1993 (2) TMI 62

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....of the Companies (Profits) Surtax Act, 1964, as on April 1, 1971, for the assessment year 1972-73 and as on April 1, 1972, for the assessment year 1973-74. The questions which are referred to us are as follows: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the dividend amounting to Rs. 32,26,214 declared at the annual general meeting of the assessee on September 17, 1971, and paid out of the general reserves was not includible in the computation of the capital for the purposes of the Companies (Profits) Surtax Act, 1964, for the assessment year 1972-73 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the dividend amounting t....

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....o be reduced by the dividend declared on September 13, 1971, and September 15, 1972, respectively, for the assessment years in question. In our view, the question is covered by the decision of the Supreme Court in the case of Indian Tube Co. P. Ltd. v. CIT [1992] 194 ITR 102. In the case before the Supreme Court, which related to the assessment year 1964-65, the relevant previous year was the calendar year 1963. As on December 31, 1962, the balance-sheet showed under the head "Liabilities", that the liability to pay proposed dividend was "nil". The general reserves as on January 1, 1963, shown was Rs. 90 lakhs. On April 3, 1963, the directors recommended dividend of Rs. 76 lakhs to be paid from the general reserves of the company. The sa....

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.... inasmuch as it referred to the profits of the previous year ending December 31, 1962. The same ratio directly applies to the present case. It was strenuously urged before us on behalf of the assessee that in the present case, in view of the provisions of section 9(1)(g) of the Foreign Exchange Regulation Act, 1973, the liability to pay the dividend to a non-resident shareholder did not crystallise until the approval of the Reserve Bank of India was obtained and hence the ratio of the Supreme Court in Indian Tube Co.'s case [1992] 194 ITR 102, did not apply. In support, the following cases were cited before us : (i) Jhimi Bajoria (Musst.) v. CIT [1971] 80 ITR 273 (Cal) (ii) CWT v. Bhogilal H. Patel [1978] 112 ITR 910 (Bom) (iii)....