C I T Vs. MAHESH CHANDRA MANTRI

JUDGEMENT

(1.) The question for consideration formulated at the time of admission of the appeal pertaining to the Assessment Year 2001-02 reads as follows :-

(2.) It is apparent from the language of the clause quoted above that before any payment can take the character of dividend within the meaning of the aforesaid provision it has to be shown that there were accumulated profits lying with the company which made the payment. In the case before us it was never the contention of the revenue that any accumulated profit was lying with the company. Their case is that the company was having a reserve created from out of the share premium. How is the money received by a company, on account of the share premium, is to be accounted for and how can that money be spent has elaborately been provided for in Section 78 of the Companies Act, 1956.

(3.) Mr. Bhowmick, learned Advocate appearing for the appellant did not dispute that there were no accumulated profits lying with the company. His contention is that there was a reserve created from out of the share premium.