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TMI Blog1958 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... r had passed an order on 18th January, 1951, assessing the total income of the petitioner mills at ₹ 30,30,622. At that time in accordance with the provision contained in clause (1) of the proviso to paragraph B of Part 1 of the Schedule to the Finance Act of 1950, he allowed the rebate of one anna in a rupee on the undistributed profits of ₹ 6,43,621. The rebate so allowed amounted to ₹ 40,226. It will be convenient to reproduce the provision of law relating to that rebate. It is to be found in the First Schedule to the Finance Act of 1950 : In the case of every company * * * (1) where the total income, as reduced by six and a half annas in the rupee and by the amount, if 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 year ending on the 31st day of March, 1951, and no order has been made under sub-section (1) of section 23A of the Income-tax Act, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess. For the assessment year 1951-52 (previous year en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent passed orders on the mills company under section 35(10) of the Act, terms of which sub-section are as follows : Where, in any of the assessments for the years beginning on the 1st day of April of the years 1948 to 1955 inclusive, a rebate of income-tax was allowed to a company on a part of its total income under clause (i) of the proviso to Paragraph B of Part 1 of the relevant Schedules to the Finance Acts specifying the rates of tax for the relevant year, and subsequently the amount on which the rebate of income-tax was allowed as aforesaid is availed of by the company, wholly or partly, for declaring dividends in any year, the amount or that part of the amount availed of as aforesaid as the case may be, shall, by reason of the rebate of income-tax allowed to the company and to the extent to which it has not actually been subjected to an additional income-tax in accordance with the provisions of clause (ii) of the proviso to paragraph B of Part 1 of the Schedules to the Finance Acts above referred to, be deemed to have been made the subject of incorrect relief under this Act, and the Income-tax Officer shall re-compute the tax payable by the company by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the first time in the Income-tax Act : The amendments made in the Income-tax Act by section 4 and clause (b) of section 15 shall be deemed to have come into force on the 1st day of April, 1955, and the amendments made by sections 3 to 27 inclusive shall come into force on the 1st day of April, 1956. The amendment by way of introduction of section 35(10) was brought about by section 19. It is one of the provisions which section 28 says shall come into force on the 1st day of April, 1956 . There is no dispute, and there can be no dispute, that section 35(10) came into force on the 1st day of April, 1956, but the dispute is as to the precise effect of the coming into force of that section on 1st April, 1936, in the light of the provisions of section 35(10) itself. In a case of the nature before us the prospective or the retrospective operation of section 35(10) cannot depend merely on the words shall come into force on the 1st day of April, 1956 if there is something in section 35(10) itself which shows that the rule laid down in it was to become operative in respect of certain matters of previous years. The major premise of Mr. Kolah's argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selves to make some further observations of the nature we have made before about the interpretation of provisions said to be retroactive in their operation. The general rule indubitably is that where a statute is passed altering the law it is to be presumed as intended to apply to a state of facts coming into existence after the Act. It is a fundamental and firmly established rule of interpretation that a statute which deals with matters of substantive law-and taxation is a matter of substantive law-would not be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary implication. Now, the use of the expression retrospective operation is at times vague and misleading. In a broad general sense it may be right to say that a statute has retrospective operation when it purports to such facts or events which took place before the enactment came into force. It is sometimes used in a different sense when vested rights are sought to be affected. It is sometimes loosely used in the context of certain fictions of law which the lawmaker deems it necessary to introduce in existing laws for the purpose of settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with matters of detail, and doing so, we find that the words that follow are the crucial words. They are made in the context of rebates made and the amount of undistributed profits on which rebates were granted being availed of by the company for paying dividends in subsequent years, and the crucial words are that in such a case the amount of undistributed profits availed of by the company on which rebate had been allowed shall be deemed to have been made the subject of incorrect relief under this Act. In such a case the Income-tax Officer is authorised to recompute the tax payable by the company by reducing the rebate originally allowed as if the recomputation is a rectification of a mistake apparent from the record. The substance of the matter, evidently, is that something which had in fact not taken place, something which was not incorrect when done, relief which was correctly given when it was given, all that is to be deemed to have been made the subject of an incorrect relief under the Act and it is to be deemed that the recomputation necessary for the purpose of setting the matter right is nothing more than a rectification of a mistake apparent from the record. It m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by mistake and the relief granted shall be deemed to have been incorrectly granted. By virtue of this deeming provision, the granting of rebate must be assumed even factually to have been made as a result of a mistake apparent from the record although in fact and in truth no such mistake had ever been made. Therefore, the crucial question that we have to put to ourselves is : What is the point of time at which the mistake was made and the relief incorrectly given ? The first of April, 1956, has no cogency to the point under consideration. It is a date after which the Income-tax Officer can sit down for the first time to think as to what is it that is to be deemed by him to have taken place by or through a mistake. Apart from that, the 1st of April, 1956, the date so strongly relied on by Mr. Kolah, has no bearing on the interpretation of this section. Indubitably the section says that relief which was properly given, which was legally given, is to be deemed to have been incorrectly given. Rebate which was justifiably granted and correctly granted is to be deemed to have been granted under a mistake apparent on the record. As already stated we put to ourselves the question as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of section 35(10) is to asess the mills company over again or to reopen the assessment already made. It is stressed that some change or some alteration is being made. Of course, some change or alteration is being made. That is the very purpose of section 35(10). But the question is what is the nature of that change or alteration ? The assessment, strictly speaking, is not being changed or affected. There is only recomputation of a restricted nature vis-a-vis the rebate. What is permitted to be done by operation of the deeming provision is that the rebate is wholly or partially to be recalled as it is to be deemed to have been allowed through a mistake and relief, which was granted, is to be deemed to have been incorrectly granted. Therefore, in our opinion, it would not be correct to say, as learned counsel strongly asserted, that his assessment was being disturbed and/or in a sense he was being assessed over again. Nor can it be said that the finality of that assessment has been really affected. The assessment depended on the income of the company for the relevant years. There is to be no recomputation of the income of the company for the relevant years. That has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was placed by counsel on the recent decision of the Supreme Court in Venkatachalam v. Bombay Dyeing Manufacturing Co. Ltd. ([1958] 34 I. T. R. 143) Statutes which give retrospective operation to their provisions may have different objects in view and the purpose may be to lay down different rules. Mr. Kolah is right when he says that in case of different enactments different words are used in giving retrospective operation. Now, the meaning of the words employed in section 35(10) and the question whether the rule laid down in those words is to affect any rebates granted in the past can only be determined from the words themselves and the object of the rule if there is language appropriate to that object or purpose. Other enactments with different objects in view and intended to serve different purposes would necessarily have been enacted in different language. Therefore, comparison of the language of one enactment where by retroactive operation was sought to be given by the lawmaker is of little guidance in matters of this type and it is unnecessary for us to examine the provision which required to be considered in the case before their Lordships of the Supreme Court. There ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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