1951 (8) TMI 20

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....eld 7,000 shares on which this dividend was declared. The Income-tax Officer grossed up the dividend income by adding to it the tax payable in the United Kingdom at 9 shillings per pound sterling, which amounted to Rs. 1,14,546, and Indian income-tax which amounted to Rs. 59,112. On this grossing up, the Income-tax Officer came to the conclusion that the dividend income of the assessee was Rs. 3,13,658. The Appellate Assistant Commissioner took the view that to the sum of Rs. 1,40,000 only Rs. 59,112 should be added and the gross dividend of the assessee should be Rs. 1,99,112. The Tribunal agreed with the Appellate Assistant Commissioner, and the Commissioner has now come before us on a reference made by the Tribunal. Now, before we loo....

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....n India and at the rate laid down in the Finance Act: it cannot possibly apply to a tax paid by a company outside India. Then we come to Section 18(5), and that sub-section provides for the relief to the assessee. The assessee's income having been grossed up, relief would have to be given to him in the amount which was already paid for tax by the company, and Section 18(5) provides that "...any sum by which a dividend has been increased under sub-section (2) of Section 16 shall be treated as a payment of income-tax on behalf...of the shareholder...and credit shall be given to him therefor in the assessment, if any, made for the following year under the Act." (I am only quoting the relevant portion of the section.) Therefore, it is by th....

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....s placed by Mr. Joshi on Section 49B. Frankly, I must confess that that section does present some difficulty, because that section deals with the case of refund and it provides for refund on the basis that income-tax on the company's dividend is deemed to have been paid by the shareholder, and relief is intended to be given to the shareholder of a company which is assessed to income-tax not only in India but also elsewhere. This provides Mr. Joshi with an argument that the scheme of the Income-tax Act is that you take into consideration not only the assessment of a company to income-tax in India but also assessment of a company to income-tax elsewhere. And Mr. Joshi says that, as in this case the company whose dividends are in question ....