Commissioner Of Income Tax, Madras v. M/S. P. S. S. Investments (P) Ltd

i7 ¥ mm N AUTRE TT, ARTTAT: HAG Wo Uo Uto TAgezawa (umgaz) fafats[The Commissioner of Income-tax, Madras M/s. P.S.S, Investments (P) Ltd.]oo.(9 Faraz, 1976)| (Fle THo Mito Tat WIT ato Mo Fo waz) gforr geen zea Caz, 1922(1922 BT 11)———aree 55—[aafea faa afafaaa, 1958--saq aqgal) %WIT 2% Tet Fy wr cacciacta] —fae afufaan, 19538aga agalart 2B Gergt wR ata fedeA at® fa faatfeat wr cat tat Farag se qdadh ad Fpeat a sf fear wrat——ataae & seage F fede -atarate cafa——areia & fare stad maiq kas a,a fe gaa qaadt wi, afaae & wave & fag fede. ayAUTAT BT MATTFl.: ssSfeenat sea faq daz, 1922 HF arer 66(1) & aitat fatet & facafafaa at seat wr aarcean ud faatfedd%cer Haar user % fees sat feat war s—(1) war amaeat * arare oe ate ofefeafaat F ata farce a ag fhedt afafaatica frat% fie preter Caz, 1959 at cee maga ®art 2 8 dar sy # ameite (1965-66 ® Gadery waeq agermiaaq169 #) wear wie 168 faa wfifran, 4) fae 1958 FH welt% welt starrer (1965-66 Fhe sa& gad atera *att & wet eT ofits feat art aifee feat a aniaaifad feat war @, we (2) wat atta afeacn F fate: aén ufafratfcr fear 2 fa worfateer dif F fre ex FR 830 fae at adtdt & sairared faaifett wert at anred get aywat aga H adt at art arfec: sea wararaa % fata Ffreg TATA VHC MRT aa TF ae Hse FT Fi AATAAT FEI BL, afafautica——to St A gress: Bratt Bl Ha “ATT TT 50sfana afreta az falga aad 21 sabora carreyagfrnt& faaten F feate at soata feat aa &1 seret at afer atGataat2, weatt fag feaz30 %, feral sft gaat at TC arodt Te THT& CAT orate ITT F eTAata aly a feazHateaeHt vg (Ga TogaE Hate (7) F ga Hat at frail arcaraqt amar HAa Aa seaina fear war g afe arate F wT Afaafea THA and Tat H 6 yfawa A afss F1 (FT 10)eqeeraen FH avs(iii) FA aa F aPTATTae ATAa fe va wan a, fae at Hag amarwmag fe ag‘grata ® ea F faafer at ave at, aaee Fae: fatecau Rafres aaa BT care H waarglar Fi SATs gs agaara fear mar? fae aiaia at cat cea aaarfea wetFH fag‘arm feat Sitar stat ¢ fara are Hoag AaaaT fs aa farettgeqat grt aaa afaaxe at frater aor & faq fede st Ararei ear ¥ wad ge faafer at we 81 ‘Gaadt ad% fa’ atk‘Se af® faw mdidag wiatnadie fe fee Foraycat ama & fae arate Ft ag can fas at 4 ag THe EAT fhag faafer at oreat, et are at aft ate aeY Fara_gitc afaardl et cea oz, Gait arftaat at etst eq. fare HTAT“gar feat & Far qdadt at Fa fe qaadt ash F ataaa araau we feu ait ave (iii) Tarate ave Ts ae OA OFmoral wae St we @ froh ale ag aaa area fe ag faaferat mS 21 Get HeTAT Ta HAT FT YHA TT Aes FTA FTrap aret fafza atait F fax wet. eu a salsa at Tat gIque (iii) % saz aren ga faced F ofr dat ae gf- arerera -SuferntPeat ar gait srftaat @ fers wert. HHA WT WIT aret ate afwarat at ear H waar diate feat a eeeqt Vaeund va ad F & afeag wal Hr ea ax fear weafaat arate faafta feat mat ari ag aa fe F ara wieafaara qaadt at } gd agtA ewe ge 8 ak wae F ar.afrafad 3 fr? amet ofafran % saad Fo adia ax Aweet at, afte gana wat & eae sa ate a are a MTA HUTAaifaarftat & ag wif2 feag Fea Gaadt ad F araat afaerat at feafe at earF wa) GeaaH eaters H waqArKat Sat ae gar aifec fe faa afafras, 1958 at yaa wageat2 edu st ¥ adte fedeFH aethh ay aaa aa Ffag ara att afaarat at ga feafe at,tt fe qdadt ad aa, av fe gas gaadi vata, sqrtF feat arat afew t (G7 11) fataa aatat afaartear : 1971 a fafan ato dent 1853 (@) 1966 # Ft ya Ae18 Wit 19 F asa seq Wit 19 F asa seq 19 F asa seq F asa seq asa seq seq‘aaa Fara 18 Ha, 1969 area facia wie area *faea 18 Wit 19 F asa seq Wit 19 F asa seq 19 F asa seq F asa seq asa seq seq aritarett at AI a Tat ato TA wate, Ho Tafa| WIR THe OtoAHto Uo UHART| saat aac a afa.@ afaaam adtarat eaeAsaat at site &| TO Sto AEXSSoft do uo UNA rararaa et fasta catatfasit wa ate wart A fear)rarattaafa @at——a ga fanaa i971 afafa attadenrisss(t) ae1854 #1 faqarerat waar AT Agta seq eqTaTaa % fore F (a79 Algo gto Ho 456 4H ofaafed feat wat4%) fase warmaaL aT aaaA HE aT 2, Ga fig H efeemy apy41 M of Law/77—26.oe COMMISSIONER OF INCOME TAX, MADRAS M/S. P. S. S. INVESTMENTS (P) LTD. November 9, 1976 [H. R. KHANNA AND V. R. KRISHNA IYER, JJ.] Finance Act, 1958, First Schedule Part IT, Explanation (iii) to par11-graph D-Calculation of rebate in computation of Super-tax, whether profits earned during previous year to be taken into account. c The Income-tax officer took into account the respondent's entire dividend income of the year ending December 30, 1957, while calculating the super-tax payable by it for the assessment year 1958-59. Jn appeal against the computa-tion the respondent contended before the Appellate Assistant Commissioner that the dividend-income included profits earned during the previous years, and that rebate should be reduced only with reference to the propartionate part of the dividend declared during 1957 which had come out of the other income assessed to income-tax. and super-tax in the assessment year 1957-58. The respondent's contention was accepted in pninciple. The Department's appeal was dismis.e<i D by the Appellate Tribunal. The matter was then referred to the High Court under section 66 ( 1) of the Indian Income Tax Act, 1922, and decided in favour of the assessee. Allowing the appeals the Court, HELD : For computing the reduction in rebate under paragraph D of Part H of the First Schedule to the Finance Act, 1958, the position of profits and gains as it existed in the previous year should be taken into account and not in the years prior to that Clause (iii) introduces a fiction with regard to the amount of dividends which shall be deemed to have been distributed. The taxing autho-rities have to take into account the company's total income and the profits and gains other than capital recJ'ipts reduced by certain allowances only in the pre-vious year, i.e., the year in which the dividend was distributed. The fact that those profits and gains accrued in ye·ars prior to the previous year and included· portions which were exempt from tax under the provisions of the Income-tax Act would not be of much relevance. [85 A-DJ CIVIL APPELLATE JURISDICTION : Civil .Appeal Nos. 1853 (A) and 1854 of 1971. Appeal from the Judgment and Order dated the 18th April, 1969 of the Madras High Court Madras in Tax Cases Nos. 18 and 19 of 1966. V. S. Desai, J. Ramamurthi and M. N. Shroff, for the Appellant. T. A. Ramaclwndran, for Respondent. The Judgment of the Court was delivered by KHANNA, J. This judgment would dispose of two civil appeals H Nos. 1853(A) and 1854 of 1971 which have been filed on certificate by the Commissioner of Income-tax against the judgment of Madras High Court (reported in 79 ITR 456) answering the following two questions referred to it in two references under section 66(1) of the Indian Income-tax Act, 1922 in the affirmative in favour of the assessee and against the revenue : "1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that for computing the reduction in rebate under Para D of Part II to the First schedule to the Finance Act, 1959 (in R. A. No. 169 of 1965-66) and of Finance Act, 1958,(in· R. A. No. 168 of 1965-66) in the composition of profits of the year from which the dividend had been declared should be looked ·into, and 2. Whether the Appellate Tribunal was right in law in holding that the paid up capital of the assessee company should be proportionately reduced for the purpose of reducing the rebate in Corporation Tax in the manner direc-ted." daq daz, 1922 at aret 66(1) ¥ aeteat faemt F fafacefacafafad at seal ar aarcens, frathat F cet F ate WaTa fees sat feat wat aT— “1, eat are & aah F arare ae ate ofefeafaat oder aferen 3 ag ste a afafraifer fear t Taz, 1959 AY ITH HATA Fa 2H AT st wera a media (1965-66 Faden gaat Feat 169 FA) Axfaa ufafram,i958 % melt(1965-66 F Fatemaar dear ies H) fede Avett at amasfar vaag & arat # aot ar ofettest feat oat arfau frata arara aifaa feat war.zg, atk ae ste afalratiea 2. aT aire afer F fafa: feat 2 fe aor fafece ta F fara ae FF fede atweld & waters fratfedt wea at eared gait at vatmage Haat at oral arige 1’ 2. ag aTaaT sera ara } frateorag 1958-59 atc 1959-60 &frater & aracfar 21 gfrar Hfac ea set fratag 1958-59 & arated weal ay soafe He 1 veaTe aTag array cara g fe va ae } art H ag fafreay cat aya arafad afaare Fag st at am grrr frater aT 1958-59& faa gama arta 31 fearat, 1957at ware aA arta¥ eaAy 99.000Va aT arta atfea frat gaat aATedGat 1,65,000 wa Atfaatfedt wert73,255 waa feat wat aT freafafad & fatat gor we arr aT at ataT| 3. faatfadh wrod F afer at sodad ara Te aTafea wit aan aaa (aia)* aaa aia seqa ayfagifedt at aie. & ag fraaa feat wat fe 1957 41 wartait aay ad F crea cifer 99,000 wa aTaraia Ga am= art # & fear vat at at 31 fearax,1956 FT TATAem at. fratfedt % maare frater ad 1957-58fat,eragfaatet at dat aie ae wrt Got 1,74,196 ara aftaferwa 1t at, ag frat fret Pear1,10,105 aafe 99,000 St ¥ aaAT FT -1,10,105 wa FT wawit 64,091 Ta A wea a F Aa warad,Ta Te Aa Ht at eam H xed H qeerq fear say arfeqi faethe 4ga sat ay amor farafafad eqHay e-— amaafaata osha arf,.44,279HTAT BA HA BU faatfea gai afray=|75,423HC BR FA HLA BAGAT-..22,492 faatfcdt & ag arar feat fe fedeFo Ha Fae 15,659 IT,ai Uf & ofe gd at oral arfee at fe31 faaraz,1957ay vara aa ara ga ag & cheat sifet arate ar araaianam @ at faster at1957-58 A araat ait afaacatfraifea sre & & fear war ati15,659wa aUTfaatita: a fartiafaa ea F frat at— 4. terme maar(ara)A fratfedtat aeactiafaareaa: carat Bt af fae arate H sea Te Ga ae F aaa*osfa fade axa ex faare fHar.arar aifeq1 feeg var75,423 wa % oot afwarat #t 22,492 emg at ute Fara afar wea gu, mae Tate ai sea Ufe amitat dat fe ai® afea feat aot 2—: ESTA AT,—aifea arate.Jotete)|". 97,915=arseX 99,000arya1,42,194 wer ataat (ait) F fea are oe wt waar at att fataqt Ht agl TAT TAT aT sah arate az, waraa faa fear,stat fe gemma & afer fear wat at, Aaa Gal FT 1,65,000way St VAT| 5. faamt 4 ga fava4 wiia afaawrF ane aiaal. wfanw a ag afafratiea wea et adit afer at alfe fra afafarn, 1958 a san aaa Boat 2% Fer ste eacdipem(iii) * ada ‘qa aa’ Fat va ga ay F atafate axat 2 faah arat FF araiat a ator ai we atait zafau aradl % va areal we ufaarat ¥ sa dacat aT,fart & ararr afer fac ame4, faa afaftra,1958 aTTIT aga Hart2 8 Ga A HemsiaeT (ii) F aaasata faarat % faq ofeetiat feat oat att| 6. MATHY ALUT TL BALEI WIT Vas WaT Teaararaa Ht fafece feu aFt| 1,42,194 99,000 × 22,492 97,915 99,000 The matter relates to the assessment of the respondent company for the assessment years 1958-59 and 1959-60. For sake of con-venience we may set out the facts relating to the assessment year 1958-59. It is the common case of the parties that the decision about that year would also govern the point of controversy relating to the other year. The assessee is a private limited company. In the previous year ending on December 31, 1957 relevant for the assessment year 1958-59, it declared a dividend of Rs. 99.000. Its paid up capital was Rs. 1,65,000. The total income of the assessee company V.'a.'i determined at Rs. 73,255 made up as under : As the dividend of Rs. 99,000 declared by the assessee company was in excess of 6 per cent of the paid up capital of the company, the Income-tax Officer worked up the super-tax payable by the assessee as under : The assessee company objected to the above computation of the super-tax and took the matter in appeal to the Appellate Assistant Commissioner. It was urged on behalf of the assessee that the dividend of Rs. 99,000 declared during the year ending 1957 was out of the profits of the previous year which ended on December 31, 1956. According to the assessee, the dividend income determined for the assessment year 1957-58 was Rs. 1,74,196 which included capital gains to the extent of Rs. 1,10,105. The dividend of Rs. 99,000, it was urged, should be apportioned between the capital gain of Rs. 1,10,105 and the other income of Rs. 64,091 after taking B mto account the tax payable thereon. The assessee computed the figures as under : The assessee claimed that rebate should be reduced only with reference to the sum of Rs. 15,659 being proportionate part of the dividend declared during the previous year ending on December 31, 1957 which had come out of the other income assessed to income-tax and super-tax in the assessment year 1957-58. The figure of Rs. D 15,659 was arrived at by the assessee as under : 99,000 x 22,492 l ,~2,194 The Appellate Assistant Commissioner accepted in principle the assessee's contention that the components of the dividend should be considered with reference to the profits of the previous year. He, E however, computed proportionate dividend at a higher figure by in-cluding the capital gains of Rs. 75,423 with the sum of Rs. 22,492 as shown below : The Appellate Assistant Commissioner retained the paid up capital at Rs. 1,65,000 as per balance sheet without apportionment on the basis of ·taxed and non-taxed income. The department took the mat:er in appeal to the Appellate Tri-G bunal. The Tribunal dismissed the appeal holding that the "previous year" under Explanation (iii) to Paragraph D of Part II to the First Schedule to the Finance Act, 1958, refers only to the previous year out of the profits of which the dividends were declared and therefore tl1e composition of the profits and gains of the company out of which dividends were declared had to be looked irito for work-ing out the proportion under Explanation (iii) to Paragraph D of H Part II to the First ·Schedule to the Finance Act of 1958. · At tlle instance of t~e Commissioner, the questions reproduced above were thereafter referred to the High Court. 7. saa aaaH ana waF aseHi We awe fader fear wat fe seanat faite ad & gana vat aye dua ait & faafarwetHsrealagat3fat anfeafea ofafor&adaafeet Aamar art& faa faare A fear arar ata2%1 ae faaaafratafta aratwot fe ag & aratad aea fe 8, Wa aga wa aaa ser asdat ¥ gaadtadl adat ate ¥ cheat faaatafaaa FT staat feu me va afsac A fae ai arat faaratH sasTaTs sai Masta Hel se| gatare ae faderfear am fe farot at ag watt war aa fae a} aTHATait a fac wana wrett ¢1 gah fata faaifedisr area oag fader for vor fe afe ga aah ay watear at aTatdt frat ara ediga.eq & afaa fee ac F six farm ®fafaratia ar F orare ax fac at anuat wer # farmattefrat wat at at ag waredfas oT,| Sea ATATAAA firey ofa [1977] 4 3H0 fto qo 836 49 eae earatery fafese sea ar fautfedt # cer F ax used F faeg vatad gu farafafadwa ear feat— “ga:, afe ‘faaco’at werd & arate caer Foformeaeq ga wart fattena& ea F aaaarat aar & a aot ag fade at sa mar %, fireattarad) feat fare faa afafram & ala searat fatifraa act & fae afsart aca at aaat & ?afe va ay ox frat farer feat sar % faa afatrane satawie fede al arat & maaren ge fastfeat atat & at gear ofeora fete ai cafe A faaateetarafret arodt & fae maear wae at aatieqaafad & aaifat Git weaqwear amet gi wie ceazreafan ara sfeeatr F faa tt aalfe# aét areai aa at ana & fe feet faaay Ho wa aan at faacn ax fear var @, aAledgst 4 garkata wl ae a) are waar afe Ht a) TTT|wa Ta wAted Gat st fae) arrdt aryom waart arte waat waar gt art aval at frat® faa afafea eo F aca ahr? gare ag cfeeatre fe a at ae faarameea at ora At ate a ZTsah Baral FT ag afeaqat manta st st AHA aT|qe’aeqa: oz ot warefaa afaftan, staat1958 2, ‘faaun’ a7 eadtecm wea & fazeot ‘ane atgat fat@|‘aated Get’&31Ata,1959at ara et ara fratcr ay a gant ga as F TIAfat at Heady Ht AAS Ga afasa sa: ae aa Save gs fHfaaien ag & chr ara) at aared git F art aag wel wer at anat fe ag faa afafaaa, 1958 aTrat ae BT2Ger StF ganas va ayal aatan ost@ feat ara ge a ate fad a fraterag % cher aria facia few ae Ff 1” >}of MITHT AMAT To AAA To Wo Wao Faaeerea [FYTo TAT] 837 s. 2) a actatot faa act & gt gana soaofa fade arar ofaa si1 efesat sewn coq Vaz, 1922 afqT 55 F gaat feet at % few safer orcax F fatefra)oofte, fare afawat gera,seri,cardia srfrara,—oataetad wa aarar cofsaal @ oer aT FH aaeal Te cafeaTdeT a ga ae Hl Ee wT Hl Tad va as H faq wrTHr aTafafaa wea (faa ga afefray F afanx ser wat) FTafafan gra ga ag & fac afaafsar oc ar Ri ae carted,wardta. att daafeat oem1faaafafrrm,1958(1958.aT11) a are2 ¥ ave (at)F wea aat &aa-arg ag siatera & fe gaara’ (2) ate (3) ¥ sraat%, fare gare are adare sgl %, wea 1958 F wT Fsan fet at we ata ata ag F fry—|*(@q) efosqa gna Zea 4c, 1922 (1922 aT 11)(fat eet gad qearq araae afafrrn wet TAT2)at ur55 & vataafeet same nage.& art 2% fafaface wad oz warfea frat area meq wat # gart waar faa afufraw, 1958 a1 9ammtg& aT 2% Ge HT as|adaFUT Fl aATT AMTqq THT J, tks aHT BT EL Bt UH AT KITA BY AMT F-— tga FF sa wae B— “(b)super-taxshall,for the purposes of section55 of theIndianIncme-taxAct,1922(XIof1922)(hereinafterreferredtoasthe Income-TaxAct)becharged at the ratesspecifiedin partHt of theFirstSchedule.” **<“Rate of Super-Tax In the case of every other company, $38 0 SeaaH earaTey facta afamt = [1977] 4 THe fre go afeat ay ee .STFA ATIT 50 wfaara Tw 4a fR-- In appeal before the High Court, it was argued on behalf of the revenue that dividends having been distributed during the accounting year relevant to the assessment year in question, it is that year alone which has to be taken into consideration for calculating the super-tax under the appropriate Finance Act. The fact that such profits were traceable to the profits earned during the ·year prior to the accounting year, according to the submission, was not of significance and had to be ignored for the purpose of working out the quantum of rebate in such super-tax made available in the Finance Act. It was accordingly urged that the year of distribution, namely, the accounting year, is the only basis for the calculation of the rebate. As against that, it was submitted on behalf of the assessee that it would be unreal if the years in which the profits had been admittedly earned was to be ignored and reliance was placed for calculation of rebate on the ministerial act of distribution. The High Court, while answering the questions referred to it in favour of the assessee and against the revenue, observed us under : "If, therefore, 'distribution' is thus to be understood as a ministerial act resulting from the indoor management of the company, can that be the sine qua noll to decide the question of quantum of rebate to which the company would be entitled under a particular Finance Act? If the year in which distribution is to . be effected is considered for pur-poses of the Finance Act and for the determination of the quantum of rebate, then it would result in a notional imple-mentation of the benefit contemplated by the Iagislaiure to a company in the nature of a rebate and would not amount to a realistic approach of such a vital problem connected with the finances of the company. It may be that in any particular year when distribution of dividends have been made, the paid-up capital might have been reduced or in-creased, as the case may be. Is that paid-up capital going to be taken as the basis for working out the relative bene-fits or disadvantages to be enjoyed or suffered by a com-pany? We are of the view that it is neither the intention of the legislature, nor could it be said to be a reasonable inference of the provisions thereto. In fact, the Expla-nation to the Finance Act, 1958, which elucidates the term 'paid-up capital', gives the key to the interpretation of the word 'distribution'. 'Paid-up capital' means the paid-up capital of the company on the first day of the previous year relevant for the assessment year ending on 31st March, 1959. It is, therefore, clear that the paid-up capital of the company during the assessment year cannot be said, for purposes of Paragraph D of Part II of the First Sche-dule to the Finance Act, 1958, to be the paid-up capital of the year in which the profits arose and from which divi-dends were distributed during the assessment year." Before dealing with the contentions advanced, it may be appro-priate to refer to the relevant provisions. According to section 55 of the Indian Income-tax Act, 1922, in addition to the income-tax 7-1458SCI/76 According to section 55 [1977] 2 $.C.R. (ii) Prat anagt area aed & arid a|faa et aaa art ga arr at 40 sfawa a ex Oz|fede ate Fa ara & afaas ot 30 sfana w fae feetGat aratt at cart gaara at aredt a oad (a) atqu Fal @,5 feeg qaadtSs avs st wtS (a) at. ger= el.HU Sy TUT AZ Ale fH, (i) qos (1) waar (ii) * welta fede at HR aAGal uf, afe arg at, wa at at orem at aanftafa cataT aafra cer gear cHAt B at B auaz F-— Rates of Super-Tax ~ On the whole of the total income................50% :Provided that,— of the(ii) total a rebate income at asconsists the rate of of 40 dividends per cent from onso a much sub-'30 §tdiary per Indian cent on Company the balance of and a the rebate total at income the rate shall be ofallowedinthe case of any company whichsatisfiedcondition (a) but not condition (b) of the preceding clause; aProvided further that,-. _., @the amount of the rebate ‘under clause(i) or_Clause (i) shall bereduced by the sum,if. any, equalto the amount or the aggregate of the amounts, as the casemay be, computed as hereunder :-—— - 47 (t) gam afaftar gaat vega ® ave(ii) Ffaface fret tat arady al amt F frat ga ag % ahaaary gatarcat wt wat Tata TT F 6 sfaaa a alasarin faatfta fer %, ay ta arara z ot faaa ax 7%aaa Tél g-— (am) Cet array at carHF at cat adt Zfart sft araat atafaaa al arr 23 al Sqeet (9) F fadw feat vat g— BHT ATHTM HFT ATT IT aH 6 Waa10 sferaraa afas % feed ar ane Teteal et gz10 Tfaaa & afew at ze HT AMM FST AT TL FT FATT-20 sfaaaast & 10 sfama & afew egHT AT TL STCANHU——SH TU B IATATTGi) oe—_ (c)in additionin the case of a company referredtoinclause(ii)ofthepreceding proviso. whichhasdistributedtoits -shareholdersduringthepreviouscapital,year dividends not beingin dividends excessof payable six per centat a fixed of its rate...... paid-up(A)in the case of a company which isnotsuchsection23A asisofthereferred Income-Taxtoin Act—sub-section(9)ofOn that part of the said dividends whichat theexcessed6percent, but does notrate of-exceed 10 per cent of the paid up capital:10%On that part of the said dividends whichat theexceeds1-1/2 per cent of the paid-uprate ofcapital.20 %Explanation—Forthe purpose of this paragraph 840 | veaan earoraa facia cfant = [1977] 4 BH fo To (it) Set arcat & aral ate afwarayaH fatart BT want afafaaa H feat soaca H aella Ua featATTFT HC A Ge Ira git F HTT sual Hat aa F.oferta ae} fear sat & aeat aeodt ay ‘eared aay’,ataiat & wr F faafta wen (aT Ta arate agl z stfrat at ot dey gt) feel aaa Tad ai atari- at fa ag feat tae at wee ah afsa aca ar ferHU Feat THU, ST TH BT GAHT CAT AT FART ATTAT|var fe qa ag & far arqdt at ga ar sa at % farasta siftaat & faa ga arat ate afwearat ¥ sfs z,fart a va ara ae az fer act a area afafaraah watt wre sl, fare Bradt A va ag H faa Hradl Fary att fs ae F cara A aat fear &1”;9. aravaHt are J ot arsFX gat ana aAtla Wagfader fear g fe seat frat ag & arag taraysaaa%, facia fer artF area saa set ay F arat akafraratat afaat ht sarea fete St arora wea aaa frat% faa. oar afer1 fae area F mqare ae gear fH taramie sas gaadt aut a afsa arat 4 & faafea fear wara, WAT A| sa aed A faa afafran, 1958 at TaN “WATT,eA2H Ft Tt TH eqediacn |e (ili)at ast ot fas Ft Tt TH eqediacn |e (ili)at ast ot fas Tt TH eqediacn |e (ili)at ast ot fas TH eqediacn |e (ili)at ast ot fas eqediacn |e (ili)at ast ot fas |e (ili)at ast ot fas (ili)at ast ot fasat ast ot fas ast ot fas ot fas fas (ii) chargetl for any year there shall be charged, levied and paid for t:Jlat year in respect of the total income of the previous year of any individual, Hindu undivided family, company, local authority, un-registered firm or other association of persons, not being a regi.Stered firm, or the partners of the firm or members of the association indi-vidually, ali additional duty of income-tax (in this Act referred to as super-tax) at the rate or rates laid down for that year by a Central Act. Clause (b) of section 2 of the Finance Act, 1958 (Act No. t1 of 1958) provides, inter alia, that subject to the provisions of sub-sections (2) and (3) with which we are not concerned, for the year beginning on the first day of April 1958. "(b) super-tax shall, for the purposes of section 55 of the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the Income-tax Act), be charged at the rates specified in Part II of the First Schedule." We are concerned in the present case with Paragraph D of Part II of the First Schedule to the Finance Act, 1958. The relevant part of the above paragraph reads as under : RATE OF SUPER-TAX In the case of every other company,-RATES OF SUPER-TAX On the whole of the total income .................. 50% :-Provided t'hat ,- (ii) a rebate at the rate of 40 per cent on so much of the total income as consists of dividends from a subsi-diary Indian company and a rebate at the rate of 30 per cent on the balance of the total income shall be allowed in the case of any company which satis-fies condition (a) but not condition (b) of the preceding clause; (iii) Provided further that,- (i) the amount of the rebate under clause (i) or clause (ii) sliall be reduced by. the sum, if any, equal to tlie amount or the ag:gtegate of the amounts, as the case may be, computed as hereunder : ............ . (c) in .:addition, in the case of a conij>ariy referred to m c;lause. _(n) of the preceding proviso which has distributed to I!S shar~holders during the previous year dividends in excess of s~ per cent of its paid-up capital, not being divi-dends payable at a fixed rate- ill the case of !l ctihipahy whkh is not ~uch as is referred m ill sub-section (9) tlf section 23A of the bit:ottie-tax Act :- oh that part of the said dividends which exceeds 6 per cent, but does not exceed 10 per cent of the paid-up capital; at the rate of 10% on that part of the said dividends which exceeds itl per cent of the paid-up capital; at tlie rate of 20% Explunation/-For the purpose of this patagraph- (ii) (iii) where any portion of t~e profits and gains of the company_ is not includ()d in its