COMMISSIONER OF INCOME-TAX, WEST BENGAL vs CENTRAL INDIA INDUSTRIES LTD.

The Supreme Court held that under Section 16(2) of the Income-tax Act, 1922, dividends can be distributed in forms other than cash, including share scrips, and must be assessed at market value rather than face value. The Court affirmed that the legality of the distribution does not affect its taxability, as long as a resolution for distribution is passed. The Tribunal's decision to value the shares at face value was overturned, establishing that the market value is the appropriate measure for taxation purposes.