(1) Where the stipulated dividend in respect of a preference share of a company ¹[issued and subscribed for before the 1st April, 1960],--
         (a) is specified to be free of income-tax and no deduction is made therefrom on account of the income-tax payable by the company, or
         (b) was being paid before the 1st April, 1960, without any deduction therefrom 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 preference share of a company issued and subscribed for after the 31st March, 1959 ²[and before the 1st April, 1960] is free of income-tax, and the company, besides paying the stipulated dividend to the holder 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 company²[issued and subscribed for before the 1st April, 1960]--
         (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) was being paid before the 1st April, 1960, 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, 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 percent.thereof.
     (4) Where a company has in relation to a preference share ²[issued and subscribed for before the 1st April, 1960] declared,--
         (a) after the 31st March, 1959, and before he 1st 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 purposes 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 ²[and section 4A] to deduction made from a dividend "on account of income-tax payable by the company" does not include any amount deducted by the company from the dividend under ³[section 194 of the Income-tax Act, 1961(43 of 1961)].