| Case ID |
3a926ae9-2623-44c2-af6c-78a1533e5f6a |
| Body |
View case body. Login to View |
| Case Number |
TAX CASE Nos. 63 AND 64 OF 1971 |
| Decision Date |
Jul 18, 1974 |
| Hearing Date |
|
| Decision |
The Patna High Court held that the shares of the Bihar State Financial Corporation were not preference shares, and thus the corporation was not entitled to a further rebate of 7½ percent on the declared dividend. The court analyzed the legal definitions and provisions under the relevant acts, concluding that the corporation's shares did not meet the criteria for preference shares as outlined in the Companies Act, 1956. The court emphasized that the shares did not guarantee fixed dividends nor did they provide preferential rights in terms of capital repayment, resulting in the rejection of the corporation's claims for additional tax rebates. The decision was thus rendered against the corporation, affirming the earlier rulings of the Income-tax Appellate Tribunal. |
| Summary |
In this landmark case decided by the Patna High Court, the court examined the status of shares held by the Bihar State Financial Corporation in relation to tax rebate eligibility under the Income-tax Act, 1961. The case revolved around the interpretation of whether the shares could be classified as preference shares according to the Companies Act, 1956. The court carefully analyzed the provisions of the Finance Acts of 1964 and 1965, which laid down specific criteria for tax rebates on dividends declared on preference shares. The corporation claimed entitlement to a rebate of 7½ percent based on its shares being preference shares. However, the court found that the shares did not carry the necessary preferential rights regarding dividends or capital repayment. Therefore, the court ruled in favor of the Commissioner of Income Tax, denying the rebate and emphasizing the importance of adhering to statutory definitions. This case highlights the intricate relationship between corporate finance structures and tax obligations, serving as a precedent for similar cases involving financial corporations and tax assessments. |
| Court |
Patna High Court
|
| Entities Involved |
Reserve Bank of India,
State Government,
Bihar State Financial Corporation
|
| Judges |
N.L. Untwalia, C.J.,
S.K. Jha, J.
|
| Lawyers |
Tarkeshwar Prasad,
K.N. Jain,
M.N. Varma,
Rameshwar Prasad II,
Shambhu Sharan,
Awadh Bihari Prasad
|
| Petitioners |
Bihar State Financial Corporation
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1976 SLD 222 = (1976) 102 ITR 517
|
| Other Citations |
Not available
|
| Laws Involved |
Finance Act, 1964,
Finance Act, 1965,
Companies Act, 1956,
Income-tax Act, 1961,
State Financial Corporation Act, 1951
|
| Sections |
Schedule I Part II para D,
Schedule I Part I para F,
Sections 85 and 86,
Section 154,
Section 104,
Section 108,
Section 2(18),
Section 4(3),
Section 6,
Section 35(2),
Section 35(3),
Section 43
|