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Commissioner of Income-tax Vs. Sahibganj Electric Cables Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 41 of 1969
Judge
Reported in[1983]144ITR422(Cal)
ActsIndian Income Tax Act, 1922 - Section 23A
AppellantCommissioner of Income-tax
RespondentSahibganj Electric Cables Pvt. Ltd.
Excerpt:
- .....income of the assessee as computed by the ito. this amount, that is to say, the amount of total income as computed by the tribunal after upholding the deletion of rs. 40,000 and confirming the addition of rs. 40,000 has been taken into consideration by the tribunal in considering whether there was a distributable surplus. but the tribunal has taken a figure of tax liability of rs. 35,000 on the basis of the addition of the entirety of rs. 80,000 from undisclosed sources. now, that cannot be the correct position, because the tax liability has to be computed on the income upholding the addition of rs. 40,000 and not rs. 80,000. after that tax liability has been computed, it will be possible to determine the question whether there was a distributable surplus andwhether the order under.....
Judgment:

Sabyasachi Mukharji, J.

1. The question involved in this case is whether the Tribunal was right in holding that the order under Section 23A of the Indian I.T. Act, 1922, was not justified in law.

2. It appears that there was an addition of about Rs. 80,000 made by the ITO as from undisclosed sources. The ITO added these amounts on the ground that the alleged loans covering these amounts had not been proved satisfactory. The assessee disputed that amount up to the Tribunal, but, before the Tribunal the assessee accepted the position that out of Rs. 80,000, loans amounting to Rs. 40,000 were not genuine. Therefore, the Tribunal sustained the addition of the loan of Rs. 40,000 but deleted the other Rs. 40,000. We have today confirmed the said deletion of Rs. 40,000. But the fact remains that Rs. 40,000 of the loans were deleted from the total income of the assessee as computed by the ITO. This amount, that is to say, the amount of total income as computed by the Tribunal after upholding the deletion of Rs. 40,000 and confirming the addition of Rs. 40,000 has been taken into consideration by the Tribunal in considering whether there was a distributable surplus. But the Tribunal has taken a figure of tax liability of Rs. 35,000 on the basis of the addition of the entirety of Rs. 80,000 from undisclosed sources. Now, that cannot be the correct position, because the tax liability has to be computed on the income upholding the addition of Rs. 40,000 and not Rs. 80,000. After that tax liability has been computed, it will be possible to determine the question whether there was a distributable surplus andwhether the order under Section 23A of the Indian I.T. Act, 1922, was not justified in law.

3. Therefore, the matter is referred back to the Tribunal. The Tribunal will dispose of the matter by taking into consideration the tax liabilities on the total figure as computed by the Tribunal and thereupondecide the question whether the order under Section 23A of the Indian I.T.Act, 1922, was justified or not.

Sudhindra Mohan Guha, J.

4. I agree.


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