Law:

Section:

Section 104 of the Income-tax Act, 1961 - Additional income-tax on undistributed profits of certain companies - Assessment year 1964-65 - Whether since default or non-distribution in distributing dividends arises only after expiry of period of 12 months and not on last date of 12 months referred to in section 104, rate of additional super-tax has to be fixed with reference to date from which liability for tax arose - Held, yes - Whether for non-distribution of dividends in respect of assessment year 1964-65, said rate would be in accordance with law as applicable on expiry of 12 months therefrom, i.e. law applicable on 1-4-1965 - Held, yes FACTS In respect of the assessment year 1964-65, the assessee-company did not declare any dividend. After the expiry of twelve months immediately following the end of the previous year, the ITO initiated proceedings under section 104, and by an order dated 28-2-1966, levied additional super-tax at the rate of thirty-seven per cent. It was contended before the ITO that the proper provision to be applied was section 104, as amended by the Finance Act, 1965, and in force from 1-4-1965, and not the provision as it was on 1-4-1964; if the provision as in force on 1-4-1965, was to be applied, the additional super-tax was leviable at the rate of twenty-five per cent, but, if the law immediately preceding that amendment was to be applied, the rate of tax was thirty-seven per cent. The ITO held that, although an order under section 104 could be passed only after 1-4-1965, it was an order in respect of the assessment year 1964-65, and that, therefore, the correct provision to be applied was section 104 as it stood prior to the amendment made by the Finance Act, 1965. He, thus, he fixed the additional super-tax at the rate of thirty-seven per cent. The AAC confirmed the order of the ITO. On further appeal, the Tribunal held that the rate of additional super-tax should be fixed with reference to section 104 as amended by the Finance Act, 1965, at twenty-five per cent, and not at thirty-seven per cent, under the unamended provision. HELD It has been held in a number of cases that, so far as personal or corporate total income is concerned,…

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