HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Punjab Distilling Industries Ltd. v. Commissioner of Income-tax, Punjab
Civil Appeal No. 414 of 1965
[1965] 3 SCR 1 ·
Indian Income-tax Act, 1922: sections 2(6A)(d) and 16(2) · Finance Act, 1956: First Schedule · Indian Companies Act, 1913: sections 55, 56, 60, 61 and 62
Sources & disclosures includedDownload original judgment / order
5-judge bench; unanimous on validity; 3:2 majority by K. Subba Rao, J. on distribution timing. · K. Subba Rao, J. · Raghubar Dayal, J. · J. R. Mudholkar, J. · R. S. Bachawat, J. · V. Ramaswami, J.
Assessment years: 1956-57
01 · Facts of the case
After resolving to reduce capital and refund Rs.2 per share, the company obtained court confirmation and registration in 1954, but account credits and refunds occurred in the year ending 30 November 1955. Revenue treated accumulated-profit amounts as dividend for AY 1956-57 (SCR pp.3-5; PDF pp.3-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The tax-on-income field permitted an anti-avoidance deeming rule despite company-law capital form. The 3-judge majority held distribution required actual or constructive payment or credit; the resolution and certificate were preparatory. The 2-judge dissent treated registration as allotment and would use AY 1955-56 (SCR pp.5-16; PDF pp.5-16).
Source: Primary judgment: discussion
03 · Judicial decision
By majority the appeal was dismissed with costs, sustaining AY 1956-57 timing (SCR p.16; PDF p.16).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue by 3:2 majority on timing; the separate bottle-security question was not decided (SCR pp.10-16; PDF pp.10-16).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: separate the date fixing accumulated profits from the date a deemed dividend becomes distributed. Under the majority, a capital-reduction resolution or certificate did not substitute for actual or constructive payment or credit (based on SCR pp.7-10; PDF pp.7-10).
Source: Primary judgment: review point
Source & verification
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Statutory scope
This historical 1922 Act, 1956 Finance Act and 1913 company-law setting does not determine current deemed-dividend treatment.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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