COMMISSIONER OF INCOME TAX Vs. KABIR DAS INVESTMENT CO

JUDGEMENT

(1.) IN respect of the asst. year 1976 -77, the ITO invoked S. 104 of the INCOME TAX ACT, 1961, and levied additional tax, of Rs. 18,540 on account of non -distribution of dividend. The profits which were available for distribution, according to the ITO, was Rs. 37,083.

(2.) IN appeal, the CIT (Appeals) deleted the tax after coming to the conclusion that, judged from business considerations, the non - declaration of the dividend was justified. The ITO filed an appeal to the Tribunal. The Tribunal reiterated the reasons given by the CIT (Appeals) who, incidentally, had relied upon the decision of the Supreme Court in the case of CIT vs. Gangadhar Banerjee (1965) 57 ITR 176 and had come to the conclusion that nondeclaration of the dividend was, on the facts of this case, justified. The Tribunal took note of the fact that the respondent -company owed Rs. 5,78,000 to the holding company and repayment of that was necessary, and, in fact, in the subsequent years, have raised loan to repay the said amount.