Law: Income Tax Act, 1922

Section: 2(6A)(a)

Section 2(22) of the Income-tax Act, 1961 [Corresponding to section 2(6A)(a) of the Indian Income-tax Act, 1922 - Deemed dividend- Assessment year 1956-57 - Whether expression "income" in entry 54 of List I of Seventh Schedule to Government of India Act, 1935, and corresponding entry 82 of List I of the Seventh Schedule to Constitution of India, shall be widely and liberally construed so as to enable a legislature to provide by law for prevention of evasion of income-tax but there must be a reasonable nexus between item taxed and legislative field delineated - Held, yes - Whether as section 2(6A)(d) of 1922 Act embodies a law to prevent evasion of tax, it falls within ken of entry 54 of List I of Schedule VII to Government of India Act, 1935 - Held, yes - Whether if accumulated profits were distributed, it would satisfy not only definition of 'dividend' in section 2(6A)(d) of 1922 Act but also would bix year in which it would be deemed to be income - Held, yes - Whether dividends may be paid or credited to different shareholders during different accounting years; and shareholders may be assessed in respect of the said payments in different years even so, payments are referable only to declaration of dividends out of profits of a particular year - Held, yes - Assessee company by sanction of High Court reduced its capital from Rs. 50 lakhs to Rs. 15 lakhs and got requisite certificate from Registrar of companies - Noties were issued to shareholders inviting applications for refund and after receipt of applications amounts payable to shareholders were debited in accounts and refunds were actually granted during accounting year 1955, i.e., between 1-12-1954, and 30-11-1955 - Whether amounts were distributed only during accounting year, when amounts were both debited and paid and, therefore, dividends were distributed to shareholders during accounting year, i.e., 1954-55 - Held, yes FACTS The assessee, a public limited company, was incorporated with a share capital of Rs. 50 lakhs. Got a sanction from the High Court for the reduction of the capital from Rs. 50 lakhs to Rs. 15 lakhs. The Registrar of Companies granted the requisite certificate under section 61(4) of…

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