PIONEER MOTORS LIMITED Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF KERALA
Pioneer Motors Limited
COMMISSIONER OF INCOME TAX
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(1.) THIS is a reference by the Tribunal, Madras Bench ' B', under s. 66(1) of the Indian IT Act, 1922. The questions referred are :
"(i) Whether the aforesaid dividend of Rs. 75,000 declared on 2nd Jan., 1951, purporting to have been out of the profits of the three accounting years 1122, 1123 and 1124 is apportionable at all ?
(ii) If the answer to the above question is in the affirmative, is an order under s. 23A of the Indian IT Act (equal to s. 31 of the Travancore IT Act) competent for the ' previous year ' 1123 ?
(iii) The original order being under s. 31 of the aforesaid Travancore Act, whether the order of the Tribunal directing an order under s. 23A of the Indian Act is valid ?
(iv) Whether the provisions of s. 23A of the Indian IT Act are ultra vires of the Indian Constitution and accordingly inoperative -
(2.) THE facts necessary to appreciate the questions referred are few and can be briefly stated. The assessee, the Pioneer Motors Ltd., is a private limited company with two shareholders which was
incorporated in November, 1946 (1122 M. E.), under the Travancore Companies Act (IX of 1124).
The accounts of the year 1122 were laid before the company in general meeting on 22nd July,
1949, of 1123 on 22nd Sept., 1950, of 1124 on 2nd Jan., 1951, and of 1125 on 31st Dec., 1951. There was no declaration of any dividend at the meetings held on 22nd July, 1949, 22nd Sept.,
1950, or on 31st Dec., 1951.
(3.) IN the report to the shareholders dt. 28th Dec., 1950, (Annexure B) the directors said :
"The company has not declared dividend for the period ended 31 -12 -1122 and 31 -12 -1123. The profit for the year amounted to Rs. 56,350 -6 -5 after providing for all expenses. This together with Rs. 1,04,244 -1 -0 brought forward from previous years amounted to Rs. 1,60,594 -7 -5. Your directors proposed to make the following appropriation :
and at the meeting on 2nd Jan., 1951, it was resolved (Annexure A) :
"that a dividend of 30 per cent on the paid up capital be paid to the shareholders as recommended by the directors."
Annexure C is a specimen copy of the dividend warrants that followed and it is stated therein that the dividend was "for the years ended 1122, 1123 and 1124".;
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