1960 (11) TMI 13 - SUPREME COURT

Whether the sum of ₹ 15,608 should have been included in the assessee company's 'profit' for the purpose of determining whether the payment of a larger dividend than that declared by it would be unreasonable ?

Held that:- By the fiction in section 10(2)(vii), second proviso, read with section 2(6C), what is really not income is, for the purpose of computation of assessable income, made taxable income; but on that account, it does not become commercial profit, and if it is not commercial profit, it is not liable to be taken into account in assessing whether in view of the smallness of profits a larger dividend would be unreasonable.

The High Court was right in holding that the amount of ₹ 15,608 was not liable to be taken into account in considering whether having regard to the smallness of the profit made by the company, it would be unreasonable to declare a larger dividend.Appeal dismissed.