Law:

Section:

JUDGMENT Chagla, CJ.-This reference raises a very important and a very interesting question as to the interpretation of section 23A of the Indian Income-tax Act. The facts leading up to the reference may be briefly stated. The assessee is the legal representative of Mafatlal Gagalbhai and he has been assessed in that capacity. The assessment order against him for the assessment year 1942-43 was passed on 28th February, 1946, and with regard to the assessment year 1943-44 it was passed on 23rd August, 1946. It appears that Mafatlal was a shareholder in the Gagalbhai Jute Mills Ltd., and-as such shareholder he held 12,185 ordinary shares and 2,500, preference shares. The Income-tax Officer made an order in respect of this company under section 23A on 20th February, 1947, and by that order he directed that Rs. 5,71,072 and Rs. 10,00,411 for the two respective years ending on 31st March, 1941, and 31st March, 1942, should be distributed as dividend to the shareholders Who were shareholders at the date when the relevant general meeting of the company was held. In consequence of this order the Income-tax Officer reopened the assessment of the assessee for the assessment year 1942-43 and 1943-44 and he included in the assessment year 1942-43 a sum of Rs. 4,48,502 and in the year 1943-44 a sum of Rs. 7,96,082 as attributable to the dividends which had been distributed under the order made under section 23A. Against the order made by the Income-tax Officer under section 23A Gagalbhai Jute Mills Ltd., preferred an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. The company then went in appeal to the Appellate Tribunal and the Appellate Tribunal took the view that the undistributed dividends had not been properly distributed among the various class of shareholders. Under the order of the Income-tax Officer the dividend had only been distributed among the ordinary shareholders. Therefore, the Appellate Tribunal directed that the undistributed profits should first be distributed amongst the preference shareholders and the balance should then be distributed amongst the ordinary shareholders.…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492