Law:

Section:

Section 199, read with section 8 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 year 1945-46 - Whether in case of dividend payment it is only registered shareholder who is entitled to benefit of credit for tax paid by company under section 18(5) of 1922 Act as well as corresponding grossing of under section 16(2) of 1922 Act - Held, yes - Whether where shares in company stood in names of three out of four partners of firm, only persons who were entitled to be treated as shareholders to whom provisions of sections 16(2) and 18(5) of 1922 Act were attracted were three partners in whose names shares stood registered, and not firm - Held, yes Section 154 of the Income-tax Act, 1961 [Corresponding to section 35 of the Indian Income-tax Act, 1922] - Rectification of mistakes - Apparent from records - Whether ITO had jurisdiction under section 35 of 1922 Act to rectify errors but not to effect merely readjustment so as to avoid illogicalities in an error which is still permitted to continue - Held, yes FACTS The assessee-respondents were partners in a firm registered under the 1922 Act. There was a company 'M' which was registered under the Phaltan State Companies Act and certain shares of it stood in the name of the respondents. For the account year of the company ending 30-9-1945, the company disclosed a net profit of Rs. 1,09,165. The company, however, did not declare any dividend out of these profits but paid income-tax and super-tax thereon. After the merger of the Phaltan State in the Indian Union and the extension of the provisions of the 1922Act thereto, the ITO, who had jurisdiction over the assessment of the company, issued notice to it under section 34 and acting under the provisions of section 23A thereof directed that the undistributed assessable income of the company should be deemed to have been distributed as dividend among the shareholders as on the date of the general body meeting of the company. Before the date of this order the assessment of the firm and the individual assessment of its partners had been…

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