9911796707
TMI Blog1967 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... dates of the general body meetings. The following table sets out the relevant details : Assessment year Amount of dividend deemed to have been declared Date of order passed under s. 23A deeming dividend to have been declared Rs. 1946-47 46,563 March 18, 1952 1947-48 43,959 March 18, 1952 1948-49 47,829 March 18, 1952 1949-50 97,875 March 18, 1952 1950-51 92,591 March 18, 1952 1951-52 25,899 March 30, 1955 3,54,716 On July 7, 1955, the company in a general meeting resolved that the amount of ₹ 3,54,716, which was under the orders of the Income-tax Officer deemed to have been distributed as dividend amongst the shareholders pursuant to orders under section 23A of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f super-tax admissible under the Finance Act, 1956. The Tribunal held that the case of the company did not fall within any of the situations contemplated by section 34(1)(b) and the company's income had not been the subject of excessive relief, as the rebate of super-tax originally granted was out of the tax otherwise computable and not from the assessed income. But the Tribunal confirmed the order of the Appellate Assistant Commissioner directing that ₹ 77,600 be taken into account in withdrawing rebate of super-tax. The Tribunal then referred three questions to the High Court of Judicature at Madras : 1. Whether the Tribunal was justified in disposing of the appeal as it did ? 2. Whether the Tribunal was right in law in entertaining the assessee's contention relating to the applicability of section 34(1)(b) under rule 27 of the Appellate Tribunal Rules ? 3. Whether the setting aside of the assessment under section 34(1)(b) was correct in law ? The High Court decided in favour of the company on the first two questions. In considering the third question the High Court observed that the plea of the company that reassessment proceedings under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiate the proceeding under section 34(1)(b) of the Indian Income-tax Act for bringing to tax the excessive rebate granted to the assessee ? Section 34(1)(b) of the Indian Income-tax Act, as it stood at the relevant time, provided : If--... (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it is material, that : 2. (1) Subject to the provisions of sub-sections (2), (3), (4) and (5), for the year beginning on the 1st day of April, 1956,-- (a) income-tax shall be charged at the rates specified in Part I of the First Schedule,... (b) rates of super-tax shall, for the purposes of section 55 of the Indian Income-tax Act, 1922 (XI of 1922)....be those specified in Part II of the First Schedule,... Part II of the First Schedule specifies the rates of super-tax. Clause D provides : In the case of every company-- on the whole of total income Six annas and nine pies in the rupee. Provided that--... (ii) a rebate at the rate of four annas per rupee of the total income shall be allowed in the case of any company which satisfies condition (a), but not condition (b) of the preceding clause ; and.... 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 representing the at the rate of two annas per face value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed at too low an amount but the expression used is assessed at too low a rate : therefore, says counsel for the company, the jurisdiction of the Income-tax Officer will be attracted only when the wrong fraction has been applied in the determination of super-tax, and not when the computation of tax depends on other factors. We are unable to accept this contention. The assumption that the expression rate has been used in section 34(1) as meaning a fraction of total income is, in our judgment, not warranted. By the use of the expression rate in the context in which it occurs, undoubtedly a relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion or fraction. The expression rate is often used in the sense of a standard or measure. Provided the tax is computable by the application of a prescribed standard or measure, though not directly related to taxable income, it may be called tax computed at a certain rate. We agree with the High Court that the rebate of tax and the reduction of such rebate are essentially matters of measure or standards of rate. The chief aim and object of the Finance Act, 1956, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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