BENARAS STATE BANK LTD. vs COMMISSIONER OF INCOME-TAX, LUCKNOW

The Supreme Court ruled that under Section 2(14-A) and Section 14(2)(c) of the Indian Income-tax Act, 1922, the dividend income declared on July 25, 1949, was taxable as it was received in the taxable territories on December 31, 1949, following the merger of the State of Benares. The Court clarified that dividend income is deemed received under Section 16(2) only when it is paid or credited, and not merely declared. Thus, the dividend was not exempt from tax liability, and the appeal was dismissed.