SANKAR PRASAD MITRA, J. - (1.) THIS is an application for leave to appeal to the Supreme Court. The assessment year out of which the reference arose was the year 1956-57 and the relevant accounting year was the calendar year ended on the 31st Dec., 1955. The total income of the assessee was computed at Rs. 6,14,525. In computing the tax on the total income in accordance with the Finance Act, 1956, the ITO calculated the reduction in rebate in the following manner : The ITO based his calculation on the paid-up share capital of Rs. 30,50,000. According to the Finance Act, 1956, the expression "paid-up capital" means the paid-up capital of the company as on the 1st day of the previous year relevant to the assessment for the year ending on the 31st of March, 1957, increased by the 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 1st day of the previous year aforesaid.
(2.) THE assessee's accounts as on the 31st Dec., 1954, being equivalent to the balance-sheet as on the 1st Jan., 1955, disclosed no separate amount standing under the name of share premium account. THE receipts on account of share premium said to be for Rs. 45,50,000 were transferred to the "reserve fund and other reserve accounts" disclosing an aggregate figure of Rs. 1,08,00,000. THE ITO did not aggregate the paid-up capital by addition of the said sum of Rs. 45,50,000. The AAC first considered the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, which runs thus : "(1) 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 1st day of the previous year relevant to the assessment for the year ending on the 31st March, 1957, increased by any premiums received in cash by the company on the issue of its shares, standing to the credit of the share premium account as on the 1st day of the previous year aforesaid." 3.The AAC also considered the provisions of s. 78 of the Companies Act, 1956. This section is as follows : "78. (1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an Total dividend and bonus taken during the year Rs. (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 . Rs. . Rs. 4 per cent of the ordinary share capital 1,22,000 @ 2 As. 15,250 . 2,44,000 @ 3 As. 45,750 . . Total 61,000 account, to be called 'the share premium account' ; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company. (2) The share premium account may, notwithstanding anything in sub-s. (1), be applied by the company (a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares ; (b) in writing off the preliminary expenses of the company ; (c) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company ; or (d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company. (3) Where a company has, before the commencement of this Act, issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act : Provided that any part of the premiums which has been so applied that it does not at the commencement of this Act form an identifiable part of the company's reserves within the meaning of Sch. VI shall be disregarded in determining the sum to be included in the share premium account." Having regard to the provisions of the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, and s. 78(3) of the Companies Act, 1956, the AAC held that the sum of Rs. 45,50,000 forms 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. The Tribunal affirmed the order of the AAC and, on an application under s. 66(1), the following question was referred to this Court : "Whether, on the facts and in the circumstances of the case, the amount of Rs. 45,50,000 should be added to the paid-up capital of the assessee as on the 1st Jan., 1955, for the purpose of allowing rebate to the assessee under Paragraph 'D' of Part II of the First Schedule to the Indian Finance Act, 1956." This Court by its judgment delivered on the 17th Dec., 1963, has supported the view of the Tribunal for reasons stated therein and has answered the question in the affirmative. Broadly speaking, this Court has held that s. 78 of the Companies Act, 1956, also applies to banking companies and by the deeming provisions of s. 78(3) the disputed figure which was an identifiable sum should be taken to have satisfied the requirements of the Finance Act, 1956.
(3.) THE CIT, who is the petitioner herein, wants to urge before the Supreme Court that the definition of "paid-up capital" in the Explanation to Paragraph "D" of the First Schedule to the Finance Act, 1956, refers to addition of an amount "standing to the credit of the share premium account". THE provision, according to learned counsel for the petitioner, postulates that there should be an account labelled as the "share premium account" and unless this account labelled as aforesaid was there on the relevant date, namely, the 1st Jan., 1955, nothing could be said to be standing to its credit. In other words, if on 1st Jan., 1955, there was no share premium account with restrictions imposed upon the company regarding its application, the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, could not be availed of. Learned counsel submits that s. 78(3) of the Companies Act, 1956, does not satisfy the requirements of the said Explanation. Learned counsel submits further that up till now there is no decision either of the Supreme Court or of any other High Court on this point. THEre is no doubt that on the grounds aforesaid advanced by learned counsel for the petitioner, the certificate prayed for ought to be granted. Mr. E. R. Meyer appearing for the respondent also did not raise any substantial objection to our allowing the application on merits. But there is a technical objection strenuously urged by Mr. Meyer which I shall presently deal with. The point is that the Indian IT Act, 1922, has been repealed by sub-s. (1) of s. 297 of the IT Act, 1961. Then, sub-s. (2), cl. (c), of s. 297 of the 1961 Act, provides that notwithstanding the repeal of the Indian IT Act, 1922, any proceeding pending on the commencement of the 1961 Act before any IT authority, the Tribunal or any Court, by way of appeal, reference or revision, shall be continued and disposed of as if the 1961 Act had not been passed. Mr. Meyer contends that at the date of commencement of the 1961 Act, that is, the 1st April, 1962, the reference out of which this application has arisen was pending, but it has been disposed of by the judgment of this Court delivered on the 17th Dec., 1963. In the premises, there is no scope for an application for leave to appeal to the Supreme Court under s. 66A(2) of the repealed Act.;