A shareholder, who receives assets, whether capital or in any other form, from a company under liquidation is liable to pay tax on the market value of the assets on the date of its distribution.
In the N Bagavathy Ammal vs Commissioner of Income-Tax case, two sisters were shareholders in a private limited company. It went into liquidation.
Pursuant to a compromise decree in a suit between them and their brother, who was also a shareholder, the company
