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TMI Blog1981 (9) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal (Bombay Bench 'C') is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the action under section 104 of the Incometax Act, 1961, was not justified ? " The assessee is a private limited company and the assessment years involved are 1962-63, 1963-64 and 1964-65. The question concerns the application of s. 104 of the I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal observed as under: " In our opinion, the directors would have acted irresponsibly if they had declared dividends in the present years. First of all, we may mention that the company had lost Rs. 21 lakhs of its circulating capital invested in the money-lending business, which the Department accepts was being carried on. According to the department, the loss pertained to the accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed, resulting in a demand of Rs. 2,50,000 and it was in 1968 that the Appellate Asst. Commissioner cancelled the orders. It was also as late as 1966 that the Income-tax Officer dropped the proceedings for other years. The directors had, in the reports to the shareholders, specifically pointed out that the financial position of the company as shown by the account is none too good, and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirements of the future and similar other factors. It has been observed further that the ITO must take an overall picture of the financial position of the business. He should put himself in the position of prudent businessman or the director of a company and deal with the problem with a sympathetic and objective, approach. In CIT v. Gannon Dunkerley Co. Ltd. [1971] 79 ITR 637, a Division Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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