TMI Blog1964 (1) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer determined the income to be ₹ 3,91,143. This increase was due to the disallowance of a claim to an alleged trading loss of ₹ 2,12,691. This loss was held to be not genuine. Against this disallowance there was an appeal to the Appellate Assistant Commissioner and a further appeal to the Tribunal both of whom held that the transactions leading to the alleged loss were unreal and had been recorded with an ulterior motive. An application to make a reference under section 66(1) of the Act was dismissed. When the matter came before this court under section 66(2) of the Act, this court observed that the transactions had been found to be bogus ones and, consequently, the loss claimed as a result of these transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer was confirmed in successive appeals, and finally, on the application of the assessee, the Appellate Tribunal referred the following question for the determination of this court: Whether the sum of ₹ 2,12,691 held as sham or bogus loss or, in the alternative, capital loss, should have been excluded from the assessee-company's profits for the purpose of determining whether the payment of a larger dividend other than that declared by it would be unreasonable? It seems to us that on the facts as stated, and in view of the earlier proceedings in which the question of the alleged trading loss was examined by the department, the Tribunal and this court, the contention of the assessee that it did not deliberately underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares depreciated so much in value from ₹ 10 to one anna per share were not satisfactorily explained. It was found that the alleged sales by the assessee- company were to certain allied concerns, and that no one unconnected with the assessee-company or the group of companies to which the assessee-company belonged was a party to this sale transaction. It was found that one of the purchasers, Messrs. Vishnu Agencies, to whom the assessee-company sold 21,000 shares on June 30, 1953, at ₹ 10 per share, itself purported to dispose of those very shares at one anna per share to Delhi Glass Works Limited, practically on or about the same date as the date on which the assessee-company sold 21,505 shares to that Delhi concern at the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is the true commercial profits that have to be had regard to in deciding whether the assessee could have paid a larger amount of dividend. Where the definite finding is that the sum of ₹ 2,00,000 and odd claimed as the trading loss of the assessee was not real at all, in order to arrive at the true profits, that is to say, even profits regarded in a commercial sense, this alleged loss would have to be added back; and after making such addition, the assessing authority reached the conclusion that such profits would be very nearly ₹ 4,00,000. The computed income-tax and super-tax were deducted therefrom and the statutory percentage which should have been paid as the dividend was worked out. There is no dispute before us with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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