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TMI Blog1973 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(2)(vii) of the Income-tax Act, 1922 (hereinafter referred to as " the Act "), and in this assessment, the corporation tax was assessed at six annas and nine pies per rupee and rebate at the rate of four annas was given as per the provisions of Part II-D of Schedule I of the Finance Act of 1956. There were appeals and thereafter a reference to this court. This court on December 7, 1960, held in Ajax Products Ltd. v. Commissioner of Income-tax that no portion of the profit was assessable under the proviso to section 10(2)(vii) and, consequently, there was nil income in the assessment year 1956-57. The decision of this court was also affirmed on October 8, 1964, by the Supreme Court in Commissioner of Income-tax v. Ajax Produds Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,630.75. But, as the total income was held to be nil for this assessment year, there was no demand by way of income-tax or corporation tax. The assessee appealed to the Appellate Assistant Commissioner against the order of the Income-tax Officer fixing the sum of Rs. 45,630.75 as the super-tax rebate to be withdrawn raising two contentions : (1) that the refund of Rs. 1,49,444 cannot be taken as accumulated profits as on October 31, 1954 ; and (2) that the question of withdrawal of rebate of super-tax, did not arise as the company had no total income for that year and was not, therefore, liable to any super-tax. The Appellate Assistant Commissioner held that the Income-tax Officer was not justified in taking Rs. 1,49,444, the tax refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for varying rates of rebate in the super-tax according to the category in which a company falls and to the nature of its income. Clause (i)(a) and (b) of the second proviso provide that the amount of rebate fixed under the first proviso is to be reduced if the company allots the bonus shares to its shareholders or declares dividends in excess of six per cent. of its paid up capital. Clause (ii) of the second proviso further provides that where the sum arrived at in accordance with sub-clause (a) or sub-clause (b) or both the sub-clauses of clause (i) of that proviso exceeds the amount of rebate arrived at in accordance with clause (i) or clause (ii), as the case may be, of the first proviso, only so much of the amount issued as bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to income-tax and similarly section 55 brings to charge the total income of the assessee to super-tax. But the rates to be charged as income-tax or super-tax are to be prescribed by the Finance Act. The Finance Act of 1956 fixes the rate of super-tax at six annas 9 pies per rupee. and then allows rebates at varying rates according to the class in which the companies fall or according to the nature of the income they receive. But, at the same time, it reduces the rebate when the companies distributed the past profits in the form of bonus shares or declared dividends in excess of 6% of the paid up capital. The rate of super-tax to be applied, the rebate to be allowed on that rate and the reduction of the said rebate all contemplate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be first satisfied by the revenue that the case is one where the income of the company is liable to super-tax." In Commissioner of Income-tax v. Deoria Sugar Mills Ltd. the learned judges construing the Finance Act, 1959, expressed their view thus : " The second proviso to Paragraph D of Part II of the First Schedule to the Finance Act, 1959, provides that the amount of rebate to be allowed under clauses (i) and (ii) of the first proviso thereto has to be reduced by the sum, if any, equal to the amount or the aggregate of the amount, as the case may be, computed in the manner set out in the said second proviso. Now, clause (i)(a) of the second proviso refers to the aggregate of the sums arrived at in accordance with clause (i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income-tax, there is no levy as such of any super-tax on excess dividend or on bonus shares under the second proviso to Part II, Paragraph D of the First Schedule. Super-tax is levied only on the total income of the previous year under section 55 of the Income-tax Act at the rate authorised by Part II, Paragraph D of the First Schedule to the Finance Act. The, first proviso to Part II, Paragraph D, gives a rebate in the rate of super-tax which is, however, subject to reduction in any of the contingencies provided for in the second proviso, the obvious result being that if there is no total income and, therefore, no super-tax to be levied on an see, there is no question of rebate in the rate of super-tax and the reduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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