HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay v. Elphinstone Spinning and Weaving Mills Ltd.
Civil Appeal No. 427 of 1957
[1960] 3 SCR 953 ·
Indian Income-tax Act, 1922: section 3 · Finance Act, 1951: section 2(7), First Schedule Part I paragraph B
Sources & disclosures includedDownload original judgment / order
3-judge bench · S. K. Das · J. L. Kapur · M. Hidayatullah
Assessment years: 1951-52
01 · Facts of the case
Depreciation converted the company’s accounting profits into a tax loss of Rs. 2,19,848. Despite no taxable income, dividends of Rs. 3,29,062 prompted additional income-tax of Rs. 41,132-12-0. The High Court held the company not liable.
Source: Primary report: SCR 955
02 · Discussion by the Hon’ble Court
Paragraph B prescribed rates on total income; its references to additional tax, profits liable to tax and dividends out of those profits did not fit a nil or negative tax income. The Court distinguished construction that resolves an ambiguity from judicially supplying a missing charge, and rejected the proviso as an independent charging section.
Source: Primary report: SCR 958–966
03 · Judicial decision
The additional levy could not operate where the relevant total income did not exist. The earlier-profit fiction could not substitute a different tax base. Having answered liability against Revenue, the constitutional validity question did not survive.
Source: Primary report: SCR 963–967
04 · Outcome / in whose favour
The Revenue appeal was dismissed with costs, affirming the company’s non-liability under this provision.
Source: Primary report: SCR 967
05 · AKHB REVIEW POINT
Check the actual charging language and conditions of a rate schedule before imposing tax by reference to policy or anomaly. The decision concerns a historical dividend-tax provision, not a general exemption for distributions made during a loss year under later legislation.
Source: Primary report: SCR 963–967
Source & verification
Download original judgment / order · Open cited source rendition
Complete 15-page Supreme Court Reports scan. Any adjoining report fragments remain in the unchanged original and are excluded from this analysis.
Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-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 uses AI assistance and a preserved full-primary review, with refreshed exact original-byte verification. 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. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.