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Report No. 12

D-Additional super-tax on undistributed profits

113. Super-tax on undistributed income of certain companies.-

(1) Subject to the provisions of sub-section (2) and of sections 114, 115, and 116 [section 23A, sub-sections (2), (8) and (9)1, where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that previous year are less than the statutory percentage of the distributable income of the company of that previous year the Income-tax Officer shall make an order in writing that the company shall, apart from the sum determined as payable by it on the basis of the assessment under section 147 or 148 [23], be liable to pay super-tax at the rate of-

(a) fifty per cent. in the case of an investment company, and

(b) thirty-seven per cent. in the case of any other company, on the undistributed balance of the total income of the previous year, that is to say, on the distributable income as reduced by the dividends actually distributed, if any.

[Section 23A(1), part]

(2) The Income-tax Officer shall not make an order under sub-section (1) if he is satisfied-

(i) that, having regard to the losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable; or

(ii) that the payment of a dividend or a larger dividend than that declared would not have resulted in a benefit to the revenue.

[Section 23A(1), part]

Income-Tax Act, 1922 Back

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