- (1.) Under appeal is the decision of a Division Bench of the High Court at Madras. The Division Bench answered in the negative and in favour of the Revenue the following questions : 1. "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that having regard to the Notification under Section 104 (3) of the Income-tax Act, 1961 in S. O. No. 3210, dated 8-8-1969 issued by the Government the assessee was not liable to pay additional tax under Section 104 of the Income-tax Act, 1961 for any of the assessment years from 1971-73 to 1974-75
(2.) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding, that the amounts realised by the assessee from the transfer of its import licences constituted sales proceeds derived by it from its export within the meaning of the Notification S. O. No. 3210, dated 8-8-1969 and therefore the assessee would be entitled to enjoy the exemption from the operation of the provision of Section 104 of the Income-Tax Act, 1961 - 2. As indicated in the questions, we are concerned with the Assessment Years 1972-73 to 1974-75.
(3.) To appreciate what is involved, it is necessary to set out, at the outset, the provisions of Section 104 of the Income-tax Act, 1961, so far as they are relevant : "104.Income-tax on undistributed income of certain companies- (1) Subject to the provisions of this section and of Sections 105, 106, 107 and 107a, 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 distributable income of the company of that previous year, the Income-tax Officer shall make an order in writing that the company shall, apart from the sum determined as payable by it on the basis of the assessment under Section 143 or Section 144, be liable to pay income-tax at the rate of- (A) fifty percent, in the case of an investment company, (B) thirty seven per cent, in the case of a trading company, and (C) twenty five per cent, in the case of any other company, On the distributable income as reduced by the amount of dividends actually distributed, if any. (2). . . . . . . . . (3) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette and subject to such conditions as may be specified therein, exempt any class of companies to which the provisions of this section apply from the operation of this section. ";