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TMI Blog1991 (10) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2015. The ITO in these cases initiated proceedings under section 23A(1) of the Act on the ground that the appellant company had not declared the dividend within the stipulated period. According to the ITO there were distributable profits in each of the asst. years under consideration and the assessee was expected to declare the statutory percentage as dividend. In response to the show-cause notices, for the three years under consideration the assessee stated that it had already declared the profits of Rs. 30,000, Rs. 40,000 and Rs. 40,000 referable to each of the asst. years under consideration on 15-6-1961. The further arguments which were advanced were in the direction of contending that the one had to take into account the "commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed by law. In the final analysis the ITO proceeded to levy the additional tax for each of the asst. years under consideration. 4. The levy was upheld by the CIT(A) who at the outset rejected the argument pertaining to the limitation on the ground that there was no time limit prescribed under the 1922 Act although such a limit had been prescribed by the 1961 Act. At this stage we may mention that the specific ground pertaining to limitation taken before the Tribunal was not pressed for our consideration. This aspect of the matter accordingly need not detain us any further and we straightaway reject the relevant ground in all these appeals. On the merits of the case, the CIT(A) in a consolidated order pertaining to assessment years 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture development. Therefore, there is no consistency in the arguments of the learned counsel that funds were needed for future development of the company. There is a clear default on the part of the appellant company to declare the dividends for these two assessment years within the stipulated 12 months period after the closing of the respective accounting year and there is a direct decision on this point reported in 86 ITR 436 and 72 ITR 29 (SC) wherein it has been held that dividends were required to be declared within the period of 12 months and the dividends declared thereafter are not to be considered. The Supreme Court also in the case report in 72 ITR 729 has clearly held that subsequent distribution of the dividend by the company wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective assessment years the assessee had suo moto on 15-6-1961 declared dividends of Rs. 30,000, Rs. 40,000 and Rs. 40,000 referable to each of the assessment years. That such declaration prior to the date of passing the orders under section 23A(1) was required to be deducted from the distributable figure of profits for each of the assessment years. (vi) That S.Y. 2013 (assessment year 1958-59) was the tenth year of business of the assessee and the position of the earlier assessment years revealed losses in six years, a profit of Rs. 10,000 in one year and profits of Rs. 30,000 and Rs. 20,000 in the immediately preceding assessment years viz., S.Y. 2011 and 2012. (vii) That the assessee had just been able to wipe off the previous losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (P.) Ltd. [1975] 101 ITR 764 (SC), (6) Tulsi Lal Manilal v. CIT [1985] 154 ITR 665 (Raj.), (7) Webb's Sales Services Ltd. v. CIT [1985] 155 ITR 401 (Kar.) and (8) CIT v. Abdul Rahim Osman Co. (India) (P.) Ltd. [1972] 86 ITR 436 (SC). 6. The learned DR on the other hand strongly supported the orders passed by the tax authorities reiterating thereafter the arguments indentical to the reasons recorded by these authorities in levying and upholding the levy of additional tax under section 23A(1). According to him, the provisions of section 23A(1) did not warrant the consideration of any facts other than the "losses" and "smallness" of profits. In support of the said orders he placed reliance on the following decisions : (1) Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of the assessment years under appeal and these can be stated at Rs. 49,182 for assessment year 1959-60 and Rs. 1,61,032 for assessment year 1960-61. Even in the subsequent assessment years viz., 1961-62 and 1962-63 the appellant made substantial additions towards capital assets amounting to Rs. 3.29 lacs and Rs. 1.37 lacs. According to us the cumulative effect of the aforesaid undisputed facts would lead to the conclusion that the appellant did not come within the ambit of section 23A(1) of the Act and the action of the ITO in levying the additional tax and the CIT (Appeals) in confirming his action was not justified. 8. The assessee must also succeed in respect of its argument that the dividends declared on 15-6-1961 are required t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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