| Case ID |
41df0b8a-c65c-42d1-8b69-6f88c40bdab8 |
| Body |
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| Case Number |
IT REFERENCE No. 49 OF 1969 |
| Decision Date |
Jul 10, 1978 |
| Hearing Date |
|
| Decision |
The Tribunal upheld the distribution of dividends actually distributed and cancelled the super tax levied under section 23A(1) of the Indian Income-tax Act, 1922. The court concluded that the ITO must take an overall picture of the financial position of the business and not act merely as a tax collector. The decision was based on the assessment that the company was actively engaged in a rehabilitation program and had acquired new machinery, which justified the limited dividend distribution. The order under section 23A of the Act after its amendment by the Finance Act, 1955, was not an assessment order subject to the limitation period prescribed by section 34(3) of the Act. Ultimately, the Tribunal's conclusions were not characterized as erroneous. |
| Summary |
The case revolves around the application of section 23A of the Indian Income-tax Act, 1922, concerning the distribution of dividends and the assessment of additional super tax on undistributed profits. The Bombay High Court deliberated on whether the Income Tax Officer (ITO) acted reasonably in imposing super tax on the Gagalbhai Jute Mills for not distributing a larger dividend. The Tribunal found that the company was undergoing significant rehabilitation and had sufficient grounds for limiting its dividend to preference shares. The judgment emphasized the need for the ITO to consider the overall financial status of the company rather than viewing the case solely from a tax collection standpoint. The final ruling supported the company's approach in managing its finances prudently, thereby cancelling the super tax imposed. |
| Court |
Bombay High Court
|
| Entities Involved |
Gagalbhai Jute Mills (P.) Ltd.
|
| Judges |
KANTAWALA, C.J.,
S.K. DESAI, J.
|
| Lawyers |
R.J. Joshi,
V.J. Pandit,
Miss S.G. Shah,
B.A. Palkhiwala
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Gagalbhai Jute Mills (P.) Ltd.
|
| Citations |
1980 SLD 1247 = (1980) 126 ITR 191
|
| Other Citations |
CIT v. Gangadhar Banerjee & Co. (P.) Ltd. [1965] 57 ITR 176 (SC),
Indo-Ceylon Dental & Surgical Co. Ltd. v. CIT [1975] 98 ITR 536 (Mad.),
M.M. Parikh, ITO v. Navanagar Transport and Industries Ltd. [1967] 63 ITR 663 (SC),
Indian Commerce and Industries Co. Ltd. v. CIT [1966] 60 ITR 229 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
104,
153
|