Section 4 in The Preference Shares (Regulation Of Dividends) Act, 1960
4. Special provisions in relation to companies where a portion of their income is not chargeable to income-tax .- [Where any preference share of a company has been issued and subscribed for before the 1st April, 1960, and any portion of the profits and gains of the company] in respect of the relevant period is exempt from income-tax under the [Income-tax Act, 1961] [ Substituted by Act 10 of 1965, Section 72 for " Indian Income-tax Act, 1922" (w.r.e.f. 1.4.1965) ] by reason of such portion being agricultural income, then, for the purpose of the increase in the dividend in relation to any preference share under the provisions of section 3, the increase of thirty per cent. or eleven per cent. referred to therein shall be taken to be such propartion of the said thirty per cent. or eleven per cent. as the case may be, as the total amount of the profits and gains of the company excluding the portion of the profits and gains which is so exempt in respect of the relevant period bears to the total amount of the profits and gains thereof in respect of that period.
Explanation .-For the purposes of this section, "relevant period", in relation to the profits and gains of a company, shall mean-(a)previous years relevant to such of the three assessment years as immediately precede the assessment year ending on the 31st March, 1961, and in each of which the net result of the computation of profits and gains of the company has not been a loss or where there are only two such years, such two years, or where there is only one such year, such one year; or(b)in any case where clause (a) is not applicable, the previous year relevant to the assessment year ending on the 31st March, 1961 or a subsequent assessment year immediately following thereafter in which the net result of the computation of profits and gains has not been a loss.[4-A. Deduction of income-tax.-Where the stipulated dividend in respect of a preference share of a company-(a)is specified to be subject to income-tax and a deduction is made therefrom on account of the income-tax payable by the company, or(b)is being paid subject to a deduction therefrom on account of the income-tax payable by the company, notwithstanding the absence of any specification that the dividend would be subject to income-tax,][such deduction made by the company from any dividend declared after the 28th day of February, 1966 shall in no case exceed twenty-seven and a half per cent. of the aggregate of-(i)the stipulated dividend, and(ii)an amount equal to eleven per cent. of the stipulated dividend as specified in sub-section (3) of section 3.]
