Section 104 cannot be invoked where notional dividends would still attract full section 80K relief and yield no revenue gain.

Section 80K relief applies only when dividends are actually declared, and where accumulated section 80J-linked relief would have fully sheltered any dividend for the relevant year, the Revenue would gain nothing from a notional distribution. On those facts, section 104(2)(ii) barred the making of an additional income-tax order under section 104, and the absence of dividends in earlier years did not change that result.

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Issues: Whether the company could be subjected to additional income-tax under section 104 of the Income-tax Act, 1961 when its undistributed profits would have yielded no benefit to the revenue because dividends, if declared, would have qualified for relief under section 80K in relation to earlier section 80J relief.

Analysis: The Tribunal held that section 80K operates when dividends are actually declared and that, in a case where the company had accumulated section 80J relief and had not declared dividends in the earlier years, any dividend declared in the relevant year would still have attracted relief to the extent of the available section 80J-linked amount. On the facts, the statutory dividend requirement for the year would have been fully covered by the available relief, so no tax would have been recoverable and the Revenue would have gained nothing. In such circumstances, section 104(2)(ii) barred the making of an order under section 104. The intermediate years in which no dividend was declared did not alter this position.

Conclusion: The order levying additional income-tax under section 104 was not justified, and the assessee succeeded.

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