THE COMMISSIONER OF INCOME-TAX, WEST BENGAL, II CALCUTTA versus M/S. NAGA HILLS TEA CO. LTD.

Citation: [1973] 3 S.C.R. 510 · Decided: 08-02-1973 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

51() 
'liHE COMMISSIONER OF INCOME-TAX, WEST BENGAL, 
II CALCUITA 
v. 
M/S. NAGA HILLS TEA CO. LTD. 
February 8, 1973 
[K. S. I!EGDE, P.,JAGANMOHAN REDDY AND H. R. KHANNA, JJ.l 
Finnnce Act, 1959, First Schedule, Part 11, Paragl'aph D--Carry over 
of unabsorbed rebate--Scope of. 
For the assessment year 1959-60 the total income of the assessee. 
company was utilised and a rebate was allowed, on the corporation tax 
payable by it, under the provisions of Finance Act, 1959. Thereafter, 
that reb-ate was wiardrawn on the ground that there was an unabsorbed 
reduction of rebate in the assessment year 1957-58. For the assessment 
year 1958-59 the assessee's assessment disclosed a loss and no corpora-
tion tax was legal for that year. 
It was contended by the assessee that 
the unab~rbed reduction in rebate for the year 1957-58 could only be 
carried forward and set off against the rebate for the 
assessment year 
1958·1959 under the provisions of Finance Act, 1958, and as there was 
no rebate available for the assessment year 1958-59 the unabsorbed reduo· 
tion in rebate exhausted itself and could not be further set off against the 
rebate available in the assessment year 1959-60. 
The contention 
was 
rejected by the Income-tax Officer and the Appellate Assistant Commi~ 
sioner. The Tribunal and the High Court in reference, however, held in 
favour of the assessee. 
Dismissing the appeal to this Court, 
HELD : It is a cTear from paragraph D of Part II of the First Schedule 
to the Finance Act, 1959, that it does not provide for carry over of any 
unabsorbed rebate from year to year. All that the provision provides for 
is that if there is any unabsorbed reduction of rebate in the assessment 
year 1958-59, then that can be taken into consideration while allowing 
rebate in the assessment year 1959-60. A power in favour of the revenue 
to tatce mto consideration any unabsorbed reduction in rebate for any 
year prior to 1958-59 cannot be read into the provision. 
At any rate, 
the view taken by the High Court appears to be a reasonable one, and, it 
a provision of taxing statute can be reasonably interpreted in two ways, 
that interpretation which is favourable to the assessee must be accepted. 
[513F-H; 5140-E] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No.--496 of 
1970. 
Appeal bv Certificate from the Judgment and order dated 
August 13, 1964 of the Calcutta High Court at Calcutta in Income· 
tax Reference No. 148 ot 1966. 
B 
c 
D 
E 
F 
G 
T. A. Ramachandran, S. P. Nayar and R. N. Sachthey, for 
the appellant. 
· 
H 
B. Sen, Lellu Seth, 0. P. Kizaitan and B. P. Maheshwari, for 
the respondent. 
C.I.1'. v. NAGA HILLS TEA CO. LTD. (Hegde, J.) 
511 
A 
The Judgment of the Court was delivered by 
HBGDE, J. This appeal biY certificate arises from the decision 
of the Calcutta High Court in a reference under section 66 ( 1) 
of the Indian Income-taX. Act 1922 (to be hereinafter referred 
to as the 'Act') . The question referred to the High Court for its 
8 
its opinion reads : 
· 
c 
E 
"Whether, on the facts and in the c;;ircwnstances of 
the case, the Tribunal was right in boldiJJ& that the 
assessee, having not been assessed to super-tax fot the 
assessment year 1958-59, the unabSorbed reduction in 
rebate under clause (i)(a) of the second proviso to 
Paragraph D of Part II of the First Schedule to the 
Finance Act, 1957, could not be set oft against the 
rebate available to the assessee under the Finance Act, 
1959, and that accordingly the Income-tax Officer was 
not justified in reducing the rebate of Rs. 16,114/-
available to the assessee for the assesment year 1959-
60?" 
Followi~g its earlier decision in Commissioner of Income Tax, 
West Bengal-I v. Deoria Sugar Mills Ltd.,(l) the High Court 
answered that question in favour of the assessee. Aggrieved by 
that decision the Commissioner of Income Tax for West Bengal 
has brought this appeal. 
The facts material for the purpose of deciding ~ 
question 
as could be gathered from the case stated by the Tribunal may 
now be set out. The assessment year y.rith which we are con- . 
cemed in this case is 1959-60; the relevant accounting year being 
the calendar year 1958. The -assessee is a Tea Company. For 
the assessment year 1959-60 it was assessed to a total income of 
F 
Rs. 55,257/ -. The Corporation tax payable by the assessee on 
that amount was computed at Rs. 26,357 I-. On that a rebate of 
Rs. 16,114/ - was allowed under the provisions of the Fmance Act 
1959. T

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