HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Bacha F. Guzdar v. Commissioner of Income-tax, Bombay
Civil Appeal 104 of 1953
[1955] 1 SCR 876 ·
Income-tax Act 1922, sections 2(1), 4(3)(viii) · Income-tax Rules 1922, rule 24
Sources & disclosures includedDownload original judgment / order
5-judge bench · Mehr Chand Mahajan C.J. · S. R. Das · Ghulam Hasan (author) · Bhagwati · Venkatarama Ayyar
Assessment years: Accounting year 1949–50
01 · Facts of the case
In accounting year 1949–50, Mrs. Bacha F. Guzdar received dividends totalling Rs. 2,750 from Patrakola Tea Company Ltd. and Bishnauth Tea Company Ltd., which grew and manufactured tea. The companies’ 60 per cent agricultural-income treatment under rule 24 was common ground. She claimed the same exemption for 60 per cent of her dividends under section 4(3)(viii); the authorities and Bombay High Court rejected it.
02 · Discussion by the Hon’ble Court
The assessee traced the dividends to the companies’ agricultural profits; Revenue treated the shareholder’s income as separate. The Court identified the immediate source as the share investment and contractual rights, not a direct relationship with agricultural land. The company owned its assets separately from its shareholders, and the analogy with a partnership was inaccurate. The right to participate in profits existed before declaration, although enjoyment awaited it; the Court rejected the High Court’s contrary explanation. English cases depending on different legislation could not control the Indian definition. The alternative argument under section 16(2) was unnecessary and left undecided.
03 · Judicial decision
The dividend was not agricultural income in the shareholder’s hands. Appeal dismissed with costs.
Source: Primary report: SCR 886; PDF 11
04 · Outcome / in whose favour
Revenue succeeded.
Source: Primary report: SCR 886; PDF 11
05 · AKHB REVIEW POINT
Trace the recipient’s immediate source, rather than the remote origin of the payer’s profits. The judgment rejected the High Court’s suggestion that declaration itself creates the underlying right to participate.
Source & verification
Download original judgment / order · Open cited source rendition
Complete 11-page report, SCR 876–886. The first page includes the conclusion of the unrelated Kunjilal criminal appeal before the Bacha F. Guzdar caption and judgment.
Statutory scope
Historical statutory text and assessment period only. Present statutory equivalence and later judicial treatment are not cleared.
Later treatment
Source checked 2026-10-19. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.