Dividend distribution means actual or constructive payment, not mere declaration, for rebate withdrawal purposes.

For withdrawal of rebate under the relevant proviso, "distributed" dividends meant actual or constructive distribution to shareholders, not a mere declaration. The court treated the expression as unambiguous and held that distribution required payment or credit of the dividend in shareholders' accounts. Applying that meaning, only the amount actually distributed during the relevant previous year counted, so the larger sum declared but not paid or credited did not qualify. The Tribunal was therefore correct in limiting the distributed dividend to the amount actually distributed, and the issue was answered in favour of the assessee.

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Issues: Whether, for the purpose of withdrawal of rebate under clause (c) of the second proviso to Para. D of Part II of the First Schedule to the Finance Act, 1959, the amount of dividends "distributed" by the company meant the sum actually or constructively distributed to shareholders or the larger amount merely declared as dividend.

Analysis: The expression "distributed" was held to connote actual or constructive distribution and not a mere declaration of dividend. The word was treated as unambiguous and as signifying division among shareholders by payment or by crediting the amounts due in their respective accounts. On the facts, although Rs. 1,05,000 had been declared as dividend, only Rs. 47,000 had actually been distributed during the relevant previous year.

Conclusion: The Tribunal was right in holding that only Rs. 47,000, and not Rs. 1,05,000, had been distributed as dividends, and the answer was in the affirmative in favour of the assessee.

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