9911796707
TMI Blog1985 (3) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... see-investment company had to distribute 90 per cent of its income as dividends within 12 months immediately following the expiry of the previous year for the assessment year 1979-80. In other words, it was to distribute dividends to the extent of Rs.76,770 out of the distributable income of Rs. 85,294. Since it distributed dividends to the extent of Rs. 65,700 only, the shortfall worked out by the ITO was, at Rs. 11,070 on which tax at the rate of 50 per cent was demanded under the provisions of section 104(1)(a). This was challenged before the Commissioner (Appeals) who had upheld the order passed by the ITO. 3. It is in the background of these facts that the assessee is in appeal contending that neither the ITO nor the Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory Rules bound to transfer to reserves a sum which could not be less than 10 per cent of the current profits. After referring to the above-mentioned provisions of the Company Law, the learned counsel submits that distribution of any amount larger than the amount actually distributed as dividend would have been unreasonable and, therefore, the authorities below had no justification in invoking the provisions of section 104. In support of his contentions Shri M.L. Dujari has also relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. Gangadhar Banerjee & Co. (P.) Ltd. [1965] 57 ITR 176. 4. On the other hand, Shri J.S. Rao, the senior departmental representative, has supported the orders passed by the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,466. In accordance with the statutory requirement of section 104/109 of the Act, the assessee was under an obligation to distribute at least 90 per cent of the distributable surplus as dividend. In other words, it had to distribute at least Rs. 68,820 as dividends in order that it could claim compliance of the provisions of section 104/109. Since it had declared dividends of only Rs. 65,700 and since there were no mitigating circumstances as mentioned in the decision of the Hon'ble Supreme Court in the case of Gangadhar Banerjee & Co. (P.) Ltd. or as mentioned in section 104(2) we would consider that the authorities below were justified in imposing the liability of additional tax upon the assessee under the provisions of section 104. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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