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TMI Blog1989 (6) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... view in cancelling the order under section 23A passed by the Income-tax Officer?" 2. Assessment year 1956-57 "Whether, on the facts and in the circumstances of the case, the Tribunal ignored relevant material or relied on irrelevant material to hold that there was no amount available for distribution as dividend for the assessment year 1956-57 and was justified in that view in cancelling the order under section 23A passed by the Income-tax Officer?" The dispute relates to the legality of the order of the Income-tax Officer under section 23A. The Income-tax Officer observed that less than 50% of the capital was held by the members of the public limited company. The further contention of the assessee was that after deducting sales tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated that the actual tax assessed on the basis of the assessment orders should not be taken into account but the tax on the revised income after giving effect to the appellate order should alone be taken into account. So far as the assessment year 1955-56 is concerned, the Tribunal found that the amount available for distribution of dividends for the assessment year 1955-56 was only Rs. 34,456 whereas the assessee had already declared a dividend of Rs. 60,000 and as such there was no shortfall in the assessment year 1955-56. So far as the assessment year 1956-57 is concerned, the Tribunal found that there would be no amount available for distribution of dividend whereas the assessee has declared a dividend of Rs. 90,000. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be Rs. 5,37,791 out of which the sales tax liability of Rs. 72,902 which has been deducted by the Appellate Assistant Commissioner himself, and the tax assessed by the Income-tax Officer amounting to Rs. 4,30,433 aggregating to Rs. 5,03,335, had to be deducted. Thus, the amount available for distribution of dividends for the assessment year 1955-56 was only Rs. 34,456 whereas the assessee has already declared a dividend of Rs. 60,000 and as such there was no shortfall in the assessment year 1955-56. So far as the assessment year 1956-57 is concerned, out of the assessed income of Rs. 14,60,473, the outgoings and expenses amounting to Rs. 3,36,618 and the relief of Rs. 5,527 given by the Appellate Assistant Commissioner have to be deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Assistant Commissioner and the Tribunal will be evident from the following chart : Assessment year 1955-56 : Rs. Assessed income 10,68,177 ------------------ Profit as per profit and loss account (commercial profit) 5,57,367 ------------------ Assessed tax 4,30,033 Sales tax liability 72,000 Actual outgoings like salaries, commission and expenses (which have not been allowed) 5,30,386 ------------------ 10,32,419 ------------------ Assessment year 1956-57 : Rs. Assessed income 14,60,473 ------------------ Profit as per profit and loss account (commercial profit) 9,50,968 ------------------ Assessed tax 6,38,142 Sales tax liability 5,46,574 Actual outgoings like salaries, commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits and not the assessable profits of the year. In arriving at the assessable profits, the Income-tax Officer may disallow many expenses actually incurred by the assessee and in computing his income, he may include many items on notional basis, but the commercial or accounting profits are the actual profits earned by the assessee calculated on commercial principles. The commercial or accounting profits, in the instant case, as disclosed by the profit and loss account reproduced earlier did not warrant any further distribution of dividend higher than what was declared. Having regard to the facts and circumstances of the case, we are of the view that the Tribunal came to a correct conclusion on the facts of this case. For the reasons a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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