COMMISSIONER OF INCOME-TAX (CENTRAL) CALCUTTA vs INDIA DISCOUNT CO. LTD.

The Supreme Court held that arrear dividends received by a purchaser of shares are not taxable as income under the Income-tax Act, 1922, specifically Sections 10 and 12. The Court reasoned that the consideration for the shares included the arrear dividends, which were not the purchaser's income but rather the income of the vendor. The Court dismissed the Revenue's appeal, affirming the High Court's decision that the amount received was a realization of capital rather than taxable income.