9911796707
TMI Blog1963 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1956, the Income-tax Officer calculated the reduction in rebate in the following manner : Rs. Rs. Total dividend and bonus declared during the year (The bonus declared is also to be included in the dividend as it is not bonus declared with a view to increasing the capital) . 5,49,000 6 per cent, of the ordinary share capital 1,83,000 3,66,000 Nil 4 per cent, of the ordinary share capital 1,22,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to Paragraph D of the First Schedule to the Finance Act, 1956, which ran thus: (i) The expression 'paid-up capital' means the paid-up capital (other than capital entitled to a dividend at a fixed rate) of the company as on the first day of the previous year relevant to the assessment for the year ending on the 31st day of March, 1957, increased by any premium received in cash by the company on the issue of its shares, standing to the credit of the share premium account as on the first day of the previous year aforesaid ; . . . 4. The Appellate Assistant Commissioner also considered the provisions of section 78 of the Companies Act, 1956. This section is as follows : 78. (1) Where a company issues shares at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving regard to the provisions of the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, and section 78(3) of the Companies Act, 1956, the Appellate Assistant Commissioner held that the sum of ₹ 45,50,000 (Rupees forty-five lakhs and fifty thousand) formed an identifiable part of the bank's reserves and that the amount should be added to the paid-up share capital for the purpose of calculation of rebate of super-tax. 6. The Appellate Tribunal found that the amount received on the issue of shares at a premium were first entered in the share premium account and later in the reserve account. Upon going through the balance-sheets ending on the 31st December, 1956, 31st December, 1957, and 31stDecember, 1958 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pal, learned counsel for the applicant, has argued before us that the provisions contained in Paragraph D of Part II of the First Schedule to the Finance Act, 1956, in its first proviso grants relief to the assessee by way of rebate. To that provision exceptions have been made through the several clauses of the second proviso. It is, therefore, for the assessee to satisfy the court that he is entitled to the full relief conferred by the first proviso. According to Mr. Pal, the provisions contained in these provisos are meant for encouraging companies to accumulate their funds by not declaring dividends beyond a certain percentage of paid-up capital. This is clear from the second proviso itself. Mr. Pal contends that since the highest quantu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act, 1956. Mr. Pal also referred to various authorities to show that, in the absence of restrictions, the share premium account can be utilised for declaring dividends, etc. 10. Considering carefully the argument advanced by learned counsel on behalf of the applicant, it seems to us that, if we came to the conclusion that section 78 of the Companies Act, 1956, applied to Banking Companies, the order of the Tribunal in the instant reference must be upheld. The real question for determination in this reference, therefore, is whether or not section 78 of the Companies Act, 1956, is applicable to banking companies. We have, in the premises, to consider various provisions of the Banking Companies Act, 1949, as it stood at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... And sub-section (3) of section 78 is a deeming provision with regard to premium received before the commencement of the 1956 Act. This deeming provision had to be introduced as, prior to the 1956 Act, it was not necessary for companies to maintain an account called the share premium account nor were there provisions regarding the application of premium received on the issue of shares. Section 78(1) now requires an account which is to be styled as the share premium account . Since this requirement did not exist before the 1956 enactment in the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, the language is standing to the credit of the share premium account ... The reason is that companies which did not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
