Law:

Section:

Income-tax Act (XI of 1922), S. 16(2)-Word "paid" ­Meaning-When dividend paid within purview of S. 16(2).The: word "pay" in section 16(2) means to satisfy, to set at rest, to discharge, to require with what is due or deserved etc., and it is obvious that the word as used in the aforesaid provision means when the money is actually delivered and not when a decision is made to make the payment. A mere declaration of the dividend at the annual general meeting of the Company amounts only to a decision by the Company to pay to the share­ holders dividend at a certain rate. It creates a right in favour of the shareholders and a corresponding liability on the Company to pay the amount but it does not at all mean actual payment. It is only when the warrant for payment is made out that the shareholders get into the position to receive the actual payment. Sh. Abdul Haque, Senior Advocate Supreme Court (K. B. Mushtaq Hussain Khan, Advocate Supreme Court With him) instructed by M. Iftikhar-ud-Din Ahmad, Advocate-on-Record for Appellant. Muhammad Amin Butt, Advocate Supreme Court instructed by Ch. Mehraj-ud-Din, Advocate-on-Record for Respondent. Date of hearing : 19th January 1972. JUDGMENT SAJJAD AHMAD, J.-This is a certified appeal from a decision of the former High Court of West Pakistan, Lahore, made in Civil Reference No. 9 of 1964, in which the question referred to the High Court by the Income-tax Appellate Tribunal was "when is dividend paid within the purview of section 16(2) of the Income-tax Act?" The facts leading to the reference were that the respondent, Mst. Wazirunnisa Begum, as an assessee for the charge year 1957-58, claimed refund of Income-tax on a dividend of Rs. 2,000, which was received by her in June 1956 as a shareholder from the Rawalpindi Electric Power Co. Ltd. This dividend was formally declared by the Company at the annual general meeting of the shareholders on the 30th of March 1956. The Income-tax officer was-of the opinion that the dividend warrant pertained to the assessment year 1956-57 as it had been declared by the Company on the 30th of March 1956, and since the assesses had preferred the claim for its refund m 1957-58, it could not…

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