J P SRIVASTAVA AND SONS RAMPUR PRIVATE LTD Vs. COMMISSIONER OF INCOME TAX U P

JUDGEMENT

(1.) THIS is a case stated under section 66(1) of the Indian Income-tax Act, 1922. The two questions referred are:

(2.) THE material facts are these. The assessee is a private limited company incorporated in Rampur. Rampur was an Indian State which merged with the Union of India on July 1, 1949. The relevant previous years are the years ending December 31, 1946, December 31, 1947, December 31, 1948, and December 31, 1949, corresponding to the assessment years 1947-48, 1948-49, 1949-50 and 1950-51. The following table sets out the relevant data:

(3.) IN regard to the assessment year 1947-48, relevant to the previous year ending on December 31, 1946, a notice was issued by the Income-tax Officer calling upon the assessee to show cause why the provisions of section 23A should not be invoked since no dividend had been declared by it within six months of the date of the general meeting in which the accounts for the year ending December 3, 1946, were laid. It was urged that the company had to keep moneys for the purpose of its business and, therefore, no dividend was declared. The Income-tax Officer, after referring to the paid-up capital and the capital reserves, rejected this contention and held that there was no justification for not distributing the statutory dividend. The operative portion of his order reads: