LexPADMAVATI R. SARAIYA AND OTHERS versus COMMISSIONER OF INCOME-TAX BOMBAY CITY-1
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PADMAVATI R. SARAIVA AND omERS
v.
COMMISSIONEJl OF INCOME-TAX BOMBAY Cl'f\'·1
September 22, 1964
{K. SUBBA RAo, J. C. SHAH AND S. M. SIKRI JJ.)
Income-tax Act (11 of 1922), s.r. 16(2), 49AA and lndo-Paki't""
agreement dated 10th December, 1947-Scope of.
The assessee was a share-bolder in a company carrying on business
both in India and Pakistan. It declared dividend
out of the profits
accruing to it in both the countries. For the following year, having de-
clared the dividend similarly, the company also passed a resolution that
half the amount of the dividend was payable on O'f after a certain date
and the balance was payable "within two months after -remittances from
Pakistan became free". On the two questions, namely : (i) whether the
assessee, having received the Pakistan
portion
of the diV'idend-income,
was entitled to any relief under the provisions of the
Inda-Pakistan
Agreement dated 10th December, 1947, entered
into between the two
countries to avoid double taxation
in Pursuance of s. 49AA of the
Income-tax Act, 1922, and (ii) whether the entire amount of dividend
including the moiety payable later could be included in the total income
of the assessee, the High Court answered the first, against, and the second,
in favour
of, the
assessee.
Both the
assessee and the
Commissioner
appealed to the Supreme Court.
HELD : The appeals should be dismissed.
(i) Articles IV and VI of the Agreement show that each Dominion
could make an assessment under tts own laws and
regardless of the
Agreement. The only restrictions imposed were on the liberty to retain
the tax and the obligation to allow certain abatements, if the conditions
mentioned in the Agreement were satisfied.
As no certificate of assess-
ment in Pakistan had been
produced before the income-tax officer as
required by Art. VI (b), the assessee was not entitled to any relief.
[313D,G; 314A].
(ii) As the dividend due to the assessee was not credited to any sepa-
rate account of the assessee so that he could, if he wished, draw it, it
must be held that the Pakistan portion
of the dividend had not been
credited or paid within the meaning of s. 16(2) of the Act and so, <:ould
not be induded in the total income of the assessee. [315B-C].
I. Dalmia v. Commissioner of Income-tax, Delhi,
53
l.T.R.
83,
followed.
CIVIL APPELLATE JURISDICTION :
Civil Appeals Nos. 704
to 715 of 1963.
Appeals from the judgments and orders dated March
17.
1958, of the Bombay High Court in Income-tax Reference Nos.
41, 42, 43, 57, 58, 59, 69, and 71of1957.
H
A. V. Viswanatha Sastri, T. A. Ramachandra;;, J. B. Dada-
chan;i, 0. C. Mathur and Ravinder' Narain, for the appellants
(in C.A. Nos. 704, 706, 707, 709, 710, 711, 713 and 714 of
308
SUPREME
COtJRT
REPORTS
[1965] I S.C.R.
1963) and respondents (in C.As. Nos. 705, 708, 713 and 715 of
A
1963).
S. V. Gupte,
Additional Solicitor-Genera/,
R. Ganapathy
Iyer and R. N. Sachthey, for the appellants (in C.A. Nos. 705,
708, 712, and 715 of 1963) and respondents (in C.A. Nos. 704,
706, 707, 709, 710, 711, 713 and 714 of 1963).
The Judgment of the Court was delivered by
B
Sikri J. This iudgment will dispose of 12 anneals from the
judgments of the High Court of Bombay, dated March 17, 1958.
whereby the High Court answered the questions referred to it
partly in favour of the assessee and partly in favour of the
C
Department.
The four que>tiom: answered by the High Court
are:.
"1. Whether the initiation of action under seotion 34
for the purpo<e of bringing to tax the net dividend
i~come of Rs. 579 (suitably grossed) was valid?
2. Whether the said 'P. portion of the dividend
income' forms part of the assessee's total income as that
term is defined in section 2(15) of the Indian Income
Tax Act, 1922 ?
3. Whether having regard to the provisions of the
Indo-Pakistan Agreement, the assessee is entitled to any
'relief on the said 'P. portion of dividend income' 0
1. D. Whether the other moiety of the dividend of
Rs. 1,71,992 declared by the Company on 14-10-1952
is prooerly includible in the total income of the asscssce
cf the previous year S.Y. 2008 for the assessment year
1953-54 ?"
(The figures in these questions are in respect of Shri Purshot-
tamdas Thak:urdass.)
In C.A. 709/63 and C.A. 713/63 questions I, 2 and 3 arise.
D
E
F
Only questions 2 and 3 arise in C.A. 710/63, C.A.
711/63, G
C.A. 704/63, C.A. 707/63, C.A. 71Excerpt shown. Read the full judgment & AI analysis in Lexace.