https://www.taxtmi.com/caselaws?id=39211 Dividend-distribution provisions under the 1922 and 1961 Income-tax Acts turn on whether the directors' decision was commercially reasonable from the standpoint of a prudent businessman. The text states that profits, dividend history, reserve position, business needs and future requirements must be assessed as a whole, rather than asking whether a larger dividend was merely possible. It further notes that transfers to reserve may be justified by commercial circumstances, and that adjustment of an earlier tax liability may be legitimate where it reflects prior erroneous entries. On the facts stated, the assessee's reserve transfer and tax-liability adjustment were treated as reasonable, and the anti-avoidance action was not sustained. en-us Wed, 12 Jun 1974 00:00:00 +0530 Tue, 13 Apr 2010 17:19:19 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=39211 Dividend-distribution provisions under the 1922 and 1961 Income-tax Acts turn on whether the directors' decision was commercially reasonable from the standpoint of a prudent businessman. The text states that profits, dividend history, reserve position, business needs and future requirements must be assessed as a whole, rather than asking whether a larger dividend was merely possible. It further notes that transfers to reserve may be justified by commercial circumstances, and that adjustment of an earlier tax liability may be legitimate where it reflects prior erroneous entries. On the facts stated, the assessee's reserve transfer and tax-liability adjustment were treated as reasonable, and the anti-avoidance action was not sustained. Case-Laws Income Tax Wed, 12 Jun 1974 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=39211