1983 (12) TMI 13

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....herefore, the ITO, under s. 148 of the Act, reopened the assessment and included the amount and taxed it. Venkatesam Chetty protested against the order. On appeal, the Commissioner of Income-tax, on April 29, 1976, confirmed the order and directed the ITO to suitably modify the assessment for 1971-72. Aggrieved thereby, Venkatesam Chetty has approached this court to quash all proceedings by which the assessment completed on January 13, 1971, was reopened. It is argued, Venkatesam Chetty maintains account books under cash system, that he received on May 11, 1970, the dividend cheque and, there., fore, he could not have shown Rs. 3,600 in the return for the assessment year 1970-71 ; consequently, he could not be assessed. This writ petitio....

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....idea of division between several persons which is the same as payment to several persons ". It was held that when dividend is declared by a company, it is chargeable to tax as income of the year in which it is so declared. The fact that actual payment of the income is deferred is irrelevant. It was explained "...the Act does not make dividend income taxable in the year in which it becomes due : it is taxable only in the year in which it is paid, credited or distributed " and added, the decision of the Bombay High Court in CIT v. Laxmidas Mulraj Khatau [1948] 16 ITR 248 ; 18 Comp Cas 198, " in which it was held that when dividend is declared, liability arises on the part of the company to make that payment to the shareholder and with regard ....