TaxTMI 
TaxTMI 
1971 (3) TMI 12
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....x payable was determined at Rs. 30,357. Section 205 of the Companies Act, 1956, provides as follows : " No dividend shall be declared or paid by a company for any financial year except out of the profits of the company for that year arrived at after providing for depreciation in accordance with the provisions of sub-section (2) or out of the profits of the company for any previous financial year or years arrived at after providing for depreciation in accordance with those provisions and remaining undistributed or out of both or out of moneys provided by the Central Government or a State Government for the payment of dividend in pursuance of a guarantee given by that Government ...... " This sub-section has some provisos ; and it is not ne....
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....ributed as dividends by any company within the twelve months immediately following the expiry of that previous year are less than the statutory percentage of the distributable income of the company of that previous year, the Income-tax Officer shall make an order in writing that the company shall, apart from the sum determined as payable by it on the basis of the assessment under section 143 or section 144, be liable to pay super-tax at the rate of-- (a) fifty per cent., in the case of an investment company, and (b) thirty-seven per cent., in the case of any other company, on the distributable income as reduced by-- (i) the amount of dividends actually distributed, and (ii) any expenditure actually incurred bona fide for the purposes of....
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....mpanies Act from declaring any dividend from its profits without providing for depreciation as required by the said section does not affect the liability to be assessed under section 104 of the Income-tax Act. He accordingly obtained the approval of the second respondent, the Inspecting Assistant Commissioner of Income-tax, Range 1, Ernakulam, for proceeding against the company under section 104 of the Income-tax Act ; and after giving a reasonable opportunity to the company for being heard, he passed an order, exhibit P-10, dated February 28, 1969, assessing the company to an additional super-tax of Rs. 42,446. This writ petition has been filed to quash the above order of assessment. The company has filed an appeal from the impugned order....
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.... thereunder is on the amount of short distribution of the statutory percentage of the distributable income. The contention of counsel for the company would lead to the result, that if the company distributed any dividend, it would be liable to pay the tax on the difference between the statutory percentage of the distributable income and the amount it distributed ; but if it did not distribute any dividend at all, there is no liability under section 104(1). This would be an absurd result. The interpretation sought to be given by counsel for the company is not warranted by the language of the section ; and it is also contrary to the obvious object of the said provision. The second point is that the tax under section 104 is penal in character....
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.... bar. Section 105 may not apply to a case of legal bar ; and in any event it does not affect the liability to assessment under section 104(1). I do not propose to decide this question, as the third point raised by counsel for the company is one which involves the exercise of discretion by the Income-tax Officer on the facts and circumstances of the case. That is a matter which has to be left to the authorities under the Income-tax Act to decide ; and it would not be proper dispose of this case without an adjudication on that question by the revenue. The third point raised by counsel for the company is that the company is not liable for assessment under section 104(1) of the Income-tax Act, by virtue of the provisions contained in sub-secti....