| Case ID |
2d08007d-3992-4ea2-be7b-3e011df484cc |
| Body |
View case body. Login to View |
| Case Number |
IT REFERENCE No. 48 OF 1971 |
| Decision Date |
Apr 28, 1980 |
| Hearing Date |
|
| Decision |
The court held that the dividend income received by the assessee, who was a dealer in shares, was not to be classified as 'earned income' under section 2(7)(iii) of the Finance (No.2) Act, 1962. The court emphasized that income must be immediately derived from personal exertion to qualify as earned income. In this case, the dividend income was deemed to arise from the ownership of shares, with the acquisition of shares being the intervening event, therefore not directly from the personal exertion of the assessee. The Tribunal's decision to classify the dividend as earned income was set aside, affirming that the income did not meet the criteria for earned income as defined by the law. |
| Summary |
In this landmark case decided by the Bombay High Court, the primary issue at hand was whether dividend income received by a share dealer could be classified as 'earned income' under the Finance (No.2) Act, 1962. The court meticulously analyzed the definition of 'earned income' as outlined in section 2(7)(iii), which stipulates that income must be immediately derived from personal exertion. The court noted that while the assessee was engaged in the business of buying and selling shares, the dividend income was a result of holding shares rather than personal effort. The ruling concluded that the intervening event of acquiring shares negated the direct link between personal exertion and the income derived from dividends. This case underscores the critical distinction between types of income for tax purposes, particularly in the context of share trading and the implications for taxation of dividend income. Keywords such as 'earned income', 'dividend taxation', 'Bombay High Court', and 'Finance Act' are central to understanding the nuances of this case and its implications for income classification within tax law. |
| Court |
Bombay High Court
|
| Entities Involved |
Not available
|
| Judges |
M.N. Chandurkar,
P.B. Sawant
|
| Lawyers |
R.J. Joshi,
V.C. Kotwal,
J.M. Munim,
S.J. Metha
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
D.G. Goenka
|
| Citations |
1981 SLD 1626,
(1981) 129 ITR 260
|
| Other Citations |
Bucks v. Bowers [1969] 46 TC 267 (Ch D),
CIT v. Ahmuty & Co. Ltd. [1955] 27 ITR 63 (Bom.),
CIT v. Chugandas & Co. [1965] 55 ITR 17 (SC),
CIT v. Kamakhya Narayan Singh [1948] 16 ITR 325 (PC),
J. K. Trust v. CIT [1953] 23 ITR 143 (Bom.),
Northend v. White & Leonard & Corbin Greener [1975] 50 TC 121 (Ch D),
Ramachandra Mardaraj Deo v. CIT [1955] 27 ITR 667 (Orissa),
United Commercial Bank Ltd. v. CIT [1957] 32 ITR 688 (SC),
Western States Trading Co. (P.) Ltd. v. CIT [1971] 80 ITR 21 (SC)
|
| Laws Involved |
Finance (No.2) Act, 1962,
Income-tax Act, 1961
|
| Sections |
2(7)(iii),
56
|