THE COMMISSIONER OF INCOME-TAX, MADRAS vs M. V. MURUGAPPAN & ORS.

The Supreme Court held that the distribution made by the liquidators of a company in liquidation on March 10, 1955, did not constitute a dividend under Section 2(6A)(c) of the Income-tax Act, 1922, as it represented current profits rather than accumulated profits. The Court affirmed the decisions of the Appellate Assistant Commissioner and the Tribunal, which had ruled that the profits earned before January 1, 1954, were not accumulated profits. Consequently, the appeal by the Commissioner of Income-tax was dismissed, confirming that the amount distributed could not be deemed a dividend in the hands of the shareholders for the assessment year 1955-56.