Case: M. R. M. Plantations P. Limited Vs. Commissioner of Income Tax

The case of the assessee is that even if it has sold the rubber plantation, the profits derived from the sale of plantation should not be taken into consideration for the purpose of imposition of tax under section 104 of theAct, 1961. The contention of the appellant is that only profits and gains arising out of trading activity can be taken into consideration for the purpose of deciding the question whether the company had distributed the requisite percentage of dividends out of its profits.

Court's reasoning:
But we see no reason why such gains made by investment companies are not available for distribution as dividend to its shareholders. There is no finding of fact that the assessee, as a prudent business man, had to retain the entirety of the gains for any legitimate requirement of the company. Section 104 is very clear. A certain percentage of profits or gains made by the assessee will have to be distributed as dividends, otherwise an order under section 104 will have to be passed. There is no dispute that the company is a section 104 company.