After the applications were received, the amounts payable to the shareholders were debited in the accounts and refunds were actually granted during the accounting year, i.e., between December 1, 1954, and November 30, 1955.
25 lakhs.
On the receipt of the applications, appropriate debit entries were made in the accounts of the shareholders and the amounts were actually paid to them during the previous year, i.e., December 1, 1954, to November 30, 1955.
25 lakhs to Rs.
25 lakhs to Rs.
1955 and the reduction was shown in the balance sheet for the year ending November 30, 1955.
It is clear from the said facts that the amounts were distributed only during the accounting year, when the amounts were both debited and paid.
The necessary book entries and the payments of dividends to the shareholders were number made during the year ending November 30, 1954.
The balance ,sheet for the year ending November 30, 1954 did number show the reduction, and the capital of the companypany in this balance sheet was shown to be Rs.
Under s. 2 6A d of the Act, dividend includes any distribution by a companypany on the reduction of its capital to the extent to which the companypany possesses accumulated profits, whether such accumulated profits have been capitalised or number.
On appeal the Appellate Assistant Commissioner accepted the said figure arrived at the Income tax Officer.
The Tribunal referred the following questions of law to the High Court for its opinion.
Appeal from the judgment and order dated February 21, 1962, of the Punjab High Court in I.T. Reference No.
2 per share to the existing share holders under s. 55 1 c of the Indian Companies Act, 1913.On May 10.
15 lakhs.
It was companytended on behalf of the assessee that in as much as the certificate from the Registrar for the reduction of the capital from Rs.
8,42,337.
On August 6, 1954, the High Court made an order companyfirming the reduction.
On further appeal, the Income tax Appellate Tribunal, for the reasons recorded by it in its order, reduced the figure under the said head by a sum of Rs.
15 lakhs were Rs.
25 lakhs to Rs.
On November 5, 1954, the numberice of registration was duly published.
2 per share will be made on receiving companyfirmation of the registration and requesting the shareholders to send their share certificates to the companypany at an early date for necessary endorsement and refund of share capital and stating that the refund would be made to the shareholders, whose names stood on November 15, 1954 in the books of the companypany, the share transfer register would remain closed from November 16 to November 30, 1954, and the refunds would be made to the shareholders whose names stood on November 15, 1954 in the books of the companypany.
i.e., December I, 1953, to November 30, 1954, the appellant would be entitled to a higher rate of rebate on super tax under el.
C. Chatterjee and R.V. Pillai, for the appellant.
15 lakhs.
25 lakhs to Rs.
ii of the first proviso to paragraph D of Part II of the first schedule to the Finance Act, 1956.
The assessee and the Commissioner of Income tax filed two applications before the Tribunal for referring questions of law arising out of the Tribunals order to the High Court.
25 lakhs to Rs.
i b of the second proviso tO paragraph D of Part I1 of the first schedule to the Finance Act, 1956.
On December 16, 1953, the companypany passed a special resolution for reducing its share capital from Rs.
In assessing the income of the appellant company for the assessment year 1956 57, the Income tax Officer held that the said dividends were distributed during the accounting year and on that finding he calculated the rebate on super tax in terms of el.
On the same day, the companypany issued a circular numberice to its shareholders stating that the refund of Rs.
On November 5, 1954, the Company issued numberices to the shareholders inviting applications for refunds.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
25 lakhs.
was delivered by BACHAWAT J. Subba Rao, J. This appeal by certificate raises the main question whether s. 2 6A d of the Indian Income tax Act, 1922, hereinafter called the Act, is ultra vires the Central Legislature.
On December 16, 1953, the High Court sanctioned a further reduction of the share capital from Rs.
The assessee, a public limited companypany, was incorporated on May 23, 1945, under the Indian Companies Act, 1913, with a share capital of Rs.
4,69,244 13 0 companyld be deemed to have been distributed on the reduction of the capital from Rs.
Hence the appeal.
On November 5, 1954, the appellant issued numberices to the shareholders inviting applications for the refund of share capital so reduced.
The book entries with regard to the reduction and refund were made, and the refunds were given to the shareholders during the year ending November 30.
25 lakhs to Rs.
The Judgment of SUBBA RAO, MUDHOLKAR and RAMASWAMI JJ.
The Income tax Officer further held that the assessees accumulated profits at the time of the reduction of the Capital from Rs.
15 lakhs within the meaning of Section 2 6A d of the indian Income tax Act.
In the numberice sent to the shareholders they were informed that the share transfer register of the Company would remain dosed from November 16, to November 30, 1954 both days inclusive and refund would be made to those shareholders whose names stood on November 15, 1954, in the books of the Company.
15 lakhs and for payment of Rs.
On November 4, 1954,the order and the minute approved by the Court were duly registered with the Registrar, and on the same date, the Registrar issued a certificate of registration.
If the amount of the dividend were to be fixed by reference to the accumulated profits on the dates of the payments, the result would be that the payment of rupees one lakh would be dividend to the full extent, the payment of rupees six lakhs would be dividend to the extent of one third and the payment of rupees three lakhs would number be dividend at all.
1954, the companypany applied to the Court for an order companyfirming the reduction.
If the dividends were distributed during the accounting year.
was .delivered by SUBBA RAO, J. The dissenting Opinion of DAYAL and BACHAWAT JJ.
50 lakhs.
The High Court, on August 6, 1954, sanctioned the reduction of the capital from Rs.
On November 4, 1954, the Registrar of Companies issued the certificate under s. 61 4 of the Companies Act.
414 of 1965.
15 lakhs was obtained on November 4, 1954, the distribution of the dividends should be deemed to have taken place during the year 1953 54 and, therefore, the said dividends were number exigible to tax for the assessment year.
K. Daphtary, Attorney General, R. Ganapathy lyer, R.N. Sachthey for R.H. Dhebar, for the respondent.
On December 15, 1947, at the instance of the appellant the High Court sanctioned the reduction of the capital of the companypany from Rs.
9 of 1959.
50 lakhs to Rs.
On November 4, 1954, the Registrar of Companies granted the requisite certificate under s. 61 4 of the Indian Companies Act.
3.61,40.5.
