TMI Blog1981 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the applicant-company could not be allowed to re-agitate the question that it was not a public company in view of the admission by the applicant-company in other proceedings as the applicant-company was fully aware of its implications ? 3. Whether the sum of Rs. 19,43,322 was not available to the assessee-company for the purpose of distribution under section 23A of the Indian Income-tax Act, 1922 ? 4. Whether, on the facts and circumstances of the case, the assesseecompany was liable to distribute 100% of the distributable profits or only 60%?" The assessment year involved is 1956-57, the relevant previous year being the year ending 30th September, 1955. The net profit as per accounts was Rs. 8,25,008. The company decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany was directed to pay an additional amount of super-tax amounting to Rs. 1,29,605. Appeals filed by the company before the AAC and the Tribunal failed. We propose to answer the first two questions together. It is necessary for answering these two questions, and in fact the remaining also, to refer to the findings recorded in the proceedings, which took place when the assessee moved the application under s. 23A(3). The case of the assessee was referred to the Income-tax Investigation Commission for the assessment years 1941-42 to 1948-49, under the Taxation on Income (Investigation Commission) Act, 1947. The Commission found in its report dated June 28, 1952, that the escaped income of the assessee amounted to Rs. 20,97,696. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Commissioner came to the conclusion that though under s. 23A(1) the assessees were required to distribute as dividend, 100% of their total profits, the minimum distribution required under s. 23A(1) should be reduced to Rs. 3,25,000, which represented the net increase in the liquid assets of the assessee in the relevant year. He also directed that in case the ITO found that in the assessment year in question the assessee had omitted to disclose its income fully and truly the amount of Rs. 3,25,000, which the assessee was directed to distribute as dividend, should be enhanced by the amount of such omission. Time for distributing the dividend was extended up to February 28, 1957. The assessee was not satisfied with this order and the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rs. 19,43,222. It also found that the total accumulated profits and reserves of the assessee exceeded the paid-tip capital or the actual cost of the fixed assets of the company, and this being so, the assessee was under an obligation, in view of s. 23A(1), to distribute as dividend the whole of the total income, subject to such reduction as has been accepted by the Commissioner. The decision of the Supreme Court has become final between the parties, and has been given in proceedings initiated under s. 23A of the Act, and relates to this very assessment year. Inasmuch as the assessee had in its application moved before the Commissioner under s. 23A(3) clearly admitted that the assessee was not a company in which the public were substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on a decision of the Supreme Court in the case of CIT v. Century Spinning and Manufacturing Co. Ltd. [1953] 24 ITR 499. He also contended that while calculating the available profits for distribution, and for purposes of determining whether 100% have to be distributed as dividend or only 60%, the amount of tax liability on the concealed profits has to be taken into account. He referred to the order of the Commissioner where the Commissioner has held that the liability for tax on the concealed profits had to be taken into consideration. It was contended that in case the secret profits were not treated as reserves of the tax (sic) liability on the concealed profits was taken into account the assessee would be liable to distribute dividend o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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