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TMI Blog1966 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... is no reason why any distinction should have been made between investments mentioned in rule 3(1) and investments mentioned in rule 3(2). Rule 3(1) is general and deals with all investments from profits of all businesses and would include investments mentioned in rule 3(2). Rule 3(2) deals with investments of a certain business, i.e., business which consists wholly or mainly in the dealing in or holding of investments. We have not been able to appreciate why, if Mr. Shroff is right, it was necessary to distinguish between income from investments mentioned in rule 3(1) and income from investments mentioned in rule 3(2). At any rate, the language of the Explanation is quite clear and it seems to us that by the words " in rule 3(2) of the Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their investment in the said company. (2) The dividend income accrued or arose from the profits of the Binod Mills Limited, and, as the Ordinance applied to the business carried on by this company, the dividends were excluded under the Explanation to rule 3(1) of Schedule I. (3) The dividend income should be considered as income of the full accounting period, i.e., from Diwali of 1943 to Diwali of 1944 and should be apportioned on that basis." The High Court by its judgment dated April 19, 1957, accepted the first contention of the assessees and accordingly answered the question in their favour. It did not deal with contentions Nos. 2 and 3. The Commissioner appealed to this court and this court by its judgment dated December 20, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessees on July 5, 1944, on account of dividend on shares of the Binod Mills for the year 1943. The assessees, inter alia, contended before the War Profits Tax Officer that this sum was not liable to be charged. The War Profits Tax Officer, however, by order dated July 9, 1951, included this sum of Rs. 11,09,332 in the taxable income and his view was upheld in appeal by the Appellate Assistant Commissioner and the Commissioner. As stated above, the Commissioner, at the instance of the assessees, referred three questions, including the one with which we are concerned, to the High Court. It appears that before the High Court the learned counsel for the Commissioner did not seriously dispute the contention of the assessees that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... war profis tax applies'. " This Ordinance was promulgated on February 28, 1946. Another Ordinance called the Gwalior War Profits Tax (Amendment) Ordinance, Samvat 2004---hereinafter referred to as Ordinance 2004---was promulgated on September 6, 1947. This Ordinance amended the Explanation to sub-rule (2) of rule 3 of Schedule I as follows: " In the Explanation of sub-rule (2) of rule 3 of Schedule I of the Gwalior War Profits Tax Ordinance, Samvat 2001, a comma is added after the words 'from a company carrying on a business' and before the words 'to the whole of which' and shall be always deemed to be there from the date from which the said Ordinance came into force. " The High Court felt no difficulty in holding that the Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 3(2) and not to rule 3(1) and, therefore, cannot be used to explain rule 3(1). Mr. Shroff complains that the High Court was wrong in thinking that the Explanation formed part of Ordinance 2001, as it was originally promulgated. The High Court seems to have been under this impression because, in the order refusing leave to appeal to this court, the High Court observed: " There was no omission at all on our part to consider the question whether the Explanation was prospective or not. Indeed, this question was never raised by the learned Advocate-General, appearing for the department, and it was rightly not raised as the Explanation was not added subsequent to the promulgation of the Ordinance and the very basis of the assessment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Mr. Shroff and we must hold that the Explanation applies to the computation of profits of the chargeable accounting period July 1, 1944, to October 16, 1944. Regarding the second contention, Mr. Shroff says that Ordinance 2002 expressly provides that the Explanation shall be added in rule 3(2) of the First Schedule to the Ordinance. He further says that this Explanation is referred in Ordinance 2004 as " Explanation of sub-rule (2) of rule 3 of Schedule I ". There is no doubt that Ordinance 2002 did purport to add this Explanation to rule 3(2) but it seems to us that if we look at the language of the Explanation it was meant to be an Explanation not only to rule 3(2) but to rule 3(1) also. First, the words " the income from inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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