Law: Income Tax Act, 1922

Section: 66

Income tax ---Company Assessee a company wherein public were not sub¬stantially interested Business of passenger transport Company's balance sheet showing losses of earlier years Entire share capital wiped out by losses Trade liabilities more than value of assets¬Replacement of old buses for continuity of business Loans required to be taken for replacement Expectation of dividend not reasonable. AIR 1965 SC 1977: 57 ITR 176 ref. JUDGMENT CHANDURKAR, J. .The assessee is a Company in which the public are trot substantially interested. The business of the assessee Company is of passenger transport. For the assessment year 1958 59 for which the relevant accounting year was from 1st August, 1956 to 31st July, 1957 the company disclosed an income of Rs. 30,889 according to its profit and loss account. In the return the company had shown a loss of Rs. 1,086. The Income tax Officer, however; estimated the passenger receipts at Rs. 4,50,000 as against Rs. 3,36,935.Thus an addition of Rs. 1,13,065 was made and on computation the income of the assessee was assessed at Rs. 99,860. 2. In appeal, the total income was reduced by Rs. 9,860 by the Appellate Assistant Commissioner. There were cross appeals for the assessment years 1957 58 and 1958 59. The assessee's appeals came to be dismissed. The references for the assessment years 1957 58 and 195859 made under section 66 (2) of the Income tax Act, 1922 arising out of the orders of the Appellate Tribunal for the assessment years 1,957 58 and 1958 59 are said to be still pending. 3. The Income tax Officer then made an order under section 23 A of the Income tax Act, 1922 and found that the distributable profits were Rs. 69,1.63 (Rs. 1,21,677 Rs. 52,514) and levied super tax at 3 per cent on the undistributed profits to the tune of Rs. 25,590. The net income of the assessee was Rs. 1,21,677 and the taxes payable thereon were Rs. 52,514. The Appellate Assistant Commissioner up held this assessment. 4. The assessee took the matter in appeal to the Tribunal. The Tribunal accepted the finding that the distributable profits worked out to Rs. 69,163 and directed its attention to the question as to whether. After considering the true…

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