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TMI Blog1987 (8) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... e following resolution :- "Resolution No. 524 : 'RESOLVED that an amount of Rs. 3,75,000 (Rupees Three Lacs Seventy Five Thousand) out of the estimated profits for the financial year 1979, be paid as an interim dividend and the same be distributed on and after 11th October, 1979 to the equity shareholders whose, names stood on the Register of Members as at 3rd October, 1979 @ 25% on the paid - up capital of the company subject to deduction of tax". In the balance sheet of the company as at 30th June, 1979, this amount of Rs. 3,75,000 was shown under the head 'current liabilities and provisions' in schedule H annexed and forming part of the Balance sheet. It was claimed before the Income-tax officer that since the Interim dividend w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., as on 1-7-1979 in the present case and, therefore, while computing the capital as on 1-7-1979 it is not open to the revenue authorities to take into account liabilities which arose subsequently. Reference was made by him to the ruling of the Hon'ble Supreme Court in the case of J. Dalmia v. CIT [1964] 53 ITR 83 wherein their Lordships laid down that a mere resolution of the Directors to pay a certain amount as interim dividend did not create a debt enforceable against the company for it was always open to the Directors themselves to rescind the resolution before payment of the dividend and the mere fact that the articles of the company authorised the Directors to declare an interim dividend or not to pay an interim dividend made no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought not to have been taken into account in working out the capital as on 1-7-1979 for the purpose of deduction under section 80J of the Income-tax Act, 1961. 4. On the other hand, the learned departmental representative, Shri Vohra, cited before us the ruling of the Hon'ble Supreme Court in the case of CIT v. Mysore Electrical Industries Ltd. [1971] 80 ITR 566 wherein their Lordships laid down that the appropriations out of profits even if made after the end of the accounting period after approval by the General Body Meeting of the shareholders related back to the year to which they related. On this basis it was claimed that since the provision for interim dividend amounting to Rs. 3,75,000 made in the Balance Sheet of the company as on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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