TORRENT PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PETITIONER has challenged an order dated 26th March 2004 passed by the Commissioner of Income Tax, Ahmedabad in a petition filed by the petitioner under section 264 of the Income Tax Act, 1961 ( the Act for short). Brief facts are as follows:

(2.) THE petitioner is a company registered under the Companies Act. One Torrent Power Limited had on 4th September 1999, declared interim dividend of Rs.53,90,62,550/- and also paid out such sum to three shareholder companies in the following manner:

(3.) TORRENT Power Ltd. had after the effective date of amalgamation, but before the same was actually sanctioned by the Gujarat High Court, declared and paid out total dividend of Rs.53,90,62,500/- to three shareholder companies in the above noted proportion. The said Company had also deposited with the department the dividend distribution tax of Rs.5,92,96,875/-. On the ground that upon amendment of different companies into Torrent Investments Ltd. with effect from 1st August 1999, the dividend declared by Torrent Power Ltd to the three shareholder companies would cease to bear the character of dividend, in the return that the petitioner filed for the assessment year 2000-01, on 30th November 2000, following note was placed: