9911796707
TMI Blog1982 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... Redeemable cumulative preference shares of Rs. 100 each (subject to deduction of tax) 84, 000 (2) Dividend on 8, 000 equity shares of Rs. 100 each at Rs. 20% per share (subject to deduction of tax) 1, 60, 000 2, 44, 000 3. At an Extraordinary General Meeting held on 28th March, 1973, it declared a further dividend of Rs. 2,08,000. Thus, the total dividend by the assessee was Rs. 4,82,000. 4. Apart from raising certain other contentions, Shri Harish, ld. counsel for the assessee, pressed that having regard to the smallness of the profits of the assessee from the commercial angle it was not reasonable to expect the assessee to declare any larger dividend. Shri Bhargava, ld. Deptl. Rep. relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion made for doubtful debts before the year under consideration was a total amount of only Rs. 50, 000 and that it is in these circumstances that the assessee had made the further provision of Rs. 4,50,000 in the year under consideration. Secondly, this total provision is not excessive having regard to the extent of the turnover of the assessee which was more than Rs.16 crores each year. This is not an after-thought because in the Director's Report to the shareholders dt 31st Aug, 1972 it is stated that the provision of Rs.4,50,000 has been necessitated having regard to the Auditors' Notes on the Accounts for the preceding years and the present condition of the book debts. 8. The force of the submissions made by Shri Harish is evident. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in orders of the departmental authorities it is in the sum of Rs. 30,838 being the interest paid by the assessee u/s 216 and s 220(2) of the IT Act. Apart from being an outgoing which is a normal incidence of the business of the assessee and the taxation of its income, even if it is assumed that this sum is to be added back to the profit shown as per books for determining the commercial profits, yet, the total amount of the commercial profits will b only about Rs. 4,71,000 and having regard to the amount of the capital of the assessee and the dividend declared by it already, we held that it was not reasonable to expect the assessee to declare any larger dividend. 11. Before parting with the matter, we may recall that it is well settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redeemable cumulative preference shares of Rs. 100 each (Subject to deduction of tax) Rs. 84, 000 (2)Dividend on 8, 000 equity shares of Rs. 100 each at Rs. 20 per share (subject to deduction of tax) Rs. 1, 60, 000 Rs. 2, 44, 000 This shows how the mind of the Directors was working and that their reluctance to declare a larger dividend was not with the object of avoidance of tax but was attributable to their anxiety to plough back the profits of the company for use by it in as profitable a manner as possible. 13. Having regard to the facts and circumstances of the case of the assessee, we find that the profits of the assessee were so small that the declaration of a dividend larger than that declar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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