which agri cultural income was derived, the High Court issued a writ restraining the Income tax, Officer from enforcing the demand for tax.
The Judgment of the Court was delivered by Shah, J. On December 24, 1959, M s. Short Brothers Private Ltd. sold its companyfee estates and other assets, and by resolution, dated February 6, 1960, it was resolved that it be voluntarily wound up and liquidators be appointed to administer its affairs.
The liquidators then moved the High Court of Judicature at Madras, for a writ of prohibition restraining the First Income tax Officer from taking further action to enforce companylection of the amount referred to by him in his companymunication, dated October 18, 1962.
1242 of 1962.
By letter, dated December 19, 1960, the Income tax Officer, Salem, informed the liquidators that he proposed to treat that amount distributed as dividends in the hands of the shareholders, and to call upon the liquidators to pay the amount of tax deductible under S. 18 3D of the Income tax Act.
With special leave, the First Income tax Officer has appealed to this Court.
8,50,000 to the shareholders.
The High Court reserved liberty to the Income tax Officer to examine the question afresh, and to determine the companyrect amount of dividend within the meaning of S. 2 6A c .
