Tribunal decision affirmed: Current profit not included in deemed dividend calculation.

The court upheld the Tribunal's decision directing the Assessing Officer not to include current profit in accumulated profit for deemed dividend calculation under Section 2(22)(e) of the Income Tax Act. The court referenced a relevant Supreme Court case and ruled in favor of the assessee, dismissing the appeal without costs.

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Issues:
1. Interpretation of Section 2(22)(e) of the Income Tax Act regarding the inclusion of current profit in accumulated profit for deemed dividend calculation.
2. Justification of the Assessing Officer's rejection of rectification application under Section 154.
3. Adjudication of the issue regarding the order under Section 154 by the Appellate Tribunal.

Analysis:
1. The appeal raised substantial questions of law related to the interpretation of Section 2(22)(e) of the Income Tax Act. The appellant, represented by Mrs. Bhatt, contended that the Tribunal erred by not deciding whether the Assessing Officer was justified in rejecting the rectification application under Section 154. Mrs. Bhatt argued that the Tribunal misinterpreted Explanation 2 to Section 2(22)(e) by not including the current year profit in accumulated profit for deemed dividend calculation.

2. Despite being served, no representation was made on behalf of the respondent or the Official Liquidator of the respondent-company in liquidation. The court noted that even if the matter was remitted, no representation would likely be made. Therefore, the court proceeded to consider whether the Assessing Officer's inclusion of current profit in accumulated profit for deemed dividend calculation was justified.

3. After hearing arguments from Mrs. Bhatt and examining Section 2(22)(e) of the Act, particularly Explanation 2, the court determined that the Tribunal did not err in directing the Assessing Officer not to include current profit in accumulated profit for deemed dividend calculation. The court referenced a Supreme Court case, Associated Banking Corporation of Ind. Ltd. v. Commissioner of Income-Tax, which established that profit accrues when the books of account are closed. Consequently, the court confirmed the Tribunal's decision in favor of the assessee, dismissing the appeal and ruling no costs to be paid.

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