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TMI Blog1996 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this court in Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559. The relevant facts are the following : For the assessment year 1963-64 (accounting year ending June, 1962), the company had made a provision in a sum of Rs. 1,62,000 towards dividends proposed to be declared. In the proceedings under the Super Profits Tax Act, the assessee contended that the said amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing on account of the dividend proposed to be declared. It is, therefore, a provision made for a known and existing liability. Mr. Desai, learned counsel for the assessee, however, submitted that inasmuch as by the end of the relevant accounting year, the general body of the shareholders had not met and had not approved the proposal to declare dividend, the amount does not become a provision but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the balance-sheet to the following effect : 'The directors have recommended dividend for the year 1972, at the rate of Rs. 10 per share free of tax. The dividend, if approved by the shareholders at the forthcoming annual general meeting, will be paid out of general reserve and no separate provision has been made therefor in the accounts.' At the annual general meeting, held on June 30, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to declare dividend at a particular figure but the requisite amount was also set apart and shown as a provision in the balance-sheet itself. This specific circumstance was not there in the facts of the case considered in the above decision. In view of this distinguishing circumstance, we are of the opinion that no reliance can be placed upon the said judgment since the provision here was made exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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