Law:

Section:

Section 56, read with section 2(22) of the Income-tax Act, 1961 [Corresponding to section 12, read with section 2(6A) of the Indian Income-tax Act, 1922] - Income from other sources - Chargeable as - Assessment year 1950-51 - Assessee being a shareholder in a company received dividend amount, a part of which was paid out of capital gains received by company in shape of salamis and land acquisition compensation receipts - Tribunal held that distribution to assessee of amount attributable to land acquisition compensation received by company was, in assessee's hands, receipt of dividend within meaning of Section 2(6A) of 1922 Act and that receipt by assessee of amount attributable to salamis realized by company for grant of long-term leases was a receipt of assessee's income and taxable as such - Whether nature of receipt is determined entirely by its character in hands of receiver and source from which payment is made has no bearing on that question - Held, yes - Whether therefore, fact that amount sought to be taxed was capital gains in company's hands was not a relevant circumstance - Held, yes - Whether distribution to assessee of amount attributable to land acquisition compensation received by company in hands of assessee, was not receipt of dividend within meaning of section 2(6A) of 1922 Act - Held, yes -Whether in view of fact that assessee had a beneficial interest in sum in question when it was in company's hands, and when that sum was distributed amongst shareholders, each of shareholders took a share of capital asset in which they were beneficially entitled, impugned receipt must also be considered as capital receipt and fact that those sums were distributed as 'dividends' did not change true nature of receipt - Held, yes - Whether, therefore, amount in question was not taxable in hands of assessee - Held, yes FACTS For the assessment year 1950-51, the assessee as a share-holder received dividend from the company. Out of that amount, certain sum was paid out of the accumulated capital gains received by the company in the shape of salami and land acquisition compensation receipts. Such capital gains were taken to the reserve fund and thereafter…

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