1948 (3) TMI 27

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....n all the five applications we make a consolidated reference, taking the figure in the Trust case 3. The Trustees of the Mulraj Khatau Trust received dividend income of Rs. 1,01,772 from the Khatau Makanji Spinning & Weaving Co. Ltd., on 3rd November, 1941, on behalf of five beneficiaries, they being entitled to one-fifth share each. The dividend income was assessed in the hands of the trustees, but taxed in the hands of the beneficiaries. Besides income received from the Trust the beneficiaries individually also received dividend income from the same company under similar circumstances. This dividend income was not included in the assessment for the year 1942-43 but was included in the assessment for the year 1943-44. The Khatau Makanji....

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....That the assessee's method of accounting is to include in his dividend income dividend declared out of the profits of one year only. The Tribunal did not agree with the second contention of the assessee and held that it was possible that dividend income of two years from the same company can arise in the same accounting year. As regards the first contention, the point for our determination was, what was the exact time when a dividend that was declared became a dividend income of an assessee. Is it the date of the declaration of the dividend or is it the date when it is made payable or the date when it is received ? The Tribunal held that on the date the company declared the dividend, i.e., 18-10-1941, every shareholder became a credi....

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....vidend income of the assessees for the assessment year 1943-44 as both the dates, viz., 3rd November, 1941, and 2nd November, 1942 fell in the S. Y. 1998. The assessees' contention was that as far as the dividend for the year ended 30th June, 1941, was concerned the dividend should be assessed for S. 1997 and for the accounting year 194243 because it was declared on 18th October, 1941 ; and Sir Jamshedji has contended that on the declaration of the dividend the shareholder became a creditor of the company and income accrued and arose to him although the payment thereof was deferred till 3rd November, 1941. On the other hand, the Advocate-General's contention is that it was only on 3rd November, 1941, that the assessees could have de....