Commissioner of Income-Tax, Bombay v. Robert J. Sas

Judgment

advisory jurisdiction had to give its opinion on the question submitted to it and it reframed the question in order to bring out the question which arises from the order of the Tribunal. We did not allow the question of the applicability' of proviso (I) to s. 34(3) to be raised as the question does not take in the point raised about the proviso to sub-s. (3) of s. 34. The question as framed'by the High Court is whether the service of notice under s. 34(l)(b) was out of time. The proviso to sub-s. (3) of s. 34 relates to completion of assessment within a particular period when the notice is issued before the period of limitation referred to in s. 34(l)(b). The two are different questions and one does not include the other. At the relevant date s. 23A which empowered the Income-tax Officer to assess individual members of certain companies read as under : S. 23A. Power to aBIJeBB individual members of certain companies ( 1 ).

Where the Income tax Officer is satisfied that in respect of any previous year the profits aud gairu; distributed as dividends by any company up to the end of the sixth month after its accounts for ·that previous year are laid before the,company in general meeting are less than sixty per cent of the assessable income of the company of that previous year, as reduced by the amount of incometax and super·tax payable by the company in respect thereof he shall, unless, he is satisfied that having regard to losses incurred by . the company in earlier years or to· the smallness of the profit made, the 11161 c...._.., lr1u.W-1ox, ~ Robnl J. s..

K<IJW, J, C...iss,_,, •f ,_,_,...,·B001601 'R,J,,;1 /, Su KofNr, /, payment of a dividend or a larger dividend than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax payable. by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid and. thereupon the proportionate share thereof of each shareholder shall be inducted in the total income of such shareholder for the purpose of assessing his total income."

The Income-tax Officer has power to make an order under this section determining the amount of undistributed balance out of the profits of a company where the company has distributed by way of dividends out of the income of the previous year less than 60% of the assessable income; and if it has distributed less than 60% up to the sixth month after the holding of the general meeting then the undistributed assessable income shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the general meeting. Thereafter the proportionate share of each shareholder shall be incfuded in the total of such shareholder for the purpose of assessing his total income.

It ·comes to this that if at the end of the sixth month after the general meeting of a company to consider its accounts of the previous year the income of which is being assessed, the Income-tax Officer finds that the dividends distributed are less than 60 % of the assessable income then such undistributed income shall be deemed to have been distributed at the general meeting or in accordance with tile res'ol!Jtion passed at the general meeting and proportionate share shall be includec;l .in the total income of each individual shareholder. Thus s. 23A(l} creates· a fictional distribution of dividend which is deemed' to be a receipt of diVidend by the shareholder although in fact the share-holder .does not receive it. It is deemed ·to have been distributed on the date on which accounts of the previous year were laid before the company at its general meeting.

Thus construed the undistributed assessable income in the present. case was rightly determined by the Income-tax Officer because 60% was not distributed by way of dividends up to the end of the sixth month after the holding of the meeting which was on December 4, 1948. Under s. 23A(l) of the Act dividend distributed by June 30, 1949, should not have been less than the statutory limit but the effect of the deeming provision is not that the income should be: deemed to have been distri:buted on June 30, 1949,. but on·tbe.date of. the general meeting i.e. December 4, 1948, and therefore within the account· ing year 1948, the relevant assessment year.being 1949-50. It makes no difference that accohhng to the wording of s. 23A{l) the order could be passed at any time, the assessment would still have to be made under s.

34(l){b) of the Act and if a notice is not served in accordance with that provision' the Incometax Officer will .have. nojurisdiction to take any action against . the shareholder; The notice under s. 34( I) is to be served within four years . from the end of the assessment year. It . was held by this court in First.· ..4.dditionat Income-tax Officer, MyllOre v. H. l{. S. Iyengar (1) that the pc;riod of eight or four years under s. 34(l)(a) or (b) begins from the end of the assessment year. Besides we cannot 'see whys. 23A(l) should beoonie unwcirkable merely because the notice under s. 34(1) which isthe assessment section prescribes a time limit for takii;ig action for. escaped incomes nor was any reason (l) (1962) Supp. I S.C.R.l. Qlmmii.riOllH ·Of· ,,,,__, .. ; &itolio) RMml J, s.. r..,.,, J. C...;,,~ ~ li.bn1J. Sa x..,,, J. brought to our attention in support of that sub· miaion.

In this view of the matter the answer given by the High Court to the second question was correct and the asses.5ment made under s. 34(l)(b) of the Act after four years from the end of the relevant as.5essment year was out of time. This is the only question which survives for decision and in our opinion the High Court answered it correctly. These appeals therefore fail and are dismissed with costs. One hearing fee. A ppe,al8 diamissed. BURMAH SHELL OIL STORAGE & DISTRIBUTING CO. INDIA LTD. THE BELGAUM BOROUGH MUNICIPALITY (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HmAY.t.TULLAH and RAGHUBAB DAYAL, lJ.) Octroi-Levy of Octroi on good& by Belgaum Municipality -Oo11SUmption, """ or Mlle-Mooning' of-Difference bUwttn T...,,.inal lax and Octroi-Bombay Municipal Borougha Act, 1925, (Bom. 18 of 1o25), •· 13. The appellant company deals in petrol and other petroleum products which it manufactures in its , refineries situated outside the octroi limits of Belgaum Municipality.

It brings those products inside the said area either for use or con. sumption by itself or , for sale generally to its dealers and licensees who in their turn sell them to others. , The Company alsO directly sells its products to Government, both civil and military, and to local bodies and big private concerns. The goods brought by the company within the octroi limits fall into four categories, viz. (i) goods consumed by ~he, Company, (ii) goods sold by the Company through its dealers or by itself and I