| Case ID |
df799e6d-5719-4969-a4a2-d33777608b52 |
| Body |
View case body. Login to View |
| Case Number |
CIVIL APPEAL Nos. 2321 TO 2324 OF 1966 |
| Decision Date |
Apr 29, 1970 |
| Hearing Date |
|
| Decision |
The Supreme Court ruled that the exemption under section 15C(1) of the Income-tax Act, 1961, is not related to business profits but to taxable profits computed under section 10. The court emphasized that the right of shareholders to obtain exemption under section 15C(4) depends on the company’s entitlement to exemption under section 15C(1). Since the company had no taxable profits in the relevant years, the dividend received by the shareholders was not attributable to profits exempt from tax. Consequently, the shareholders were not entitled to the benefit of section 15C(4). The High Court's decision was reversed in favor of the revenue, affirming that tax exemptions for shareholders are contingent upon the company's tax obligations. |
| Summary |
This case revolves around the interpretation of sections 15C and 80K of the Income-tax Act, where the Supreme Court addressed the tax implications for shareholders receiving dividends from companies with no taxable profits. The ruling clarified the relationship between business profits and taxable profits, establishing that exemptions for shareholders are only valid if the company qualifies for tax exemptions. This landmark decision emphasizes the need for companies to demonstrate taxable income to allow shareholders to benefit from tax exemptions on dividends. The ruling is significant for understanding tax liabilities related to dividends and corporate profits, particularly for new industrial undertakings seeking exemptions under the Income-tax Act. Keywords such as 'tax exemption', 'dividend taxation', 'Income-tax Act', and 'shareholder rights' are crucial for SEO optimization. |
| Court |
Supreme Court of India
|
| Entities Involved |
G. Ltd.
|
| Judges |
J.C. SHAH,
K.S. HEGDE,
A.N. GROVER
|
| Lawyers |
B. Sen,
G.C. Sharma,
R.N. Sachthey,
B.D. Sharma,
Gobind Das,
Miss Lily Thomas
|
| Petitioners |
Commissioner of Income tax
|
| Respondents |
S.S.Sivan Pillai
|
| Citations |
1970 SLD 581,
(1970) 77 ITR 354
|
| Other Citations |
CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC),
S.S. Sivan Pillai v. CIT [1966] 61 ITR 179
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
80K,
15C,
15C(1),
15C(4)
|