Delhi Farming And Construction (P) Ltd vs Commissioner Of Income Tax, Delhi

The Supreme Court addressed the applicability of Section 104 of the Income Tax Act, 1961, concerning the failure of a company to declare dividends due to accumulated losses. The Court held that the Income Tax Officer's assessment was erroneous as the company had valid reasons for not declaring dividends, including significant past losses and the prudent decision to capitalize compensation received from compulsory land acquisition. The Court ruled in favor of the assessee, setting aside the levy of income-tax under Section 104 for the assessment years 1974-75 and 1975-76.