TaxTMI 
TaxTMI 
1999 (3) TMI 7
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....ibunal was right in law in holding that the provisions of section 104 of the Income-tax Act, 1961, were applicable to the instant case for the assessment year 1975-76 ?" The facts leading to the abovesaid reference are as follows : The respondent-company is a trading company in which the public are not substantially interested. The assessing authority assessed the income of the company for the assessment year 1975-76 at Rs. 6,27,430 holding that the company did not distribute any dividend to its shareholders. The Income-tax Officer initiated proceedings under section 104 of the Act, demanding additional income-tax of Rs. 31,434. Against the said assessment order, the respondent-company preferred an appeal before the Appellate Assis....
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....tion of dividend as contemplated in section 104 of the Act for avoiding the levy of super-tax. The stand of the Revenue before us is that for the purpose of avoiding the levy under section 104 of the Act, there should be in fact distribution of dividend as such in favour of all the shareholders and a deemed payment of dividend is not what is contemplated under the said section. It was also contended before us that the view taken by the Calcutta High Court in Moore Avenue Properties (P.) Ltd. v. CIT [1966] 59 ITR 466 does not lay down the correct position in law and, on the contrary, the view taken by the Gujarat High Court in CIT v. Bombay Mineral Supply Co. (P.) Ltd. [1978] 112 ITR 577 should be accepted. In the instant case, during the....
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....by way of advance or loan to its shareholders is deemed to be a dividend. Since the Act has not provided for any other definition of the word "dividend" except the ones enumerated in section 2(22) of the Act, it should be construed that this definition would be applicable to all provisions which contain the term "dividend" in the Act. Section 104 of the Act reads as under : "104. Income-tax on Undistributed income of certain companies.---(1) Subject to the provisions of this section and of sections 105, 106, 107 and 107A, where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that previous ....
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....ose the income from dividend whereof is exempt under section 11. (3) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette and subject to such conditions as may be specified therein, exempt any class of companies to which the provisions of this section apply from the operation of this section. (4) Without prejudice to the provisions of section 108, nothing contained in this section shall apply to a company which is neither an Indian company, nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India." As per this section, an Income-tax Officer, if satisfied that a company in re....
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....of the Gujarat High Court. The object of the Legislature in enacting section 2(22)(e) and section 104 of the 1961 Act is one and the same, namely, to prevent the escapement of super-tax by some shareholders and/or companies. While under section 2(22)(e) of the Act, by a deeming provision, the Legislature has made payment of any advance or loan to a shareholder a deemed dividend so as to subject such payments to the levy of super-tax in the hands of the receiver of the said amount, section 104 of the Act provides for levy of super-tax on companies which attempt to avoid payment of super-tax by their shareholders by not distributing their surplus profits and income. In either case, the object of the Act is to see that evasion of super-tax is ....