1980 (12) TMI 74

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....e for two successive assessment years were heard together and are disposed of by a common order for the sake of convenience. The assessment years involved are 1974-75 and 1975-76 and the corresponding previous years are the years ended 31st Dec., 1973 and 31st Dec., 1974 respectively. 2. The assessee was incorporated on 13th Feb., 1973. The object was to manufacture and sell certain chemicals.&....

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....declaring any dividend.  In the relevant report of the Directors to the members dt. 24th June, 1975 it is stated as below: "Your Directors are of the view that it is necessary for the Company to retain the year's earnings in order to meet the needs of its manufacturing programme. The Directors have therefore, not recommended any dividend for the year ended 31st Dec., 1974." 4. The asses....

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.... of events set out by us earlier, it is manifest that the industrial unit of the company was in its period of gestation and that the Directors consciously took the decision to plough back the profits of the Company for the facility of setting up its manufacturing business. It is significant that it was borrowing loans and increasing its paid-up capital at the same time.  Sri S. Krishnan, the ....