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TMI Blog1973 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the assessee for the year under consideration?" The assessment year is 1956-57. L. Roshan Lal, since deceased, was a shareholder in the company, Messrs. Ram Chandra and Sons Sugar Mills (P.) Ltd., during the previous year relevant to the assessment year 1956-57 as well as during the assessment year. The company advanced to him a sum of Rs. 74,642 between November 1, 1955, and November 23, 1966. The net income of the company after taking into account the losses of the earlier years for the relevant accounting year was Rs. 1,52,827. After providing for Income-tax liability the amount available with the company in the form of profits on October 31, 1955, was Rs. 82,642. October 31, 1955, was the date on which the previous year of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's contention that the amount could not be regarded as accumulated profit because it was the profit only of one year and was not accumulated over a number of years. The contention of the department that the subsequent declaration of dividend by the company could not affect the nature of the funds available with the company on the date of the advance of loan was also not accepted by the Tribunal. The answer to the question, therefore, will depend on the question whether the accumulated profit of the company is the amount available for distribution by way of profits at the time the amount is lent to a shareholder by the company or it is the amount which remains after deducting from the total amount of profits the dividend which may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature or character of the amount paid by the company by way of advance or loan to the shareholder. Accumulated profits within the meaning of clause (e) will necessarily be comprised of the amount available for being distributed as profits. The word "accumulated" means the profit earned bit by bit and accumulated. It does not mean that it should be carried forward from year to year. Profits can accumulate even within a single year. The entire amount which is available for distribution as profits on a particular date would be the accumulated profit and any amount paid as advance or loan to the shareholder to the extent of this amount of accumulated profits will be dividend within the meaning of section 2(6A)(e) of the Act. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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