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TMI Blog1974 (7) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ad declared a dividend of Rs. 2,700 for the said accounting year. The company had been assessed under the Income-tax Act for the said accounting year relevant to the assessment year 1960-61 at a total income of Rs. 15,174. In computing the total income the Income-tax Officer has added back to the book profits certain items of expenses which have been disallowed. The Income-tax Officer took the view that the dividend of Rs. 2,700 actually declared fell short of the statutory amount of dividend that should have been declared by the assessee-company under section 23A, and, therefore, issued a notice to show cause as to why the provisions of section 23A should not be invoked. The assessee contended that under the provisions of section 23A onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial profits. As against the said contention, the revenue contended that the financial position of the company as disclosed by its balance-sheet as on September 30, 1959, was sound, that there was reserve to the extent of Rs. 9,003 and also large cash and bank balances as on the said date, and that taking all the said circumstances into consideration, it would not have been unreasonable to have declared a larger dividend. It was also contended that the loss on account of hydrochloric acid plant being demolished amounted to a capital loss, and that such a capital loss should not be taken into account for the purpose of finding out the feasibility of the declaration of larger dividends. The Tribunal, however, accepted the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that the payment of larger dividend would not be unreasonable and that, therefore, the provisions of section 23A have rightly been invoked in the assessee's case. At the instance of the assessee the following question has been referred to us. " Whether, on the facts and in the circumstances of the case, the application of the provisions of section 23A of the Income-tax Act was justified and in accordance with law ? " The learned counsel for the assessee contended, firstly, that the book profit alone should form the basis for considering the feasibility of larger dividend, and that no addition can at all be made to the book profit arrived at by the assessee under any circumstances. But it is well established that the mode ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee to contend that any capital loss should go to reduce the commercial profit which has to be considered for purposes of section 23A. The learned counsel for the assessee then contends that though the Tribunal says that the capital loss has to be taken note of when arriving at the feasibility of declaring a dividend, it has in fact not done so. But we find from the order of the Tribunal that the Tribunal actually took into consideration the capital loss while considering the feasibility of declaring a larger dividend. The Tribunal specifically refers to this and says that as the assessee has built up, substantial reserve and the cash and bank balances at the end of the accounting year and the current assets and liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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