TMI Blog2013 (12) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... hem - The expenditure incurred by the director were within the ceiling. Whether proposed dividend is an ascertained liability - Held that:- Following CIT v. Enfield India Ltd [1996 (10) TMI 14 - MADRAS High Court] - The dividend was only proposed and was not yet approved by the General Body of the shareholders at the annual general meeting - It could not be said to be liability on the first day of the computation period under sub-section (1) of Section 80J - Decided in favour of assessee. - Income Tax Reference No. - 150 of 1990 - - - Dated:- 23-10-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Applicant : S. C.,A. Kumar, A. N. Mahajan, D. Awasthi, G. Krishna, S. Chopra For the Respondent : R. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 40A (5) (a) and (c) of the Income Tax Act, 1961 and held that in the case of employee director and such other persons, who are covered by the proviso to Clause (a) the aggregate ceiling of Rs.72000/- was fixed not only in respect of expenditure referred to in sub-clause (i) and sub-clause (ii) but also those referred to in sub-clause (i) and (ii) of clause (c) of Section 40 (5) of the Act and thus it is evident that the legislative intention was to treat the employee directors and other persons mentioned in the proviso differently from other employees in the matter of allowability of expenditure incurred on them. By the proviso it carved out of clause (a) something which otherwise would have fallen within it. Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od there was only a recommendation by the directors to declare a dividend. The actual declaration was yet to follow, after the decision of the general body at the annual general meeting. The dividend proposed by the Board of Directors was thus not a debt owed on the first day of the computation period and therefore the amount of proposed dividend was not liable to be deducted from the aggregate value of the assets for determining the capital employed for the purpose of sub-section (1) of Section 80J. In the present case in a similar situation the dividend was only proposed and was not yet approved by the General Body of the shareholders at the annual general meeting. It could not, therefore, be said to be liability on the first day of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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