TMI Blog1978 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... istributable income of the assessee for the purposes of s. 104 was determined to be Rs. 1,81,269. The dividend required to be distributed was 60% of the said amount, being Rs. 1,08,762. It was found that the assessee declared dividend of only Rs. 1,03,717 on the 9th May, 1968. As the shortfall was below 10% of the distributable surplus the ITO issued a notice dated the 8th December, 1972, under s. 105 of the I. T. Act, 1961, calling upon the assessee to declare a further dividend as required under the statute. The assessee did not comply with this notice and the ITO thereafter forwarded a proposal for initiating proceedings under s. 104 of the Act to the IAC. The IAC gave an opportunity to the assessee to make its representation in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voked. He cancelled the said order passed under s. 104 and allowed the appeal of the assessee. The revenue preferred a further appeal to the Income-tax Appellate Tribunal. It was contended before the Tribunal that the assessee was not absolved from its liability to declare its statutory percentage of dividends under s. 104 of the Act only because of its merger and that the holding company with which the assessee merged should have held the general meeting and declared the additional dividend as required by the ITO under s. 105 and that its failure to do so would make the assessee liable for the additional super-tax under s. 104. It was contended on behalf of the assessee that the order of the AAC was correct inasmuch as it was impossible an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1968-69 ? " Mr. S. Bhattacharya, learned counsel of the assessee, contended before us that it was not possible for the assessee to comply with the requisition under s. 105 inasmuch as on the date the notice under the said section was issued the assessee was no longer in existence. Not only the assessee was not in existence but the distributable income which had accrued to it during the relevant assessment year had also ceased to have an independent existence inasmuch as all its assets were merged with the assets of the parent company. In any event, whatever surplus remained out of the said undistributable income had been merged with the assets of the parent company and, therefore, there was no question of any further distribution of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er s. 105 of the Act of 1961. By reason of the earning of the income in the assessment year in question the subsidiary company had become liable to declare the statutory percentage of dividend which it failed to do. In that view of the matter the proceedings which culminated in the order under s. 105 of the Act of 1961 must be held to have continued from the assessment onwards. In support of his contentions Mr. Sengupta cited a decision of the Supreme Court in CIT v. J. K. Commercial Corporation Ltd. [1976] 105 ITR 219 for the proposition as follows (p. 222) : " Section 23A as the marginal note indicates is the ' power to assess companies to super-tax on undistributed income in certain cases '. The relevant words of sub-section (1) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all and singular existing debts, obligations and all the liabilities and duties of the transferor company without further act or deed shall be deemed to be transferred to and become the debts, obligations, liabilities and duties of the transferee company. 4. All suits, appeals or other proceedings of whatever nature by or against the transferor company that may be pending shall not be deemed to be discontinued or be in any way prejudicially affected by reason of the transfer of the undertaking of the transferor company or of anything contained in this scheme, but the said suits, appeals or legal proceedings may be continued, prosecuted and enforced by or against the transferee company in the same manner and to the same extent as they wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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