2001 PLP 3080 (PTD)

Subsection (2) of section 104 of the Income Tax Act, 1961, disentitles the Income‑tax Officer from making an order under subsection (1) of section 104 of the Act if he is satisfied, inter alia, that the payment of a dividend or a larger dividend than that declared within a period of 12 months referred to in subsection (1) of section 104 of the Act would not have resulted in any benefit to the Revenue. The assessee admittedly had distributable income of Rs.37,330 and was required to distribute 60 per cent. of the sum at Rs.22,398 for the assessment year 1975‑

76. The assessee, however, could trot make distribution within the period of 12 months immediately following the expiry of the previous year as the audit of the accounts was completed only on June 5, 1976. The audited accounts were approved and dividend declared at the annual general body meeting held on September 20, 1976. After the declaration was made at the general body meeting, the dividend was in fact, distributed and the amounts so distributed were in excess of 60 per cent. of the distributable income:‑ Held, that the Appellate Tribunal had found that the Government would not have secured any benefit if the dividend had in fact been distributed within a period of 12 months referred to in subsection (1) of section

104. In view of the finding, the Income‑tax Officer could not have made an, order under subsection (1) of section 104 of the Act. S.V. Subramaniam for C.V. Rajan for the Commissioner. Nemo for the Assessee. R. JAYASIMHA BABU, J.‑‑‑The question referred to us at the instance of the Revenue arising out of the respondent's assessment for the assessment year 1975‑76 is as to whether, on the facts and in the circumstances of the case, the Tribunal was right in holding and have valid materials to hold that the assessee was not liable to additional income‑tax under section 104 of the Income Tax Act, 1961, for the assessment year 1975‑

76. The assessee admittedly had distributable income of Rs.37,330 and was required to distribute 60 per cent. of the sum at Rs.22,398 for that assessment year. The assessee, however, could not make the distribution as the audit of the accounts was completed only on June 5, 1976, and the audited accounts were approved and dividend declared at the annual general body meeting held on September 20, 1976. After the declaration was trade at the general body meeting, the dividend was 'in fact, distributed and the amount so distributed were in excess of 60 per cent. of the distributable income. It was the contention of the assessee before the Tribunal that the Revenue had not suffered any prejudice by reason of such belated distribution of the dividend. The Tribunal, on a question of fact, has held as there is no detriment to the Government because of the postponed declaration of the dividend for the previous year. Nothing has been placed before us to show that the conclusion of the Tribunal was in any way erroneous. Subsection (2) of section 104 of the Income‑tax Act disentitles the Income‑tax Officer from making an order under subsection (1) of section 104 of the Act if he is satisfied, inter alia, that the payment of a dividend or a larger dividend, than that declared within a period of 12 months referred to in subsection (1) of section 104 of the Act would not have resulted in any benefit to the Revenue. The powers exercisable by the Income‑tax Officer and also the orders that could be made, can also be made by the Tribunal in appeal. The Appellate Tribunal has found that the Government would not have secured any benefit if the dividend had in fact, been distributed within a period of 12 months referred to in subsection (1). In view of the finding, the Income‑tax Officer could not have made an order under subsection (1) of section 104 of the Act and that is what the Tribunal has held and in our view; rightly. Our answer to the question that has been referred to us is, therefore, in the affirmative, in favour of the assessee and against the Revenue. As the assessee is unrepresented, there will be no order as to costs. M.B.A./317/FC ????????????????????????????????????????????????????????????????????????????????? Order accordingly.