9911796707
TMI Blog1964 (6) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 9,444. No dividend was declared within the twelve months immediately following the empiry of the previous year but a dividend of ₹ 6,959 was declared on 15th October, 1957. For the assessment year 1956-57, the accounting year of the assessee ended on 31st January, 1956. The total income was determined at ₹ 17,000 and the tax thereon at ₹ 7,384, leaving a distributable surplus of ₹ 9,616. No dividend was declared within the twelve months immediately following the expiry of the previous year, but a dividend of ₹ 6,959 was distributed on 15th October, 1957. The Income-tax Officer invoked the provisions of section 23A(1) and levied the extra super-tax under section 23A(1) on the distributable surplus which amounted to ₹ 9,444 in the first year and ₹ 9,616 in the second year. He took the view that distribution of dividends by the company after the expiry of the prescribed period, i.e., twelve moths immediately following the end of the previous year, was not distribution in terms of section 23A(1). 4. The Appellate Assistant Commissioner agreed with the conclusion of the Income-tax Officer to apply the provisions of section 23A(1) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time-limit applied even for the purposes of section 23A(2). We also found that loans and advances to the shareholders which could be deemed to be dividend under section 2(6A)(e) were not distributed during the statutory period prescribed under section 23A(1) and also found the residuary profits were not inadequate for the purposes of distributing the dividends. We accordingly dismissed the appeals. Copies of the Income-tax Officer's the Appellate Assistant Commissioner's order and the Tribunal's order forming part of the case are annexures A , A(1) , B and C respectively to the case. 7. The following question of law arises from our order for both the assessment years, viz., 1955-56 and 1956-57. Whether on the facts and in the circumstances of the case the provisions of section 23A(1) could be applied to the company for the respective assessment years? Dr. D. Pal with P. K. Pal, for the assessee. S. Mukherjee with B. Gupta, for the Commissioner. JUDGMENT S.P. MITRA J.- The assessee is a private limited company owning properties. The assessment years are 1955-56 and 1956-57. The relevant accounting periods are the years end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany for the respective assessment years? Now it is admitted by the parties appearing before us that there is evidence that the company advanced to its controlling Hindu undivided family a sum of ₹ 2,21,714 on January 31, 1955, and a sum of ₹ 1,48,801 on January 31, 1956. Section 2(6A)(e) of the Act is as follows: 'Dividend' includes--.... (e) any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23A, of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits. It was urged on behalf of the assessee before the Appellate Tribunal that the advances by the company to the controlling shareholders amounted to a distribution of dividend within the meaning of section 2(6A)(e) (vide paragraph 4, page 12 of the paper-book). The Tribunal has dealt with this point in paragraph 7 of its order at page 13. This paragraph runs thus: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at section? Such an argument would be wholly unacceptable. To deny the company the right, if it is in a position to do so, to pay interim dividends would not only be oppressive, but would also be an abuse of the power given to the Income-tax Officer under section 23A. It could not have been the intention of the legislature that unless the whole amount is distributed within the 12 months immediately following the expiry of the previous year and not prior thereto a company will not escape the consequences provided for in section 23A. We are of opinion that in the present reference by reason of advances made to shareholders on January 31, 1955, and January 31, 1956, section 23A became inapplicable. In view of our decision on the first point urged before us by learned counsel for the applicant, we need not discuss the second point at all; but since the point has been taken we may briefly deal with it. The argument is that even assuming that section 23A is attracted to this case, it would be applicable only to the undistributed balance of the total income of the assessee, that is to say, on the total income as reduced by the amount of tax payable on the assessed income and the divide ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
