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2005 (9) TMI 61 - HC - Income Tax"Whether Tribunal was justified in holding that only the cumulative preference dividends relating to the previous year amounting to Rs. 65,000 could be deducted in working out the undistributed income, which was liable to additional income-tax u/s 104?" - we affirm and restore the alternative finding recorded by ITO under section 104 holding that the dividend on accumulated preference shares actually distributed within twelve months immediately following the expiry of the previous year amounting to Rs. 1,30,000 fell short by above 1 per cent. on statutory requirement considering the capital of Rs. 25 lakhs. - ITO was perfectly justified in seeking the approval of the Inspecting Assistant Commissioner as envisaged u/s 107 to levy an additional tax. However, the Income-tax Officer while subtracting the dividend from the distributable profit ought to have deducted or subtracted Rs. 1,30,000 and not Rs. 65,000 only. As such correct recalculation would be necessary – thus, held that shortfall in declaring dividend would carry additional income-tax as required by section 107 – question is answered in favour of the assessee
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