TMI Blog1983 (5) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) accepted this figure with a rider that it is to be verified. The assessee declared dividend of Rs. 75,000. Obviously, therefore, the amount declared is not in conformity with the provisions of section 104 but the assessee pleaded that in view of certain facts, which we will deal with presently, the dividends were not declared beyond the sum of Rs. 75,000. This plea of the assessee based on a number of grounds was not accepted by the revenue authorities and, therefore, this appeal is filed before the Tribunal. 3. Among various grounds, one of the grounds urged by Mr. C.S. Agarwal is based on the smallness of profit which would not only include the quantum of profits available for the declaration of dividend but also the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the view taken by the Commissioner (Appeals) was erroneous inasmuch as section 107A is no bar for considering the various factors while dealing with the provisions of section 104 as laid down by the judicial pronouncements. He particularly relied on the decision of the Allahabad High Court in CIT v. Jananamandal Ltd. [1977] 106 ITR 976. The learned departmental representative, on the other hand, pointed out that in view of the language of section 104, which mentions that it is operative subject to the provisions of section 107A, the latter section should prevail and the judicial pronouncements enlarging the scope of concept of smallness of profits no longer represent the correct view on the point. 6. On a bare perusal of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t say that once a company goes to the Board under section 107A further argument based on enlarged scope of concept of smallness of profit which includes future development expenditure is abrogated. Accordingly we hold that the orders passed by the authorities below are unsustainable. It may be mentioned here that the Supreme Court in the case of CIT v. Gangadhar Banerjee Co. (P.) Ltd. [1965] 57 ITR 176 has laid down the following dictum : "...The reasonableness or unreasonableness of the amount distributed as dividends is judged by business considerations, such as the previous losses, the present profits, the availability of surplus money and the reasonable requirements of the future and similar others. . . ." It is, therefore, clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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