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TMI Blog1964 (3) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... d dividend was in excess of 6 per cent. of the capital investment. In the assessment year 1957-58, the assesseecompany was assessed on a total income of Rs. 61,69,943. For the purpose of computation of super-tax from the aforesaid assessed income, a sum of Rs. 4,67,705 was deducted, being the capital gain included in the total income on which the corporation tax was not payable. Thus the total income was reduced to Rs. 57,02,238. According to the provisions of the Finance Act, 1957, the corporation tax payable by the petitioner-company at the rate of 50 per cent. was calculated at Rs. 28,51,119. From this amount, a rebate at the rate of 30 per cent. was granted to the petitioner company, it being entitled to grant of rebate according to the provisions of the Finance Act. The rebate granted at the rate of 30% amounted to Rs. 17,10,671.40 nP. In the previous year relevant to the assessment year 1957-58, the petitioner-company had declared dividends and it appears that the dividends declared exceeded 6% of the capital investment. Under the provisions of the Finance Act, therefore, from the aforesaid amount of rebate determined there was a withdrawal to the extent of Rs. 1,27,971.20 nP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lkhivala the learned counsel for the petitioner-company contends that the aforesaid order made by the respondent on the 29th of January, 1963, is without jurisdiction. His argument is that the condition precedent for the exercise of jurisdiction under section 35 of the Act is that there must be a mistake apparent from the record. It is only if there is a mistake apparent from the record, the respondent-Income-tax Officer would have jurisdiction to rectify that mistake in exercise of his powers under section 35 of the Act. In support of his argument, Mr. Palkhivala referred us to decisions reported in the following cases : (1) M. Subbaraja Mudaliar v. Commissioner of Income-tax (1), (2) M. L. Janardhanan Pillai v. Income-tax Officer, Alleppey (2), (3) Ramniklal Tribhowandas v. V. R. Amin, First Income-tax Officer, C-II Ward, Bombay (3), (4) Walchand Nagar Industries Ltd. v. V. S. Gaitonde, Income-tax Officer, Companies Circle I(3), Bombay (4), (5) Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale (5). Mr. Palkhivala states that by the impugned order the respondent has corrected a mistake, which, according to the respondent, was apparent from the record. He has w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. Ultimately, the Supreme Court decided that a levy of tax on excess dividend was bad in law. The assessee-company then made an application to the income-tax authorities under section 35 for rectification of the assessment order by deleting from the calculation the amount levied by way of additional tax in respect of excess dividends. The assesse company claimed a refund of that amount. The Income-tax Officer held that though the Supreme Court has held that the levy of income-tax on excess dividend was bad in law, he could not rectify that mistake as that was not a mistake apparent on the face of the record. The assessee-company filed a writ application under article 226 of the Constitution of India. This court held that a mistake to be a mistake apparent from the record may be a mistake either of law or of fact, but it must be one, to point out which, no elaborate argument or debate is required. In M. Subbaraja Mudaliar v. Commissioner of Income-tax (2), the provisions of section 35 were considered by Mr. Justice Rajagopala Ayyangar, as he then was. At page 230 of his judgment it is observed that " the jurisdiction of the officer to rectify a mistake is dependent on the mistake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by making the law operative from April 1, 1952. According to the amended provisions the amount of interest taken into account was in excess. The Income-tax Officer, therefore, purporting to act under section 35 of the Act called upon the assessee-company to pay back the excess amount received by the assessee-company by way of interest on the amount of advance payment of tax made by the assessee-company. The order of the Income-tax Officer was challenged in this court. This court held (1) [1958] 33 I. T. R. 111.(3) [1955] 1 S. C. R. 1104. (2) [1960] 1 S. C. R. 890.(4) [1958] 34 I. T. R. 143.that the mistake which the Income-tax Officer purported to correct was not a mistake apparent on the face of the record within the meaning of section 35 of the Act and therefore he had no jurisdiction to correct it under section 35. On appeal to the Supreme Court, their Lordships, reversing the decision of this court, held that it was a mistake apparent on the face of the record. Their Lordships observed that " a glaring and obvious mistake of law can be rectified under section 35 as much as a mistake of fact apparent from the record. " The other decision is the oft-cited decision of their Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld (1) [1955] 1 S. C. R. 1104. govern the assessment of the petitioner-company for the assessment year 1956-57 and the Finance Act of 1957 would govern the assessment of the petitioner-company for the assessment year 1957-58. The portion relevant in the aforesaid clause D of the Finance Act of 1956 is in the following terms : PART II Rates of super-taxRate D. In the case of every company-Six annas and On the whole of total incomenine pies in the rupee. Provided that(i) a rebate at the rate of five annas per rupee of the total income shall be allowed in the case of any company which ....... Provided further that(i) the amount of the rebate under clause (i) or clause (ii), as the case may be, of the preceding proviso shall be reduced by the sum, if any, equal to the amount or the aggregate of the amounts, as the case may be, computed as hereunder : (a) on the amount ..........at the rate .................of two annas per rupee (b) in addition, in the case of a company referred to in clause (ii) of the preceding proviso which has distributed to its shareholders during the previous year dividends in excess of six per cent. of its paid-up capital, not being dividends payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him, even though the petitioner-company had declared dividends in the previous year relating to the assessment year 1956-57 in excess of 6 per cent. of paid-up capital, the provisions of subclause (a) of clause (i) of the second proviso to paragraph D of Part II of the First Schedule of the Finance Act, 1957, were not attracted inasmuch as in the previous year relating to the assessment year 1956-57 the petitionercompany's total income was found to be nil ; there was, therefore, no question of calculating any tax or super-tax payable by the petitioner-company, and consequently no occasion also arose to prove to make an account for reducing the amount of rebate. At any rate, Mr. Palkhivala contends that the question is a debatable one and the view taken by the Income-tax Officer cannot be sustained without the aid of elaborate and detailed arguments. The mistake, even if any, therefore, was not an obvious mistake on the face of the record which could have been corrected in exercise of powers under section 35 of the Act. Mr. Joshi on the other hand contends that the position in law is clear and self-evident, and on a mere reading of sub-clause (a) of clause (i) of the second provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in excess of 6 per cent. during the previous year relevant to the assessment year 1957-58. Sub-clause (a) of clause (i) of the second proviso to paragraph D of Part II of the First Schedule to the Finance Act of 1957 relates to the computation or determination of the amount that has to be deducted from the rebate by reason of excess dividends paid not in the previous year relevant to the assessment year 1957-58 but by reason of excess dividend paid in the previous year relevant to the assessment year 1956-57. No doubt, the said sub-clause (a) enacts a measure of computation of the amount by which the amount of rebate has to be reduced on this count but it also specifies the amount of excess dividend in respect of which the reduction has to be computed or calculated. When we turn to the said sub-clause (a) of the Finance Act of 1957, we find that it provides for reduction of the rebate by the sum computed on that part of the sum as is referable to that amount of dividends " which has not been deemed to have been taken into account in accordance with clause (ii) of the said proviso for the purpose of reducing the rebate mentioned therein to nil. " The computation of reduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year relevant to the assessment year 1956-57, no question of computation of super-tax arose. Therefore, no question of determination of rebate from the amount of the super-tax determined also arose, and consequently there was no amount computed or calculated for the purpose of reduction of the rebate to nil under clause (i) of the second proviso of the Finance Act, 1956, and, therefore, clause (ii) of the second proviso of the Finance Act, 1956, did not come into play or operation. Consequently there could be no amount which could be deemed to have been either taken into account or not taken into account. The argument on behalf of the revenue on the other hand is that no doubt there was no total income to which the petitioner-company was assessed in the assessment year 1956-57, none the less there had been declaration of dividend in excess of 6 per cent. of the capital invested. Occasion therefore arose for determination of the amount by which the rebate had to be reduced under clause (i) of the second proviso. There being no rebate actually granted in that year, the amount calculated under clause (i) was not required to be taken into account for the purpose of reducing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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