9911796707
TMI Blog1982 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... es were deleted. The assessee at its annual general meeting of the shareholders of the company held on 10th March, 1960, declared a dividend of Rs. 2,37,500. The dividend was, however, actually paid on 18th March, 1960. As in the opinion of the ITO, no dividend was declared within 12 months Immediately following the expiry of the relevant previous year, proceedings were initiated under s. 23A(1) of the I.T. Act, 1922, and additional super-tax was levied by order dated 21st October, 1965, on the undistributed balance as below : Rs. Total income assessed 18,97,624.00 Less: Tax levied thereon &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l profits amounted to less than this figure, it would be unreasonable to expect the assessee-company to declare any dividend. The Commissioner applied to the Tribunal to refer certain questions of law arising out of the order of the Tribunal to the High Court. The Tribunal rejected the said application. Thereafter, on the application of the Commissioner under s. 256(2) of the I.T. Act, 1961, the following questions of law were directed to be referred to the High Court: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for the purpose of computing commercial profits the tax actually imposed at the time of assessment should be taken into consideration and not the tax found payable by the Appellate Assistant Commissioner as a result of his order in the quantum appeal of the assessee ? (2) If the answer to question No. 1 be in the negative then whether the Tribunal was right in holding that the order passed under section 23A(1) of the Indian Income-tax Act, 1922, was not justified in law ?" In this reference it has been contended on behalf of the Revenue before us that the Tribunal has erred in taking into consideration the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 10,25,206 (Additions on account of cash credit and suppressed sale deleted) Less : Tax levied thereon 5,66,623 --------- Distributable surplus 4,58,583 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 4,16,895 -------- The contention of the counsel for the Revenue is that when the ITO added back cash credit and suppressed sales, he was really holding that the assessee had made much higher commercial profits than he had shown. When the ITO passed the order under s. 23A, he was satisfied that the commercial profits of the assessee was much higher than actually shown by the assessee and he calculated the tax accordingly. Therefore, the, ITO was right in holding that on the date of the annual general meeting the company had a sum of Rs. 8,50,268 as distributable surplus in its hands. He has, relied on the case of Gobald Motor Service (P.) Ltd. v. CIT [1966] 60 ITR 417 (SC), for the proposition that what the ITO added to the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be deducted. In a case where an Income-tax Officer takes action under section 23A of the Act before the tax for the relevant period is assessed, only the estimated tax can be deducted ; but, there is no reason why, when the tax had already been assessed before he takes action under this section, the estimated tax and not the real tax shall be deducted therefrom. In this view, in the present case to ascertain the commercial profits what should be deducted is not the tax shown in the balance-sheet but the actual tax assessed on the income of the company. "" Applying the principle enunciated in the aforesaid judgment of the Supreme Court it must be held that the Tribunal was right in taking the commercial profits and deducting therefrom the income-tax actually levied by the ITO in calculating the distributable surplus of the company for the purpose of s. 23A of the Act. The ITO passed the order under s. 23A on 21st October, 1965. The AAC's order reducing the tax payable to Rs. 5,66,623 was passed on 19th January, 1967. Therefore, it was not possible to take into account the tax calculation made by the AAC. The ITO in passing the order under s. 23A had to take into account the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
