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TMI Blog1985 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... red was only Rs. 8,00,000 as against Rs. 15,50,000 adopted by the Income-tax Officer ? " The assessee is a limited liability company. The assessment year with which we are concerned is the assessment year 1968-69, the corresponding previous year being the calendar year 1967. On June 29, 1967, the assessee declared at its annual general meeting a dividend of Rs. 8,00,000 in respect of the profits earned in 1966. On December 19, 1967, the assessee's directors at a board meeting exercised the powers conferred upon them under article 149 of the articles of association to pay members such interim dividend as was in their judgment justified, having regard to the position of the company. They decided to pay an interim dividend aggregating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, or (iii) such a company as is exempt from the operation of section 104 of the said Act by a notification issued under the provisions of sub-section (3) of that section, on so much of the total income as does not exceed the relevant amount of distributions of dividends by the company ...... 7.5 per cent. Explanation 1.-In clause (B), the expression 'the relevant amount of distributions of dividends' means the aggregate of the following amounts, namely: (a) the amount, if any, by which the 'relevant amount of distributions of dividends' by the company as computed in accordance with Explanation 1 to Item I of Paragraph F of Part I of the First Schedule to the Finance (No. 2) Act, 1967 (20 of 1967), exceeds its total income ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors are authorised by the articles of association to pay the said amount which they think proper having regard to their estimate of profits made by the company. On payment, the interim dividend becomes the property of the shareholders, but a mere resolution of the directors resolving to pay a certain amount as interim dividend does not create a debt enforceable against the company, for, it is always open to the directors to rescind the resolution before payment of the interim dividend. Interim dividend declared by a resolution of the board of directors of a company is not, therefore, dividend " declared ......... by the company ". For the purposes of the application of the afore-mentioned provisions to the assessment year in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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