Law: Income Tax Act, 1922

Section: 16(2),50,66(1)

Law: Income Tax Ordinance, 1979

Section: 12(11)

Income Tax Act, 1922 -Section 16(2) -- Dividend -Whether assessable when the warrant for payment is made out and not when a decision is made to make the payment -Held yes -"Paid", meaning of -- Corresponding Sections: Income-tax Ordinance, 1979 -Section 12(11) -- JUDGMENT The judgment of the court was delivered by 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 assessee had preferred the claim for its refund in 1957-58, it could not relate to the assessment year 1957-58. On appeal, the Appellate Assistant Commissioner held that in terms of Section 16(2) and 50 of the Income Tax Act, the claim had been rightly made, as relating to the year 1957-58. He directed the Income-tax Officer to admit the respondent's claim after proper verification and allow the necessary refund to her. The Income-tax Appellate Tribunal, on the department's appeal, confirmed the view of the Appellate Assistant Commissioner, holding that the material date was the 1st of June, 1956 when the dividend warrant was actually made out by the Company for payment to the respondent. On an application by the department, under Section 66(1) of the Income Tax Act, 1922, the Tribunal referred the question stated above to the High Court, which, in the precise terms, was as follows: "Whether on the facts and circumstances of the case the…

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