Law:

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Section 23A(1) of the Indian Income-tax Act, 1922 [corresponding to section 104 of the income-tax act, 1961]-Additional tax on undistributed profits-Concept of commercial profits-Alleged profits from joint venture surrendered by assesses as income claimed to represent disputed income-Whether such surrendered income could form part of commercial and distributable profits for applying section 23a(1)-Held, yes Facts For the assessment year 1961-62, the assessee, a private company, was assessed on a total income of Rs. 1,58,257. This included an amount of Rs. 75,444 which, in fact, represented its half share in a joint venture in respect of some transactions with another party ; but shown in its accounts as being due to be paid to the co-sharer. For the relevant previous year, the assessee distributed dividends aggregating to only Rs. 9,600 which fell short of the statutory minimum. The levy of additional super tax of Rs. 28,653 was accordingly imposed by the ITO and the AAC upheld this levy. On further appeal, the Tribunal found that the said half share was a disputed amount and would not, therefore, form a part of the commercial and distributable profits. Held 1. There is no evidence in this case to establish that there was any joint venture which would enable the assessee to set apart 50 per cent of the share of profits in question so as to have left them out of consideration for computing commercial profits. The mere entries in the books, without its independent value, cannot be a conclusive evidence of any joint venture. In fact, these entries have lost their credibility when the assessee conceded before the ITO that the entire amount should be treated as its income. 2. There is no material on record on which the Tribunal could have drawn any inference that the amount was in dispute. 3. The concession by the assessee to treat the entire amount as income was not in respect of any fictional income, but was in respect of profits actually earned and held by the assessee. The provisions of section 23A(1 ) have, there fore, been rightly applied. Case review CIT v. Universal Fertiliser Co. Pvt. Ltd. [1978] 114 ITR 47 (Cal.) distinguished. Case referred to CIT v.…

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