9911796707
TMI Blog1976 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... an Income-tax Act, 1922, in the assessment year 1961-62, the relevant previous year ending on 30th September, 1960. It is found that in the said assessment year the distributable surplus available to the assessee within the meaning of section 23A was Rs. 2,45,793. It is further found that dividend aggregating to Rs. 1,06,950 has been distributed and this amount was less than the statutory percentage and the dividend which ought to have been distributed was Rs. 1,59,765. Accordingly, the Income-tax Officer levied an additional super-tax on the balance of the distributable surplus. The assessee, being aggrieved by this order of the Income-tax Officer, preferred an appeal to the Appellate Assistant Commissioner. It was contended by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal found that the directors' report for the relevant year in question apparently did not take into account the accrued demands under section 23A. The Tribunal concluded that the assessee was trying to utilise the existence of such demands as an ex post facto justification for the dividends declared. The Tribunal held that the Income-tax Officer was right in excluding the super-tax payable under section 23A for other years. The Tribunal came to the conclusion that the amount of the dividends distributed for the said assessment years was not reasonable in the context of the available profits and it was held that section 23A was rightly applied in the said year. Mr. S. Sen, learned counsel for the revenue, has contended before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether in making an order under section 23A in respect of the profits and gains of the year 1946-47, the assessable income of that previous year is to be reduced not only by the amount of income-tax and super-tax payable by the company in respect thereof but also by the amount of interest charged to it in accordance with the provisions of section 18A ?" The Supreme Court held that in ascertaining the amount due to be distributed no deduction could be made in respect of the interest charged under section 18A. Interest chargeable under section 18A(8) was interest and not tax. As section 23A permitted deduction only of income-tax and super-tax no deduction could be made in respect of this interest. Dr. D. Pal, learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed after taking into consideration the liability for wealth-tax. We have carefully considered the respective submissions of the parties. It appears to us that the law is well settled by the decisions of the Supreme Court. It is beyond question now that the dividend if at all to be declared has to be distributed out of the commercial profits. The available commercial profits are to be computed after taking into account the entire financial performance of the company for the year. The ultimate question which will have to be gone into is whether there was enough money in the till of the company justifying distribution of any or higher dividends. The interpretation of section 23A which Mr. Sen invites us to accept, it appears, cannot be rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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