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TMI Blog1955 (9) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. The facts of this reference are different from the facts of the two references which we have just decided : (I.T.R. 31 of 1954 and R.A. No. 56 of 1954) See Elphinstone Spinning and Weaving Mills Co., Ltd v Commissioner of Income-tax, Bombay (p 811 supra). In this case the assessment years are 1949-50 and 1950-51, and the company had a total income with regard to each of these tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding this reference is that this company had no undistributed profits in the years preceding 1949-50 or 1950-51. What the company really did was that instead of taking these amounts to depreciation which was a permissible deduction under the Income-tax Act, it distributed the profits as dividends. The other important and significant fact is that neither of these two amounts of ₹ 45,600 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly imposed by way of penalty, the additional income-tax, according to this clause (ii), is equal to the sum, if any, by which the aggregate amount of income-tax actually borne by such excess falls short of the amount calculated at the rate of five annas per rupee on the excess dividend. Therefore, the scheme is that the profits represented by the excess dividend, which, as we will presently point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as laid down in the Act itself; and the mode is that for the purposes of clause (ii) of the above proviso, the aggregate amount of income-tax actually borne by the excess dividend shall be determined as follows: The excess dividend shall be deemed to be out of the whole or such portion of the undistributed profits of one or more years immediately preceding the previous year as would be just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those profits which had been kept back or kept in reserve. But, as we have just pointed out, this fiction has no scope. It cannot have any play in a case where there are no past profits which were kept back or kept in reserve. Therefore, in our opinion, the Tribunal was right when it came to the conclusion that the assessee company was not liable to pay any additional tax in the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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