Law:

Section:

Section 28(i) of the income-tax act, 1961-business income-Whether where assessee-company distributed dividends in specie in shape of shares of other companies held by it as stock-in-Trade, excess of market value over cost price of shares was taxable as business profit of assessee-Held, no Facts The assessee-company held shares in other companies and these shares constituted stock-in-trade in its hands. During the relevant accounting years, the assessee distributed dividends on its equity shares in specie by transferring the shares of other companies to its shareholders. The ITO taxed the excess of market value of these shares over their cost price, as business profit of the assessee, on the ground that the company was a dealer in shares and what was distributed was its stock-in-trade. The Tribunal allowed the assessee's appeal on the ground that when dividend was declared in specie, there was no question of profit. On reference : Held Distribution of dividend in specie cannot be regarded as a trading activity even where what is distributed is the stock-in-trade of the assessee. As to what will be the value of right or thing in the hands of the shareholder is wholly irrelevant for the purposes of assessment of profit or loss of the company distributing the dividend. The Tribunal was, therefore, justified and there was no question of profit or loss as far as the assessee was concerned when it distributed shares held by it of other companies by way of dividend. Paragraph d of the first schedule to the finance act, 1959-super tax-whether where assessee-company distributed dividends in specie in shape of shares held as stock-in-trade, in calculating corporate tax rebate due to assessee for purposes of levying super tax, market value and not face value of shares distributed by way of dividend was to be taken into account-held, no Facts The assessee contended that in calculating the corporation tax rebate due to it for the purposes of levying super tax, the amount of dividend should be taken to be what was actually distributed in cash plus the face value of the shares distributed by it as dividend in specie. The Tribunal, however, accepted the revenue's contention…

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