Accrual and section 23A principles govern salary, dividend, and perquisite taxability under the 1922 income-tax law.

Salary for the last two months was not assessable because an oral agreement to discontinue it preceded the formal resolution, and the amount was not shown to have accrued under the assessee's accounting method. Dividend taxability linked to section 23A proceedings depended on the status of those proceedings: it was sustained for one company where the earlier basis remained displaced, but not for the other where the later reversal restored the proceedings. Perquisites were not taxable under section 2(6C)(iii) for the relevant year, as the Finance Act, 1955 amendment was not treated as merely clarificatory. The Revenue succeeded only in part on the dividend issue.

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Issues: (i) whether the sum of Rs. 16,000 representing salary for the last two months was assessable; (ii) whether the dividend income relatable to proceedings under section 23A of the Income-tax Act, 1922, was taxable in the hands of the assessee; and (iii) whether the value of perquisites was taxable under section 2(6C)(iii) of the Income-tax Act, 1922.

Issue (i): whether the sum of Rs. 16,000 representing salary for the last two months was assessable

Analysis: The finding was that an oral agreement to discontinue salary had preceded the formal resolution, and the amount was not shown to have accrued in the manner contended by the Revenue. On the basis of the factual findings and the assessee's method of accounting, the amount could not be added to income.

Conclusion: The addition of Rs. 16,000 was not sustainable and the issue was decided against the Revenue.

Issue (ii): whether the dividend income relatable to proceedings under section 23A of the Income-tax Act, 1922, was taxable in the hands of the assessee

Analysis: The taxability of the dividend depended on the status of the section 23A proceedings against the two companies. As to one company, the earlier decision supporting the assessee's stand had not been shown to be displaced. As to the other company, the later reversal of the High Court decision restored the section 23A proceedings and revived the basis for taxation.

Conclusion: The dividend issue was decided partly in favour of the Revenue and partly in favour of the assessee.

Issue (iii): whether the value of perquisites was taxable under section 2(6C)(iii) of the Income-tax Act, 1922

Analysis: The amendment introduced by the Finance Act, 1955 was not accepted as merely clarificatory for the relevant period. The matter was therefore governed by the law as applicable to the assessment year, and the High Court's answer against the Revenue was upheld.

Conclusion: The perquisites issue was decided against the Revenue.

Final Conclusion: The appeal succeeded only in part, with the salary addition disallowed, the dividend issue sustained only to the extent indicated, and the perquisites issue left against the Revenue.

Ratio Decidendi: Where the relevant facts show non-accrual of salary by prior oral agreement, the amount is not assessable as salary income; dividend taxability under section 23A depends on the subsistence and effect of the proceedings against the distributing company; and an amendment will not be treated as clarificatory unless its retrospective operation is clearly established.

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