- (1.) TWO of the questions referred in this Reference are admittedly covered by a previous decision of this court in the case of the very same group of assessees and the third question is covered by a majority decision of the supreme Court. Mr. S. Mukherjee, appearing for the Revenue, submits that in view of the aforesaid majority decision of the Supreme Court, he could not ask us to decide the third question in favour of the Revenue, but he wants it to be recorded that the Revenue does not concede its contention that the amount was taxable under the residuary head. The facts giving rise to the reference are as follows :
(2.) THE assessee is a shareholder of the Ukhara Estate Zemindaries Ltd. (hereinafter referred to as "the company" ). The assessment year is 1950-51, the corresponding accounting year being 1356 B. S. ending on the 13th April 1950. The company declared a dividend on the 19th October, 1949 and the asssessee received a sum of Rs. 13,200/- as his share of such dividend during the relevant accounting year. Out of the above amount, the sum of Rs. 8,829/ - was paid out of the accumulated capital gains received by the company in the shape of selamis and land acquisition compensation receipts after the 31st March, 1948. Such capital gains were taken to the reserve fund and thereafter distributed as dividend by the company. The remainder of the dividend was paid out of the balance of the profit and loss account. The dispute in this Reference centres round the taxability of the sum of Rs. 8,829/ -. The assessee contended before the Income-tax authorities that the amount received out of the accumulated capital gains of the company could not be assessed as dividend within the meaning of Section 2 (6a) (a) of the indian Income-Tax Act, 1922, as the explanation to the aforesaid clause excluded capital gains arising before the 1st day of April, 1946 or after the 31st day of March, 1948 from the expression 'accumulated profits". As in this case the company distributed the aforesaid amount as dividend out of its capital gains received after the 31st March, 1948, such portion* of the dividend did not come within the statutory definition of dividend in Section 2 (6a) (a) and could not be assessed as such. This contention was rejected by the Income-tax officer who assessed the entire amount of Rs. 13,200/- as the assessee's income from dividend.
(3.) ON appeal from the order of assessment, the Appellate Assistant Commissioner accepted the assessee's contention that the amount of Rs. 8,829/- could mot be construed as dividend within the meaning of Section 2 (6a ). He, however, held that as the amount was a receipt of a revenue nature in the hands of the assessee, it was assessable under the general charging section. The appellate Assistant Commissioner, therefore, dismissed the assessee's appeal. On the assessee preferring a second appeal before the Tribunal, his appeal was heard along with the appeals preferred by the other shareholders of the company against the assessment of the amounts distributed by the company out of its capital gains in the relevant accounting year and the Tribunal gave its principal decision in the case of (1)Sri Nalin Behari Lall Singha, in I. T. A. No. 5920 of 1961-62. In that appeal the tribunal held that the distribution out of capital gains in the shape of premium received by the company as consideration for the grant of mining and other leases could not be held to be a dividend within section 2 (6a) (a) and that the said amount could not also be assessed as dividend under the ordinary meaming of that expression. The Tribunal, however, was of the opinion that the remaining part of the distribution, which was attributable to the land acquisition compensation received by the company, could not be regarded as having been made out of the capital gains in the hands of the company and therefore, the exemption in the third proviso to 'section 2 (6a) was not applicable in terms and there was no bar to the assessment of the distribution as dividend in the hands of the assessee. The Tribunal also agreed with the decision of the Appellate Assistant Commissioner that even if a portion of the distribution was not covered by the definition in Section 2- (6a), such portion of the dividend would be taxable as the income of the assessee from other sources. In conformity with that decision the Tribunal dismissed the appeal preferred by the assessee.;