Deemed dividend on liquidation could not be taxed under section 44-F because the provisions operated in different fields.

A liquidation distribution treated as a deemed dividend under section 2(6A)(c) of the Indian Income-tax Act, 1922 could not be taxed under section 44-F. The Court held that section 44-F applies only to income from shares or securities arising in periodical form and capable of being apportioned over time, whereas a liquidation receipt is a distribution of company assets and not income generated by the shares after liquidation. The deemed-dividend fiction in section 2(6A)(c) was confined to its own statutory purpose and could not be extended to section 44-F. The taxing provision could not be enlarged by implication, so the assessee succeeded.

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Issues: Whether the distribution of assets to shareholders on liquidation, treated as a deemed dividend under section 2(6A)(c) of the Indian Income-tax Act, 1922, could be brought to tax under section 44-F of that Act.

Analysis: Section 44-F is directed to income arising from securities or shares in a periodical form, capable of being deemed to accrue from day to day and of being apportioned accordingly. A distribution on liquidation is of a different character: the shareholder receives a share of the assets of the company, not income generated by the shares after liquidation. The deemed dividend in section 2(6A)(c) is an artificial or legal fiction created for a distinct purpose, and that fiction cannot be extended to section 44-F. The two provisions operate in different fields and are not compatible. A taxing provision cannot be expanded by implication to cover receipts not plainly brought within its language.

Conclusion: Section 44-F was inapplicable to the liquidation distribution, and the deemed dividend under section 2(6A)(c) could not be taxed under that provision. The issue was answered in favour of the assessee.

Final Conclusion: The appeals could not succeed because the impugned liquidation receipts were outside the scope of section 44-F, and the High Court's view in favour of the assessee was upheld.

Ratio Decidendi: A legal fiction deeming a liquidation distribution to be dividend cannot be extended beyond its own statutory purpose, and a taxing provision must clearly and expressly bring the receipt within its ambit before tax can be levied.

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