COMMISSIONER OF INCOME TAX1 Vs. VAZIR SULTAN TOBACCO COMPANY LIMITED
LAWS(APH)-1992-2-32
HIGH COURT OF ANDHRA PRADESH
Decided on February 11,1992

COMMISSIONER OF INCOME-TAX Appellant
VERSUS
VAZIR SULTAN TOBACCO CO. LTD. Respondents


Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. K C PRIVATE LIMITED [LAWS(APH)-1996-8-55] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. STANES TYRE AND RUBBER PRODUCTS LIMITED [LAWS(MAD)-1996-7-15] [REFERRED TO (AP),]
COMMISSIONER OF INCOME TAX VS. STANES TYRE AND RUBBER PRODUCTS LIMITED [LAWS(MAD)-1996-3-170] [REFERRED]


JUDGEMENT

Syed Shah Mohammed Quadri, J. - (1.)At the request of the Commissioner of Income-tax, A. P. I., Hyderabad, the Income-tax Appellate Tribunal, Hyderabad, referred the following questions under section 256(1) of the Income-tax Act, 1961 :
"1. Whether, on the facts and in the circumstances of the case, amounts standing under 'capital redemption reserve' are includible in computing the capital base ? 2. Whether, on the facts and in the circumstances of the case, gross dividends are deductible in arriving at the chargeable profits but not the net dividends ?"

(2.)In so far as the first question is concerned, it is represented by learned counsel for the parties that it is covered by the judgment of this court in the case of the assessee for an earlier year in CIT v. Vazir Sultan Tobacco Co. Ltd. [1988] 173 ITR 567. The question is, therefore, answered in favour of the assessee and against the Revenue.
(3.)Regarding the second question it would be useful to refer to the facts giving rise to this question. The assessee-company receives what is commonly known as inter corporate dividends. For the assessment years 1978-79 and 1979-80, the assessee sought deduction of the gross amount of dividends received by it from other companies in computing chargeable profits under the Companies (Profits) Surtax Act, 1964 (for short, "the Surtax Act"). The Income-tax Officer did not accept the contention and allowed the deduction of only net dividends. On appeal by the assessee, the Commissioner of Income-tax (Appeals) accepted the assessee's claim for deduction of the gross dividends. Dissatisfied with the order passed by the Commissioner of Income-tax (Appeals), the Commissioner filed an appeal before the Tribunal, which was dismissed and at the instance of the Revenue the above said questions were referred for our opinion.
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