1971 (12) TMI 17

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....h law ? " The super-tax was levied under section 23A of the Indian Income-tax Act, 1922, the relevant part of which as it stood at that time is in these terms: " 23A. Power to assess companies to super-tax on undistributed income in certain cases.-(1) 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 year are less than the statutory percentage of the total income of the company of that previous year as reduced by- (a) the amount of income-tax and super-tax payable by the company in respect of its total income, but excluding the amount of any super-tax payable under thi....

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....ing to its accounts was Rs. 23,129.70. During that year it had made a provision for income-tax of Rs. 45,000 and the total profit was Rs. 68,129.70. It declared a dividend of 4 per cent. which worked out to Rs. 16,000. The assessing authority fixed the total income assessable to tax for the year 1960-61 at Rs. 70,723. The Income-tax and the corporation tax on that worked out to Rs. 31,825. The assessee had paid profession tax of Rs. 1,794. The total of the taxes deductible under clauses (a) and (b) of sub-section (1) of section 23A that we have extracted is thus Rs. 31,825 plus Rs. 1,794 = Rs. 33,619 leaving a balance available for distribution of Rs. 37,104. The assessee should have distributed 65% of this (viz., Rs. 24,117) to satisfy the....

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.... left is only Rs. 19,609.70. Rs. 16,000 out of this had been admittedly paid leaving a balance of Rs. 3,609.70. If the assessee had declared one more per cent. by way of dividend he would not have had money to pay dividend out of the profits of the year, as one per cent. would come to Rs. 4,000. He certainly had no money to declare a dividend which would satisfy the section as he would require in that case a sum of Rs. 24,117 which is 65 per cent. computed under the section. It was urged that the assessee had a sum of Rs. 8,000 as reserve and this amount could have been utilised for the payment of the dividend. The decisions in Commissioner of income-tax v. Bipinchandra Maganlal & Co. Ltd. and Commissioner of Income-tax v. Gangadhar Banerje....