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TMI Blog1993 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... information' and whether the reassessment proceedings under section 8(b) of the Companies (Profits) Surtax Act, 1964, are valid in law ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the balance to the credit of the general reserve account as on December 1, 1969, was required to be reduced year ending on November 30, 1969, declared by the board of directors on January 14, 1970, and May 5, 1970, and paid thereafter ?" It is an agreed position that, in view of the decision of the Supreme Court in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, the answer to question No. 1 should be in the negative and in favour of the assessee. We answer the question ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's stand and reduced the general reserve by these two amounts resulting in reduction in the capital base as computed under the Second Schedule to the Surtax Act. Before the Appellate Assistant Commissioner of Income-tax (the Appellate Assistant Commissioner), the assessee once again urged that its general reserves for the two years in question should not be reduced by the amount of interim dividends declared by it. In this connection, reliance was placed on the decision of the Supreme Court in the case of J. Dalmia v. CIT [1964] 53 ITR 83, with a view to impress upon the Appellate Assistant Commissioner that there is a difference between the dividends normally declared in the general body meeting and the interim dividends declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve account was required to be reduced by Rs. 15,75,600 being the interim dividend for the accounting year ending November 30, 1973, declared by the board of directors on November 26, 1973, and paid after November 30, 1973 ?" Learned counsel for the assessee reiterated the submissions which were made before the income-tax authorities as well as the Tribunal and strongly urged that since the assessee had not declared the dividends out of the general reserves as they stood on the first day of the relevant accounting year, there was no justification in reducing the general reserve by the amount of interim dividends declared by the assessee. In this Court in the case of Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559, more particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he current year's profit. He, therefore, urged that, since the current year's profits available were far in excess of the interim dividends declared by the assessee, the general reserves as on the first day of the relevant accounting year should not be reduced. As regards the year ending on November 30, 1973, he was fair enough to state that the current year's profits of over Rs. 88,00,000 were transferred to the general reserve, however, he pointed out that the assessee had, in fact, a balance of over 2 crores of rupees in the general reserve as on the first day of the relevant accounting year and, therefore, it is not proper to hold that the interim dividends declared by the assessee was out of the general reserve and not out of the curre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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