MADURA COATS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee has in this petition filed under section 256(2) seeks a direction from this court to refer the following question for the opinion of this court :

(2.) HOWEVER, after going through the facts and circumstances of this case, we are satisfied that the said question is not a referable one. The assessee company was formed by the amalgamation of three companies, viz., M/s. Madura Mills Ltd., M/s. A. & F. Harvey Ltd. and M/s. J. & P. Coats (India) P. Limited. The amalgamation took place on January 1, 1975, with retrospective effect from July 1,1974. For the assessment year 1976-77, dividend income of Rs. 14,33,96 arose to M/s. J. & P. Coats (India) P. Ltd. and M/s. A. & F. Harvey Ltd., on the shares held by them in Madura Mills Limited. This dividend as declared at the annual general meeting of M/s. Madura Mills Ltd. held on December 27, 1974. On the said dividend income of Rs. 14,33,986, a sum of Rs. 3,29,219 has been deducted at source. Before the Income-tax Officer, the assessee claimed that the entire dividend income of Rs. 14,33,986 should not be taken as the income of the assessee company but it is entitled to get credit for the tax deducted at source. The Income-tax Officer rejected that contention and held that the said dividend is the income of the amalgamated company as per the terms of the amalgamation. Thus, the Income-tax Officer took the view that the gross dividend income including the tax deducted at source out of the dividend income was held to be the income of the amalgamated company. Aggrieved by the order of the Income-tax Officer, the assessee preferred an appeal contending that the dividend income should not be treated as the income of the assessee.