Manash Nath Ray, J. - (1.) The petitioner, Bestobell India Ltd., (hereinbefore referred to the laid Company) is a public Company within the meaning of the Compacts Act, 1956. Prior to March, 1972 the said Company was a wholly owned subsidiary of Bestobell Ltd., U.K., a Company incorporated according to the provisions of the English Companies Act having their registered office at Stock House, Stoke Poges, Slough, Bucks, U.K.
(2.) The respondent No. 2 Shri T.K. Padmanabhan, against whom the rule has been discharged for non-compliance with the Court's orders dated 6th June, 1977, at the material time was the Joint Controller, Exchange Control Department of the Reserve Bank of India, respondent No. 1. It has been stated that prior to the public issue of its shares in December, 1971, with the approval of the respondent No. 1, the said Company from time to time, made applications for remitting administrative charges upto 30th June, 1970 to Bell Asbestos & Engineering Ltd., and those applications were made to the Exchange Control Department of the Reserve Bank of India. It is the further case of the said Company that remittances as required, were made by them for the several years passed and more particularly, till December 1971. It is also their case that on receipt of the applications the authorities concerned granted unqualified and unconditional approvals to them for remitting administrative charges from India to the companies as mentioned above in U.K. The laid Company as further alleged that on the basis of such unqualified or unconditional approvals, remittances of administrative charges were made by them to the concerned British Companies from the period as mentioned above. They have further stated that in their Income-Tax returns they duly claimed deductions in respect of the concerned remittances for the administrative charges and such deductions were granted by the Income-Tax Department for the assessment year upto 1970-71. The financial years of the said Company have been stated to have been ended on 30th June 1970 and 30th June, 1971, when they were wholly owned subsidiary of Bestobell Ltd., U.K. It has been further stated that the said Company duly obtained the unconditional approval of the respondent No. 1, as mentioned above, for remitting to the concerned English Companies, administrative charges for the years as mentioned above. In fact, it is stated that the said respondent No. 1 give unconditional approvals to remit #60/5 for the periods as mentioned above and pursuant to such approvals, they duly remitted £ 3275 as administrative charges for the financial year ended 30th June, 1970 and £ 2800 for the other financial year ended on 30th June, 1971, to the concerned English Companies, who accepted such remittances and duly appropriated them to their own use and account.
(3.) It appears that for the two financial years 30th June, 1970, and 30th June, 1971, administrative charges as aforesaid and as remitted were disallowed by the Income-Tax Officer although such permitted deductions were claimed by the said company in their return. Such orders of disallowed was made by orders dated 7th February 1975 and 10th February, 1975 by the Income-Tax officer D-Ward Company Dist. V, and subsequently, as payment for a further sum of Rs. 48,472/- as tax in respect of the assessment year 1971-72 was demanded. These orders by the Income-Tax officer concerned, have been claimed by the petitioner to be wrongful. The said company, admittedly preferred an appeal to the Appellate Assistant Commissioner, from the order of deduction as mentioned above and the payment as made, has been stated to have been kept in abeyance under section 220 (6) of the Income-Tax Act, 1961, till the disposal of the concerned appeal, which has also been stated to be pending.;