KANTILAL MANILAL AND ORS. vs THE COMMISSIONER OF INCOME-TAX, BOMBAY

The Supreme Court held that the distribution of rights to acquire shares of the Bank of India by Navjivan Mills Ltd. to its shareholders at half the market value constituted a distribution of 'dividend' under Section 2(6A)(a) of the Indian Income-tax Act, 1922. The Court affirmed the High Court's ruling that such distribution was taxable, thereby upholding the Income Tax Officer's reopening of the assessment under Section 34(1)(a). The appeal was dismissed, confirming the tax liability on the distribution.