COMMISSIONER OF INCOME TAX Vs. DAMODARAN V

JUDGEMENT

(1.) THE following questions have been referred by the Income-tax Appellate Tribunal, Cochin Bench, under Section 256(1.) of the Income-tax Act, 1961 :

(2.) QUESTION No. 1 was referred at the instance of the Commissioner of Income-tax, Kerala, while question No. 2 was referred at the instance of the assessee. The reference relates to the assessment year 1959-60, the accounting year being the year ending on March 31, 1959.

(3.) IT was contended by the assessee that the profits of the company for the year ending March 31, 1959, do not form part of the "accumulated profits" for ascertaining the dividend under Section 2(6A)(e) of the Income-tax Act, 1922, and in arriving at the accumulated profits Rs. 11,000 provided towards tax liability and Rs. 6,900 for payment of dividend already declared should be deducted from Rs. 18,950.98 representing the profits of the company as on March 31, 1958, and if so the accumulated profit is only Rs. 1,050. The sum of Rs. 1,050 was worked out by the assessee in the following manner :