Law: Income Tax Act, 1922

Section: 16,16(2)

(a) Income tax Act (XI of 1922)--- S. 16(2) Income---- Determination of Dividend Declaration of dividend by company---Income derived from dividend assessable on basis of such declaration and not when it was received by assessee ¬Assessee deriving income from dividends and property Department assessing income in relevant accounting years when such dividends received by assessee Held, only those dividends which were declared during accounting year covered by assessment year under consideration, could be included in assessees' income for that year. (b) Income tax Act (XI of 1922) S. 16(2) Words and phrases Word "paid" used in S. 16(2) of Act ¬Meaning Literal construction of word "paid" Not possible When liability arises on' declaration. of dividend on part of company to make payment to shareholder and income represented by that dividend accrues or arises to him that period is material for assessment Mere fact that actual payment of income was deferred, held, was irrelevant. Commissioner of Income tax v. Laxmidas Mulraj Khatau (1948) 16 ITR 248 rel. ORDER M.T. SIDDIQUI ('MEMBER). This appeal which preferred against the order of the Appellate Assistant Commissioner, relates to the assessment, year 1960 61. A number of objections were raised but at the time of hearing the only one pressed was in respect of the inclusion of two dividends, declared on 18 2 1959, in the taxable income of the appellant for the year under consideration, 2. The appellant is an individual who derives income from dividends and property. Returns were filed for the first beginning from the assessment year 1957 58 and ending with the assessment year 1961 62 on 1 7 1961. While dealing with the assessments the Income tax Officer found that in respect of dividend income there was no evidence regarding the date of the declaration as the dividend warrants were not available. Relying on the statement of the Manager the Income tax Officer, however, included the following four dividends in the taxable income of the appellant for the year under consideration: Dividend Warrant Date of receipt Amount 15 7 2 1960 Rs.5,000 44 8 2 1960 Rs.5,000 73 9 2 1960 Rs.5,000 102 10 2 1960 Rs. 8,000 The Income tax…

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