Commissioner of Income Tax vs Kabir Das Investment Co.

Kirpal, J.—In respect of the assessment year 1976-77, the Income Tax Officer invoked section 104 of the Income Tax Act, 1961, and levied additional tax of Rs. 18,540 on account of non-distribution of dividend. The profits which were available for distribution, according to the Income Tax Officer, was Rs. 37,083.

In appeal, the Commissioner of Income Tax (Appeals) deleted the tax after coming to the conclusion that, judged from business considerations, the non-declaration of the dividend was justified. The Income Tax Officer filed an appeal to the Tribunal. The Tribunal reiterated the reasons given by the Commissioner of Income Tax (Appeals) who, incidentally, had relied upon the decision of the Supreme Court in the case of Commissioner of Income Tax, West Bengal Vs. Gangadhar Banerjee and Co. (Private) Ltd., and had come to the conclusion that non-declaration of the dividend was, on the facts of this case, justified. The Tribunal took note of the fact that the respondent-company owed Rs. 5,78,000 to the holding company and repayment of that necessary, and, in fact, in the subsequent years, have raised loan to repay the said amount.

In our opinion, the question involved is a pure question of fact and nop of law. Whether the company was justified in not declaring dividend or not, having regard to the profit earned and business considerations, is a pure question of fact and no question of law arises.

Dismissed. No costs.