1974 (7) TMI 14

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....the income returned by the assessee was Rs. 12,655, but the income assessed to tax was Rs. 23,034. It appears that the income was assessed at higher figures than the income returned because a sum of Rs. 7,500 in the first year and a sum of Rs. 9,000 in the second year had been added to the profits disclosed as per books by the assessee on an estimate of the profits made under the proviso to section 13 of the Indian Income-tax Act, 1922, in respect of the assessment year 1961-62 and under section 145 of the Income-tax Act, 1961, in respect of the assessment year 1962-63. It appears that the said additions had been made because the assessee which was manufacturing hosiery articles did not have any register for the consumption of the yarn whic....

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....the disclosed profit which was the income of a notional character and the profit and loss appropriation account showed a loss of Rs. 12,249. There was thus no commercial profit for declaration of dividend. The Income-tax Officer, however, passed an order under section 23A of the Indian Income-tax Act, 1922, for the first year and under section 104 of the 1961 Act, for the second year directing payment of additional super-tax at 37 per cent. on the distributable incomes of Rs. 2,488.20 and Rs. 11,355, respectively. There was an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the assessee's contention. There was a further appeal to the Tribunal by the department and the Tribunal heard the appeals....

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...., 1961. We are concerned with the question whether these two sums, namely, the sums of Rs. 7,500 and Rs. 9,000 should be taken into consideration in determining the applicability of these two sections relevant for these two assessment years. The only ground upon which it has been contended that these two sums should be excluded for the respective years was that these were really based on a certain amount of notional calculation by applying the proviso to section 13 of the Indian Income-tax Act, 1922, and section 145 of the Income-tax Act, 1961. It has to be reiterated that we are not concerned in this reference with the question whether the proviso to section 13 was properly applied for the assessment year 1961-62 or section 145 had been pr....

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....tention urged by the assessee but in this case it appears from the records that section 13 of the Indian Income-tax Act, 1922, in respect of one year and section 145 of the Income-tax Act, 1961, in respect of another year were applied in order to determine the true commercial profit as the method of accounting followed by the assessee did not reflect the true commercial profit. If in those circumstances resort had been made to the proviso to section 13 of the Indian Income-tax Act, 1922, or to section 145 of the Income-tax Act, 1961, it could not be said that the assessed income in this case could not be taken into consideration in the absence of any other materials in determining the availability of the surplus for declaration of dividend.....