COMMISSIONER OF INCOME TAX Vs. N BHAGAVATHY AMMAL

JUDGEMENT

(1.) TWO questions have been referred to us at the instance of the Revenue. They are :

(2.) WHETHER the Appellate Tribunal is correct in law and had valid materials to hold that the accumulated profits for the purpose of Section 2(22)(c) of the Income-tax Act, 1961 should be taken at Rs. 4,37,780 after deducting Rs. 20,37,290 from the total accumulated profits of Rs. 24,75,070 and that since the assessee's father the late S. Kumaraswamy had already been taxed under Section 2(6A)(e) of the Indian Income-tax Act, 1922, on Rs. 4,89,144 no amount could be taxed as deemed dividend under Section 2(22)(c) of the Income-tax Act, 1961 ?"

(3.) SECTION 46(2) of the Act, however, specifically provides that the money or other assets, which a shareholder may receive from a company on its liquidation shall be chargeable to income-tax under the head "Capital gains", and thus creates a charge on such monies or assets. SECTION 46(2) of the Act is, therefore, an independent charging SECTION and in construing that provision recourse to the other provisions of the Act, are only required to be made to the extent expressly or impliedly required by that provision itself. SECTION 46(2) of the Act, after making the money or assets received by the shareholder chargeable to income-tax under the head "Capital gains" provides that the amount to be charged to tax, is the amount received or the market value of the asset as on the date of distribution as reduced by the amounts assessed as dividend within the meaning of SECTION 2(22)(c) of the Act. It further provides that the amount so calculated shall be deemed to be the full value of the consideration for the purposes of SECTION 48 of the Act.