LexRAJPUTANA AGENCIES LTD. versus COMMISSIONER OF I. T., BOMBAY
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
Oclobtr 9. 142 SUPREME COURT REPORTS [1959] Supp. RA.JPUTANA AGENCIES LTD. v. COMMISSIONER OF I. T., BOMBAY (T.L. VENKATARAMAAIYAR,P. B.GAJENDRAOADKAR and A. K. SARKAR, JJ.) Income-tax-Assessment of company-Declaration of dividend in excess of stai1.tory limit-Additional income-tax-Computaiion- " Raie applicable to the total income of the company "', Meaning of -Indian Finance Act. r95r, First Schedul• Para. B, proviso (H), explanation (ii)(b). The assessee, a private limited company in Saurashtra, v.·as ~ssessed for the assessment year 1952-53 on a total income of Rs. 26,385. It was assessable at the rate of four annas per rupee but in view of the provisions of the Part B States (Taxation Conces- · sion) Order, 1950, it was actually assessed at the rate of sixteen pies per rupee. The assessee had declared dividend of Rs. 30.000 out of which Rs. 15,159 was found to be excess dividend. On this excess dividend the assessee was liable to pay additional income-tax and the dispute was regarding the rate at which tax was to be computed. Clause (ii) of the proviso to para. B of Part I of the First Schedule to the Finance Act, 1951, which applied to the case, provided that the additional income-tax was to be equal to the sum by which the aggregate amount of income- tax actually borne by the excess amount fell short o!:the amount calculated at the rate of five annas per rupee on· the excess dividend. Sub-clause (b) of cl. (ii) to the second explanation to proviso to para. B provided· that the aggregate amount of income- tax actually borne by the excess dividend was to be determined at the rate applicable to the total income of the company. The assessee contended that the words 'at the rate applicable to the total income of the company' meant the rate prescribed by para. B of the Act, i.e. four annas per rupee, and not the rate as reduc- ed by the Order at which the income-tax had actually and in fact been levied and that consequently it was liable to pay additional income-tax on the excess dividend at the rate of one anna per rupee only. Held, that the expression 'rate applicable to the total income of the company' meant the rate actually applied and that the assessee was rightly charged at the ratt of forty-four pies per rupee being the.rate by which the rate at which the assessee was actually assessed fell short of the rate of five annas per rupee. The clause referred to the specific or definite rate which was determined to be applicable to the taxable income of the com- pany for that specific year and not to the rate prescribed by the Act for the relevant year generally in reference to incomes of companies. (1) S.C.R. SUPREME COURT HEPOH.TS 143 Elphinstone Spinning and Weaving Mills Co. Ltd. v. Commis- sioner of Income-tax, Bombay Citv, [1955] 28 I.T.R. 8u, con- sidered. · CIVIL APPELLATE ,JURISDICTION: Civil Appeal Xo. 91 of 1957. Appeal from the judgment and order dated l\Iarch 29, 1956, of the Sa.urashtra. High Court at Ra.jkot in Civil Reference No. l of 1955. Shankarlal G. Bajaj and P. 0. Aggarwal, for the appellant. K. N. Rajagopala Sast-ri, R. H. Dhebar and D. G-upta, for the respondent. 1958. October 9. 'fhe Judgment of the Court was delivered by Rajputana A genci1s Ltd. v. Contmi:;sioner of , I. T .. Bombay GAJENDRAGADkAR, J.-This appeal a.rises from the Gaj•ndragadlt•• 1 · assessment proceedings taken against the appellant, Ra.jputana Agencies Ltd., Lava.npur, for its income for the assessment year 1952-53, the accounting period being the corresponding Marwadi Year ending in October, 1951. The appellant is a private limited company and it was assessed to income-tax and super- tax by the Income-tax Officer, Morvi Circle, Morvi, on a total income of Rs. 26,385. The appellant had declared dividend of Rs. 30,000. The Income-tax Officer held that out of the said a.mount of dividend, Rs. 15,159 was excess dividend. On this basis the Income-tax Officer determined the additional income- ta.x payable by the appellant at the rate of forty-four pies in a rupee on the said excess dividend. The addi- tional income-tax payable by the appellant in that behalf was computed at Rs. 3,473-15-0. This order was passed on November 25, 1952. The appellant filed an appeal against this order before the Appellate Assistant Commissioner of In- come-tax at Rajkot. The appellate authority deter- mined the additional income-tax payable by the appellant at
Excerpt shown. Read the full judgment & AI analysis in Lexace.