https://www.taxtmi.com/caselaws?id=8166 Section 23A(1) of the Indian Income-tax Act, 1922 requires the dividend adequacy enquiry to be made from the standpoint of a prudent businessman, on an overall assessment of the company's financial position. The Income-tax Officer is not confined to the profits of the relevant year or to prior losses alone. Outstanding tax liabilities from earlier years are relevant because they affect the surplus available for distribution and the feasibility of declaring dividends, and they must be considered when judging whether the dividend declared was inadequate. The amendment to section 23A did not materially change this approach. en-us Fri, 18 Dec 1970 00:00:00 +0530 Tue, 31 Mar 2009 17:28:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=8166 Section 23A(1) of the Indian Income-tax Act, 1922 requires the dividend adequacy enquiry to be made from the standpoint of a prudent businessman, on an overall assessment of the company's financial position. The Income-tax Officer is not confined to the profits of the relevant year or to prior losses alone. Outstanding tax liabilities from earlier years are relevant because they affect the surplus available for distribution and the feasibility of declaring dividends, and they must be considered when judging whether the dividend declared was inadequate. The amendment to section 23A did not materially change this approach. Case-Laws Income Tax Fri, 18 Dec 1970 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=8166