1964 (7) TMI 2 - HC - Income Tax

Assessee is right in contending that section 297(2)(c) of the 1961 Act does not provide for appeal to the Supreme Court - petitioner is entitled to urge that his application under s. 66A(2) of IT Act 1922 is protected by s. 6 of the General Clauses Act

Summary

Issues Involved:
1. Calculation of reduction in rebate on total income.
2. Inclusion of share premium in paid-up capital.
3. Applicability of Section 78 of the Companies Act, 1956.
4. Right to appeal to the Supreme Court under the repealed Income-tax Act, 1922.
5. Interpretation of Section 297(2)(c) of the Income-tax Act, 1961.
6. Applicability of Section 6 of the General Clauses Act, 1897.
7. Interpretation of the Income-tax (Removal of Difficulties) Order, 1962.

Detailed Analysis:

1. Calculation of Reduction in Rebate on Total Income:
The Income-tax Officer calculated the reduction in rebate based on the total dividend and bonus declared during the year. The total income of the assessee was computed at Rs. 6,14,525, and the rebate was reduced by Rs. 61,000. The calculation was based on the paid-up share capital of Rs. 30,50,000.

2. Inclusion of Share Premium in Paid-up Capital:
The assessee's accounts did not disclose a separate share premium account. The sum of Rs. 45,50,000 received as share premium was transferred to the "reserve fund and other reserve accounts." The Income-tax Officer did not add this amount to the paid-up capital. However, the Appellate Assistant Commissioner and the Appellate Tribunal held that this sum should be added to the paid-up capital for calculating the rebate of super-tax.

3. Applicability of Section 78 of the Companies Act, 1956:
Section 78(1) mandates that premiums on shares must be transferred to a "share premium account." The Appellate Assistant Commissioner held that the sum of Rs. 45,50,000 forms an identifiable part of the bank's reserves and should be added to the paid-up capital. The court upheld this view, stating that Section 78 also applies to banking companies.

4. Right to Appeal to the Supreme Court under the Repealed Income-tax Act, 1922:
The petitioner sought to appeal to the Supreme Court under Section 66A(2) of the repealed Income-tax Act, 1922. The court acknowledged that the reference was pending at the commencement of the 1961 Act and should be continued under the old Act.

5. Interpretation of Section 297(2)(c) of the Income-tax Act, 1961:
Section 297(2)(c) states that any proceeding pending at the commencement of the 1961 Act shall be continued and disposed of as if the 1961 Act had not been passed. The court interpreted this to mean that subsequent appeals, including those to the Supreme Court, should be treated as a continuation of the old proceedings.

6. Applicability of Section 6 of the General Clauses Act, 1897:
Section 6 protects rights, privileges, obligations, or liabilities acquired under a repealed enactment unless a different intention appears. The court found no such different intention in Section 297(2)(c) of the 1961 Act, thereby protecting the petitioner's right to appeal under the old Act.

7. Interpretation of the Income-tax (Removal of Difficulties) Order, 1962:
Clause 4(1) of this Order prescribes that proceedings by way of appeal, reference, or revision in respect of any order made under the 1922 Act shall be continued as if the 1961 Act had not been passed. The court held that this clause does not exclude the right to appeal to the Supreme Court.

Conclusion:
The court granted the certificate for leave to appeal to the Supreme Court, overruling the technical objections raised by the respondent. The costs of the application will be costs in the appeal to the Supreme Court.