Madras H.C : Whether, on the facts and circumstances of the case and having regard to the provisions of s. 104(2) of the IT Tribunal, the Tribunal was right in holding that the dividend declared after the expiry of the period of twelve months from the end of the relevant previous year, should also be treated as dividend declared for the purposes of s. 104 ?

JUDGMENT

R. JAYASIMHA BABU, J. :

The Tribunal has found that there was no detriment to the Revenue because of the postponement of the declaration of the dividend for the previous year. The Tribunal has, therefore, held that the order under s. 104(1) should not have been made by the ITO for the asst. yrs. 1977-78 and 1978-79. In these years dividend was found to have been declared after the expiry of the period of twelve months from the end of the relevant previous year. This Court had occasion to consider the facts and circumstances similar to those found in this case in the case of CIT vs. Sawhany Trading Co. Ltd. (1999) 240 ITR 242 (Mad). It was held therein that in the light of the finding of the Appellate Tribunal that the Government would not have secured any benefit if the dividend had in fact been distributed within a period of twelve months referred to in sub-s. (1) of s. 104, an order under s. 104(1) should not have been made.

2. In that decision, this Court observed that sub-s .(2) of s. 104 of the IT Act disentitles the ITO from making an order under sub-s. (1) of s. 104, if he is satisfied, inter alia, that the payment of a dividend or a larger dividend than that declared within the period of twelve months referred in subs. (1) of s. 104 of the Act would not have resulted in any benefit to the Revenue. The Court also held that the powers exercisable by the ITO and the orders that could be made by him, could be exercised and made by the Tribunal in appeal.

3. In the light of the finding of the Tribunal that the Revenue would not have secured any benefit if the dividend had in fact been distributed within the period of twelve months referred to s. 104(1) of the Act, the Tribunal was right in holding that the order under that provision should not have been made by the ITO. We, therefore, answer the question referred to us, namely, “Whether, on the facts and circumstances of the case and having regard to the provisions of s. 104(2) of the IT Tribunal, the Tribunal was right in holding that the dividend declared after the expiry of the period of twelve months from the end of the relevant previous year, should also be treated as dividend declared for the purposes of s. 104 ?” in favour of the assessee and against the Revenue.

[Citation : 248 ITR 249]