Dividend in specie is taxed at market value on declaration date, not nominal resolution value or later receipt value.

Where dividend is distributed in specie as shares, the taxable value is the market value of the shares on the date the dividend is declared, because the shareholder's right and corresponding benefit accrue on that date. The nominal amount stated in the dividend resolution or accounts is not controlling, and the later date of transfer or actual receipt is immaterial because the recipient takes the shares subject to market risk after declaration. Tax therefore attaches to the value of the property received, not to the book value assigned in the resolution.

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Issues: Whether dividend received in the form of shares should be valued at the amount stated in the dividend resolution, at the market value on the date of declaration, or at the market value on the date of actual receipt.

Analysis: The dividend was declared by distributing part of the company's assets in specie, namely shares of other companies, and the shareholder received an advantage in money's worth by reason of its shareholding. Dividend accrued on the date of declaration, when the debt arose, and the relevant value was the market price of the shares on that date. The later date of transfer or receipt was immaterial because the shareholder took the shares subject to market risk after declaration. The principle applied was that tax attaches to the value of what is received, not to the nominal value assigned in the resolution or books.

Conclusion: The dividend income was to be taken at the market value of the shares on the date of declaration of dividend, and not at the value fixed in the resolution or at the market value on the date of actual receipt.

Ratio Decidendi: Where dividend is distributed in specie, its taxable value is the market value of the property on the date the dividend is declared, because the shareholder's right and the corresponding benefit accrue on that date.

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