CENTRAL CALCUTTA INVESTMENT P LTD Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF CALCUTTA
CENTRAL CALCUTTA INVESTMENT (P.) LTD
COMMISSIONER OF INCOME-TAX
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K.L.Roy, J. -
(1.) By this reference under Section 66(1) of the Indian Income-tax Act, 1922, the Tribunal has referred the following question to this court :
"Whether, on the facts and circumstances of the case, the Tribunal were justified in confirming the order made by the Income-tax Officer under Section 23A(1) of the Indian Income-tax Act, 1922, for the assessment year 1959-60 ?"
(2.) The facts leading to this reference are shortly as follows : The assessee is a private limited company and is admittedly a company in which the public are not substantially interested within the meaning of the Explanation to Section 23A(9) of the Act. For the assessment year 1959-60, for which the previous year was the financial year ending on the 31st March, 1959, the profits according to the assessee's books of account amounted to Rs. 17,269. After providing for liability for taxation of Rs. 8,537 there was a balance of Rs. 8,732. But in the assessment for that year the assessee was assessed to a total income of Rs. 27,742 on which the tax payable was Rs. 14,383 leaving a balance of Rs. 13,359. At its general meeting held on the 29th September, 1959, the assessee-company declared a dividend of Rs. 1,900 only. By an order dated the I2th October, 1960, made under Section 23A of the Act, the Income-tax Officer directed the assessee to pay super-tax on 50 per cent. of the undistributed balance of Rs. 11,459. Before the Income-tax Officer, it was contended by the assessee that a larger dividend could not be declared in this year on account of outstanding income-tax demands. The Income-tax Officer rejected the claim on the ground that under Section 23A, the only considerations to be applied when the declaration of dividends was less than the statutory percentage of the distributable surplus were :
(i) losses incurred by the company in earlier years, and (ii) smallness of profit made in the previous year.
(3.) As none of these grounds were advanced for failure to declare the statutory percentage of, the distributable surplus the Income-tax Officer made his order under Section 23A.;
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