| Case ID |
3ab22d1d-9674-43b6-869e-85f3788bd66c |
| Body |
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| Case Number |
IT REFERENCE No. 613 OF 1972 |
| Decision Date |
Jul 24, 1980 |
| Hearing Date |
Jul 24, 1980 |
| Decision |
The court held that only the net foreign dividend received by the assessee was includible in its total income under the provisions of the Income-tax Act, 1961. It was concluded that the income deemed to accrue or arise outside India cannot be included as taxable income. The tribunal's decision was upheld, stating that the amounts deducted for taxes in foreign countries did not accrue to the assessee, hence only the net dividend of Rs. 2,29,948 was taxable. This case relies on precedents that emphasize the distinction between actual and deemed income, particularly in the context of taxation of dividends received from foreign companies. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Shaw Wallace & Co. Ltd., decided by the Calcutta High Court, the issue revolved around the taxation of foreign dividends received by a resident company. The court addressed the interpretation of Section 5(1)(c) of the Income-tax Act, 1961, particularly regarding the inclusion of foreign income in taxable income. The assessee received a net dividend after tax deductions from UK and Ceylon companies. The key takeaway from this ruling is the affirmation that only net dividends are taxable, reinforcing the principle that income deemed to arise outside India does not qualify as taxable income. This case sets a precedent for how foreign dividends are treated in Indian tax law, emphasizing the importance of understanding tax deductions at source and their implications on residency and income accrual for tax purposes. The clarity provided by this ruling aids both taxpayers and tax practitioners in navigating complex international tax scenarios. |
| Court |
Calcutta High Court
|
| Entities Involved |
Shaw Wallace & Co. Ltd.
|
| Judges |
Sabyasachi Mukharji,
Sudhindra Mohan Guha
|
| Lawyers |
Suhas Sen,
B.K. Naha,
Dr. Debi Pal,
Miss M. Seal
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Shaw Wallace & Co. Ltd.
|
| Citations |
1981 SLD 1981 = (1981) 132 ITR 466
|
| Other Citations |
CIT v. Clive Insurance Co. Ltd. [1978] 113 ITR 636 (SC),
CIT v. Y.N.S. Hobbs [1979] 116 ITR 20 (Ker.),
North British Railway Co. v. Scott 8 TC 332 (HL),
Tokyo Shibaura Electric Co. Ltd. v. CIT [1964] 52 ITR 283 (Mys.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
5(1)(c),
198
|