Deemed dividend taxation follows the statutory year of distribution; later credit or payment does not create a new taxable event.

Dividend deemed distributed under section 23A is taxed in the year fixed by the statutory deeming provision, and the later actual credit or payment of the same amount does not create a fresh taxable event under section 16(2) read with section 4(1)(b). The shareholder's proportionate share must be included in the total income of the relevant previous year when the deemed distribution arises. Section 23A(4) operates only to avoid double taxation where tax has already been paid on the deemed dividend; it does not permit assessment of the same dividend again in a later year merely because it was actually credited then.

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Issues: Whether dividend credited to a shareholder in the accounting year 1943-44 could be taxed under section 16(2) when an order under section 23A had already deemed the same amount distributed as dividend in an earlier year.

Analysis: Under section 23A, once the Income-tax Officer makes the statutory order, the undistributed profits are deemed to have been distributed as dividends amongst the shareholders on the date of the general meeting, and the proportionate share of each shareholder must be included in the total income of the relevant previous year. Section 16(2), read with section 4(1)(b), requires dividend income to be assessed in the year in which it is paid, credited, distributed, or deemed to have been so dealt with. The statutory scheme therefore fixes the year of charge by the deemed date of distribution, and the later actual crediting of the same amount cannot shift the liability to a different year. Section 23A(4) operates only to prevent double taxation where tax has already been paid on the deemed dividend; it does not authorise taxation of the same amount in the year of actual receipt merely because it was omitted from the correct assessment year.

Conclusion: The dividend could not be subjected to tax in assessment year 1943-44 on the footing of actual credit or receipt, because it was liable to be assessed, if at all, in the earlier year in which it was deemed to have been distributed.

Final Conclusion: The statutory charge attached to the deemed distribution in the earlier year, and the later actual distribution did not create a fresh taxable event for the same income.

Ratio Decidendi: Where income is statutorily deemed to be distributed and is required to be assessed in a particular previous year, it cannot be taxed again or shifted to a later year merely because the amount is later actually credited or paid.

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