| Case ID |
d8232a8c-814e-4be6-88ef-953853738463 |
| Body |
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| Case Number |
CIVIL APPEAL No. 364 OF 1957 |
| Decision Date |
Nov 22, 1960 |
| Hearing Date |
|
| Decision |
The Supreme Court held that the distribution of rights to apply for shares was indeed a distribution of dividend, affirming the decision of the Bombay High Court. The court ruled that the right to apply for shares had a market value, and its distribution constituted a dividend under the Income-tax Act. The court clarified that dividends need not be in monetary form and can be in the form of rights or property with monetary value. The judgment emphasized that the true nature of the resolution cannot be altered by its form, and thus, the distribution of rights amounted to taxable income for the shareholders. |
| Summary |
In the Supreme Court case of Kantilal Manilal v. Commissioner of Income Tax, the court addressed the definition of dividend under the Income-tax Act, 1961. The case involved shareholders of Navjivan Mills Ltd. who were entitled to apply for shares in the Bank of India. The key issue was whether the distribution of the right to apply for shares constituted a dividend. The court ruled affirmatively, stating that dividends can be distributed in forms other than cash. This case highlights the importance of understanding the nuances of tax law, particularly in relation to corporate share distributions. It underscores how rights with monetary value can be treated as income, impacting shareholders' tax obligations. The ruling also reinforces the principle that tax definitions can be broad and inclusive, capturing various forms of economic benefits received by shareholders. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
J.L. Kapur,
M. Hidayatullah,
J.C. Shah
|
| Lawyers |
N.A. Palkhivala,
I.N. Shroff,
A.N. Kripal,
D. Gupta
|
| Petitioners |
Kantilal Manilal
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1961 SLD 155,
(1961) 41 ITR 275
|
| Other Citations |
Kantilal Manilal v. CIT [1956] 30 ITR 569 (Bom.)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
2(22),
2(6A)
|