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TMI Blog1969 (1) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1957-58 ; (2) Whether, on their facts and in the circumstances of the case, the Tribunal was right in holding that additional super-tax is not leviable under section 23A of the Act, in respect of any portion of the profits of the assessee-company for the assessment year 1957-58 ?" The matter relates to the assessment year 1957-58. The assessee is a private limited company, whose assessment for that year was computed on a total income of Rs. 37,98,774. Out of this income, it is common ground that Rs. 3,36,504 was available for distribution in respect of industrial profits and Rs. 14,05,310 in respect of non-industrial profits. Actually, a sum of Rs. 4,20,640 was only distributed as dividends. The profits left out and st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the statutory percentage of the dividends required by the first part of section 23A(1) to be distributed. Where the business of an assessee is a composite one, as industrial and non-industrial, the statutory percentage under the Explanation varies, namely, 45 per cent. of the total income as ascertained under section 23A(1) is required to be distributed and, in the other case, the percentage is 60 per cent. Then comes the following in Explanation 2 : " ...... the said percentages being applied separately with reference to the amounts of profits and gains attributable to the two parts of the company's business aforesaid, as if the said amounts were respectively the total income of the company in relation to each of its parts, the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated "also being similarly apportioned in proportion to the ratio which the industrial profits bear to the non-industrial profits ". Further, if we accept the revenue's interpretation of the Explanation, it may lead to strange results, as we shall presently illustrate. Supposing after deduction of taxes on the total income, there is a sum of Rs. 1,00,000 available as distributable profits, of which 30 per cent. represents the industrial profits and the balance the non-industrial profits, 45 per cent. of the industrial profits would be Rs. 13,500 and 60 per cent. of the non industrial profits would be Rs. 42,000. It would be easy to arrive at this position by an assessee. Having done that, he may distribute Rs. 55,500 as total dividends. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue, as it appears to us, is that, although two different percentages are applied to different segments of the total income on the basis that each of them is referable to a distinct source of the business, for purposes of charging additional super-tax both should be taken as one whole, which is not what section 23A read with Explanation 2 contemplates or necessarily requires. It is no doubt true that the Explanation is intended for the purpose of prescribing different percentages for different categories of business. But it does not stop there ; it goes further and says that for purposes of applying different percentages the amount of profit under each category of the business should be taken separately as if the same were the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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