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TMI Blog1994 (10) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... t there were past losses. Third reason assigned was that the balance left in the profit and loss account was very small for declaring any dividend. The Assessing Officer declined to accept any of the three reasons and levied penalty for not declaring any dividend in accordance with the provisions of section 104. 3. The assessee went in appeal inviting again the attention of the CIT(A) to its explanation furnished for not declaring any dividend in this year. It was claimed that the assessee had to adjust past losses and on that account the balance profit left was not sufficient for declaring any dividend. Certain provision for tax was also made and for this reason also the amount available could not be said to be sufficient for declaring any dividend. The appeal, however, failed. 4. The ld. counsel has, at the outset, challenged the order passed under section 104 on the ground that the Assessing Officer passed his order on 25-3-1988 whereas the previous approval of the of the IAC had actually not been obtained by the that time. Our attention has been drawn to the notice given by the IAC to the assessee (copy placed at page 15 of the compilation). In that notice, the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval. 7. We, however, do not find any defect in the proceedings whereby the IAC required the assessee to appear for hearing on 25-3-1988. Since the ld. counsel has not admitted that the opportunity of hearing was denied by the IAC or by the Assessing Officer, we find no force In the argument of the ld. counsel that the orders under sections 104 and 107 were not valid because both the orders were passed on the same day. Only because both the previous approval under section 107 and the order under section 104 happened to have been given and passed on the same day, it will not give rise to any presumption that the previous approval was not obtained by the Assessing Officer, as required by law. 8. The ld. counsel has next submitted that the assessee had shown loss of Rs. 65,846 in the preceding assessment year. That loss was required to be adjusted against current year's profit. During the course of hearing before us, the ld. counsel has admitted that the loss shown by the assessee in the preceding assessment year was not accepted by the Assessing Officer and assessment was made on a positive income. In this light, we find no force in the argument of the ld. counsel that the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has, in reply, submitted that the plea regarding past losses was not based on any evidence inasmuch as the assessee's claim regarding losses was not accepted by the Assessing Officer in the preceding assessment year and, therefore, this plea must fail. The assessee was not able to show as to how the plea of loss in the preceding year could be accepted when ultimately assessment was made on a positive income. As regards the investments made in M/s. Munjal Showa Ltd., it is submitted by the ld. D. R. that advances have been made by the assessee to that company during the 'previous year' relevant to assessment year 1986-87. It could not be accepted that the assessee refrained from declaring any dividend for the assessment year 1984-85. under appeal, in view of the likely investments which were to be made after about two years. As regards the provision for tax made at Rs. 1,81,993, it is stated by the ld. D. R. that it is not clear if the amount was finally held to be payable at the appellate stage. The ld. D.R. has, therefore, contended that the reasons given by the assessee were not plausible and acceptable at all. 10. We have considered the rival contentions and we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shall, apart from the sum determined as payable by it on the basis of the assessment under section 143 or 144, be liable to pay income-tax at the rate of-- (a) fifty per cent, in the case of an investment company, (b) thirty-seven per cent, in the case of a trading company, and (c) twenty-five per cent, in the case of any other company, on the distributable income as reduced by the amount of dividends actually distributed if any, within the said period of twelve months. (2) The ITO shall not make an order under sub-section (1), if he is satisfied-- (i) that, having regard to the losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared within the period of twelve months referred to in sub-section (1) would be unreasonable; or (ii) that the payment of a dividend or a larger dividend than that declared within the period of twelve months referred to in sub-section (1) would not have resulted in a benefit to the revenue; or (iii) that at least seventy-five per cent of the share capital of the company is throughout the previous year beneficilly held by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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