PAPANASAM MILLS COMPANY PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) SINCE identical questions arose for determination in each of these applications, preferred under article 226 of the Constitution for the issue of writs of certiorari to set aside the orders of the Commissioner of Income-tax, they were heard together. We shall dispose of the petitions by a common order.

(2.) THESE petitions arose out of proceedings assessing the petitioners to super-tax for the assessment year 1956-57 under the terms of Part II-D of the First Schedule to the Finance Act of 1956. We shall set out the relevant facts in W.P. No. 167 of 1058 as fairly typical. The amounts involved in the other cases of course varied. The petitioner company in W.P. No. 167 of 1958 had a computed total income of Rs. 91,533 in the previous year relevant to the assessment year 1956-57. On that amount it was liable to pay super-tax at Re. 0-6-9 in the rupee, the rate prescribed in Part II-D. The standard rate of rebate permissible was 4 annas in the rupee under clause (ii) of the first proviso to Part II-D. That rebate was, however, liable to be reduced under the terms of the second proviso, if the dividends declared by the petitioner company were in excess of the statutory maxima. The total amount of the dividends declared by the petitioner company in the relevant year was Rs. 34,155. That that was in excess of the statutory maximum was never in dispute. Under the terms of the second proviso to Part II-D the Income-tax Officer reduced the rebate by Rs. 2,134-11-0. The petitioner applied to the Commissioner under section 33A to revise the order of the Income-tax Officer and grant the petitioner the full rebate of 4 annas in the rupee. The Commissioner rejected that application. It was the validity of the reduction in the rebate by Rs. 2,134-11-0, confirmed by the Commissioner, that the petitioner challenged in W.P. No. 167 of 1958.

(3.) IT is against this background that we have to consider the scope of Commissioner of Income-tax v. khatau Makanji Spinning and Weaving Co. Ltd., on which the learned counsel for the petitioners relied to sustain his plea that there was no legislative sanction to treat the excess dividends declared by a company as part of its total income as defined by the Income-tax Act.