TaxTMI 
TaxTMI 
1948 (9) TMI 12
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....s Rs. 34,772 and income-tax payable was Rs. 10,141-13-0 only leaving a balance of Rs. 24,630-3-0 available for distribution as dividends. The general meeting of the company was held on June 6, 1941. No dividend was declared. In the profit and loss account the company showed Rs. 31,331 as depreciation allowance on the original cost of Rs. 1,19,002 only and thus the profits were shown as Rs. 55-2-6 only. The Income-tax Officer though that the company should have declared 60 per cent. of the assessable income less tax as dividend and the made an order in terms of section 23A(1) of the Act. During the assessment year 1942-43 the assessable income was Rs. 35,847 and the tax payable was Rs. 11,762-6-0 and the balance of Rs. 24, 084-10-0 ....
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....ayable...he shall...make... an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid, and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income." Mr. Mitra, learned counsel appearing for the assessee, contended that the words "profits and gains" used in Section 23A(1) have reference to a company carrying on business an....
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.... after deductions, as would appear from Section 7, 8, 9, 10 and 11. Reliance was placed on the following observations of Mullick, J., in In re Raja Jyoti prasad Singh Deo [1921] A.I.R. 1921 Pat. 103, at p. 106, viz., "the Act makes a difference between income and profits. Profits are included within the term income but profits are not synonymous with income." The observations are obiter and were made in a different connection, viz., the deduction of cess from rents and royalties under Section 11 and must be limited to the facts of that case. The observations of Courtney-Terrell, C.J., in Commissioner of Income-tax v. Gopal Sharan Narain Singh [1934] 2 I.T.R. 264, to the effect that "there is no definition of income in the Act and the wor....
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....in Section 23A (1) have to be construed on the terms used in the Indian Act without reference to English decisions, bearing in mind the rule of construction laid down by Lord Selborne, L.C., in Caledonian Railway Company v. Notch British Railway Co [1881] 6 App. Cas. 114, at p. 122: "The mere literal construction ought not to prevail, if (as the court below has thought) it is opposed to the intentions of the Legislature, as apparent by the statute; and if the words are sufficiently flexible to admit of some other construction by which that intention will be better effectuated." Mr. Mitra contended that the words "profits and gains" have a technical meaning, which limits it to business profits and gains and that this technical me....