Law:

Section:

Section 104, read with sections 45 and 47(viii), of the Income-tax Act, 1961 - Additional income-tax on undistributed profits of certain companies - Assessment years 1974-75 and 1975-76 - Whether since section 47(viii) specifically exempts any transfer of agricultural land in India effected before 1-3-1970 from scope of section 45, compensation which became payable to assessee as a result of acquisition of its agricultural land in 1962, was totally exempt from section 45 and, therefore, could not form part of 'gross income' or 'distributable income' for purpose of section 104 - Held, yes - Whether taken against background of accumulated losses of company over several financial years, together with loss of only asset of company, decision of Board of Directors not to distribute dividends from compensation awarded but to capitalize it in a reserve account was reasonable - Held, yes Words & phrases - 'Having regard to' as occurring in section 104 of the Income-tax Act, 1961 FACTS The assessee-company was carrying on business of agricultural activities and dairy farming. It was suffering losses year after year. During the year 1962, certain agricultural land belonging to the assessee-company was compulsorily acquired by the Government, compensation for which was received by the assessee-company in the assessment year 1974-75. The directors of the company took the view that on account of past accumulated losses and smallness of profit in relevant assessment years including the loss of the only asset of the company, no dividend would be distributed and, therefore, capitalised the compensation amount in the capital reserve account. The Assessing Officer, however, took the view that there was sufficient money in the hands of the assessee-company which could and ought to have been declared as dividend and that such a huge capital reserve was not required by the company for the purpose of business requirement. Consequently, the Assessing Officer held that the assessee-company was liable to pay additional income-tax of 50 per cent of the profit available under section 104, for its failure to distribute required statutory percentage of dividend. On appeal, the Appellate…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492