Law: Income Tax Act, 1961

Section: 203

Section 203 of the Income-tax Act, 1961 [Corresponding to section 18(9) of the Indian Income-tax Act, 1922] - Deduction of tax at source - Certificate for tax deducted - Assessment years 1950-51 to 1956-57 - Profit earned by respondent-company, though set off against carried forward losses as well as depreciation resulting in 'nil' tax, enabled it to declare dividends to shareholders, including appellants - Appellants were assessed to tax on dividends received by them as preference shareholder - Appellant filed a suit against respondent-company for obtaining certificate of deduction of tax at source in respect of said dividend at maximum rate and for recovery of income-tax paid by him on such dividend - Whether where articles of memorandum of association of company provided that preference shareholders would be given tax-free dividend at certain rate, it only meant that stipulated percentage of dividend would be paid by company to shareholders in full without providing for or taking away therefrom any tax payable by company - Held, yes - Whether, where company itself was not assessed to tax, no question of grossing up of dividends could at all arise, and shareholder would have no right to call upon company to pay him standard rate of tax with reference to dividend paid to him, as that would mean that tax payable by company would be part of his dividend - Held, yes - Whether, therefore, appellants claim to a certificate that income-tax appropriate to dividend had been paid by company could not be sustained as company itself had not paid any tax - Held, yes FACTS The appellants who were closely related, held severally and jointly 150 preference shares in the respondent public limited company. For the years 1950-51 to 1956-57, the profits made by the respondent-company stood wiped out in the accounts by reason of setting them of against the depreciation allowable under the Act and also against the carried forward losses incurred in the previous years. But the profits earned during those years, though set off for the purpose of income-tax, enabled the company to declare dividends to the shareholders. The appellants received in respect of their preference shares…

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