COMMISSIONER OF INCOME TAX Vs. RAJAM T S

JUDGEMENT

(1.) ALL the above matters arise out of a common order passed by the Tribunal, and, therefore, they are dealt with together.

(2.) THE assessees in all these cases were shareholders of a company known as "Tinnevelly Motor Service Company Private Ltd." The said company carried on transport business. When the Government took over all the vehicles owned by the company, the company went into voluntary liquidation on 28th March, 1970. The liquidator distributed the first dividend on 31st March, 1970, at the rate of Rs. 100 per share, the second dividend on 17th April, 1970, at the rate of Rs. 40 per share and the third dividend on 20th Oct., 1971, at the rate of Rs. 25 per share. On the date on which the company went into liquidation, the paid up capital of the company consisted of Rs. 6,76,900 represented by 6,769 equity shares of the face value of Rs. 100 each. Out of these shares 1,929 shares of the value of Rs. 100 each had been allotted as fully paid up bonus shares by capitalising a sum of Rs. 1,92,900 out of the reserve fund. In addition to the above, the company held reserve fund at Rs. 4,68,165, which was made up as follows:

(3.) THE Department went on appeal before the Tribunal. The Tribunal agreed with the view taken by the AAC and held thus: