1997 (10) TMI 6 - SC - Income Tax

Case of the assessee is that even if it has sold the rubber plantation the profits derived from the sale of plantation should not be taken into consideration for the purpose of imposition of tax u/s 104 - The company being an investment company did not have any trading activity - The profit attributable to sale of investment may be assessable as capital gains. But there is no reason why such gains made by investment companies are not available for distribution as dividend to its shareholders

Summary

The Supreme Court held that profits from the sale of investments by an investment company are available for distribution as dividends to shareholders under section 104 of the Income-tax Act, 1961. The appellant's argument that only profits from trading activity should be considered for dividend distribution was rejected. The appeal was dismissed as without merit.