Law:

Section:

Section 104 of the Income-tax Act, 1961 - Additional income-tax on undistributed profits of certain companies - Assessment year 1968-69 - Assessee company was found to have declared lesser amount of dividend - Notice under section 105 was issued to assessee to declare a further dividend as required under statute - Assessee did not comply with said notice, and therefore, IAC made an order under section 107 holding that provisions of section 104 were applicable - In meanwhile assessee merged with its parent company - Whether since at time of amalgamation both liability to declare and distribute dividend and proceedings resulting from non-payment of correct dividend were in existence, said liabilities did not come to end by amalgamation of assessee company with its parent company - Held, yes - Whether, therefore, Tribunal was justified in holding that provisions of section 104 were correctly invoked in case of assessee company - Held, yes FACTS For the assessment year 1968-69, the assessee company was assessed under section 143(3). The distributable income of the assessee for the purposes of section 104 was determined. The dividend required to be distributed was 60 percent of the said amount. As the shortfall was below 10 per cent of the distributable surplus the ITO issued a notice, under section 105, calling upon the assessee to declare a further dividend as required under the statute. The assessee did not comply with that notice and the ITO thereafter forwarded a proposal for initiating proceedings under section 104 to the IAC. The IAC gave an opportunity to the assessee to make its representation in respect of the proposed action, which the assessee did and after considering the same the IAC made an order under section 107 holding that the provisions of section 104 were applicable in the facts and approved the proposed action of the ITO. Thereupon, the ITO passed an order under section 104 levying an additional super-tax on the assessee of being 37 percent of the undistributed income as reduced by the dividend actually declared. In the meanwhile, the assessee merged with its parent company. On appeal the assessee contended before the AAC that, in view of the…

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