9911796707
TMI Blog1962 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable by it. The company then claimed rebate at the rate of one anna in the rupee on the amount computed according to Schedule I, Part I, item B, read with section 2 of the Finance Act (15 of 1955). The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a company to which the provisions of section 23A of the Income-tax Act could not be made applicable. In appeal, the Income-tax Appellate Tribunal, Bombay, reserved the order of the income-tax authorities. The Tribunal opined that the expression "cannot be made applicable" in item B of Part I of Schedule I of the Finance Act (15 of 1955) must be read in conjunction with section 23A of the Income-tax Act, and the benefit of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount, it any, exempt from income-tax, exceeds the amount of any dividends (including dividends payable at a fixed rate) declared in respect of the whole or part of the previous year for the assessment for the ending on the 31st day of March, 1956, and the company is a company to which the provisions of section 23A of the Income-tax Act cannot be made applicable, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess;" By section 23A(1) of the Income-tax Act at the material time the Income-tax officer was authorised to order a company to pay super-tax, at the rate of eight annas in the rupee in the case of a company whose business consisted wholly or mainly in the dealings in or holding of investment, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst paragraph of sub-section (9) of section 23A it is provided that "Nothing contained in this section shall apply to any company in which the public are substantially interested or to a subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year." This clause is followed by two explanations. Explanation 1, in so far as it is material to this case, provides : "Explanation 1. - For the purpose of this section, a company shall be deemed to be a company in which the public are substantially interested - ... (b) if it is not a private company as defined in the Indian Companies Act, 1913 (VII of 1913), and...." Section 23A w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by its nominees throughout the previous year, and by clause (b) of the first Explanation there to a private company as defined in the Indian Companies Act, 1913, is not a company in which the public are substantially interested. It is, therefore, competent to the Income-tax Officer to pass an order under section 23A(1) if the conditions thereof are fulfilled directing payment of super-tax by a private company at the rates prescribed by the Finance Act (15 of 1955) on its undistributed balance. To reduce the rigour of this provision the legislature has provided for inducement in the form of rebate on the difference between nine annas in every rupee of the total net income and the amount of dividend declared, to companies which have clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in subsection (9) of section 23A; if it does, the Income-tax Officer has no power to make an order; and (ii) if the company is not one which falls within clause (9) of section 23A whether having regard to inadequacy of the declaration of dividend, an order for payment of super-tax should not, because of the losses incurred by the company in the earlier years, or to the smallness of the profits in the previous year, be made. Satisfaction of the Income-tax Officer as to the existence of several conditions prescribed thereby even if the company is on which does not fall within sub-section (9) of section 23A is a condition of making of the order. The language used by the legislature clearly indicates that it is only when an order under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings and caused administrative inconvenience. It appears that the legislature modified the scheme of granting rebate in enacting the Finance Act of 1955, with a view to simplify the procedure and avoid delays, and not with the object of depriving the private limited companies as a class, of the benefit of rebate which was permissible under the earlier Acts. Counsel for the Income-tax Commissioner invited our attention to the Finance Acts 1956 and 1957 and contended that the legislature in dealing with the right to rebate under Part II relating to the rates of super-tax used phraseology which restricted the right of rebate only to public companies. It must be noticed that even under the Finance Act of 1955 by Part II of Schedule I, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
