law: Preference Shares (Regulation of Dividends) Act, 1960
  3. Regulation of dividends on preference shares in certain
  
  cases
  (1) Where the stipulated dividend in respect of a preference
  
  share of a company issued and subscribed for before the lst April, 1960-
  (a) is specified to be free of income-tax and
  
  no deduction is made there from on account of the income-tax payable by the
  
  company; or
  (b) was being paid before the lst April, 1960,
  
  without any deduction there from on account of the income-tax payable by the
  
  company, notwithstanding the absence of any specification that the dividend
  
  would be free of income-tax, every such share shall, as respects dividends
  
  declared after the commencement of this Act, carry a preferential right to be
  
  paid without any deduction aforesaid such amount as would exceed the stipulated
  
  dividend by thirty per cent thereof.
  (2) Where the stipulated dividend in respect of a preference
  
  share of a company issued and subscribed for after the 31st March, 1959, and
  
  before the 1st of April, 1960, is free of income-tax and the company, besides
  
  paying the stipulated dividend to the holder of such share pays to government
  
  on his behalf any sum on account of income-tax payable thereon, then every such
  
  share shall, as respects dividends declared after the commencement of this Act,
  
  carry a preferential right to be paid free of income-tax such amount as
  
  together with the sum aforesaid would exceed the stipulated dividend by thirty
  
  per cent thereof.
  (3) Where the stipulated dividend in respect of a preference
  
  share of a company issued and subscribed for before the lst April, 1960-
  (a) is specified to be subject to income-tax
  
  and a deduction is made there from on account of the income-tax payable by the
  
  company; or
  (b) was being paid before the lst April, 1960,
  
  subject to a deduction there from 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, then every such share shall, as respects
  
  dividends declared after the commencement of this Act, carry a preferential
  
  right to be paid subject to the deduction aforesaid such amount as would exceed
  
  the stipulated dividend by eleven per cent thereof.
  (4) Where a company has, in relation to a preference share issued
  
  and subscribed for before the lst April, 1960, declared-
  (a) after the 31st March, 1959, and before the
  
  lst July, 1960, a dividend in respect of a previous year relevant to its
  
  assessment year 1960-61 or a subsequent assessment year, or
  (b) after the 30th June, 1960, and before the
  
  commencement of this Act, a dividend in respect of any previous year.
  it shall declare, in respect of the said previous year, an
  
  additional dividend of such amount as, together with the dividend already
  
  declared, would exceed the stipulated dividend-
  (i) by thirty per cent of the stipulated
  
  dividend in the cases referred to in sub-section (1), or
  (ii) by eleven per cent of the stipulated
  
  dividend in the cases referred to in sub-section (3).
  (5) For the purpose of sub-section (1), sub-section (3) and
  
  sub-section (4), any reference therein to the stipulated dividend shall, in
  
  respect of a preference share issued and subscribed for on or before the 31st
  
  March, 1959, be construed as a reference to the stipulated dividend as on that
  
  day.
  (6) For the removal of doubts, it is hereby declared that any
  
  reference in this section and section 4A to deduction made from a dividend
  
  "on account of the income-tax payable by the company" does not
  
  include any amount deducted by the company from that dividend under section 194
  
  of the Income Tax Act, 1961 (43 of 1961).