Law: Income Tax Act, 1961

Section: 16(2)

Section 16(2) of Indian Income-tax Act, 1922 - Dividend income - Assessment years 1956-57 and 1957-58 - Whether mere declaration of dividend does not attract operation of section 16(2) of 1922 Act - Held, yes - Whether where apart from declaration of dividend there was no information on record as to when dividend warrants were handed over to assessee, dividend so declared during relevant assessment years could not be included in income of assessee - Held, yes FACTS The assessee-company had considerable investment in shares. The ITO included the dividend declared by the various companies during relevant assessment years in the total income of the assessee. The AAC dismissed the assessee's appeal. The Tribunal upheld the order of the AAC. On reference, the High Court, however, held that a mere declaration of dividend did not attract the operation of section 16(2) of the 1922 Act. On the revenue's appeal to the Supreme Court : HELD There was no information on record as to when the dividend warrants were handed over to the assessee. In the absence of any evidence to show that the dividend warrants were handed over to the assessee within the years of account ending 30-6-1955 and 30-6-1956, it could not be held that the assessee was liable to pay income-tax on the dividends received by it. The burden of proving that an amount was taxable because it was received in the year of account lay upon the department, in the absence of the information called for they were not liable to be taxed. The appeal was, therefore, dismissed. Note : The case was decided in favour of the assessee. CASES REFERRED TO Benares State bank Ltd. v. CIT [1969] 74 ITR 863 (SC); [1970] 75 ITR 167 (SC), J. Dalmia v. CIT [1964] 53 ITR 83 ; [1964] 7 SCR 579; 34 Comp. Cas. 668 (SC), Punjab Distilling Industries Ltd. v. CIT [1965] 57 ITR 1; [1965] 3 SCR 1; 35 Comp. Cas. 541 (SC),Ramesh R. Saraiya v. CIT [1965] 55 ITR 699; [1965] 1 SCR 307; 35 Comp. Cas. 251 (SC). ORDER Grover, J.-These appeals are by certificate from a judgment of the Calcutta High Court answering the following question referred to it by the Income-tax Appellate Tribunal in the negative and in favour of the assessee: "Whether, on the…

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