Law:

Section:

Section 199 of the Income-tax Act, 1961 [Corresponding to section 18(5), read with section 16(2) of the Indian Income-Tax Act, 1922] - Deduction of tax at source - Credit for tax deducted - Assessment years 1944-45 to 1947-48 - During relevant assessment years, assessee-company received certain amount as income from dividends - Though shares in respect of which dividend income was received were property of assessee yet in books of various companies they stood in names of other persons as said shares were purchased under a blank transfer but transfers had not been registered with various companies - Whether, on facts, applicant assessee was not entitled to have dividend income grossed up under section 16(2) and claim credit for tax deducted at source under section 18(5) of 1922 Act. - Held, yes FACTS During the accounting years relevant to the assessment years 1944-45 to 1947-48, the assessee-company received certain amount as income from dividends. The shares in respect of which this dividend income was received were the property of the applicant assessee but in the books of the various companies these shares were purchased by the applicant from other persons under a blank transfer but the transfers had not been registered with the various companies. The applicant's claim in these income-tax proceedings was that these shares although not registered in the name of the applicant were the property of the applicant. It was further claimed that this dividend income should be grossed up under section 16(2) of 1922 Act and credit for the tax deducted should be allowed to the applicant under section 18(5) of 1922 Act. The ITO did not accept this claim, and the appeals of the assessee were rejected by the AAC and by the Tribunal. On reference the High Court affirmed the decision of the Tribunal. On appeal to the Supreme Court : HELD When the company pays its own income-tax and declares a dividend from the balance of its profits, it deducts from such dividend a proportionate part of the amount of the tax paid by it.The shareholders, however, get the benefit of the payment of the tax by the company. Though under section 16(2) of 1922 Act their dividend is increased by a…

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