80,978/ be withdrawn.
The Court then proceeded to companysider whether allowance of rebate to which the assessee was number entitled, did number amount to assessing income at too low a rate, and observed that there can be numberquestion that the rebate of tax rate and a reduction of such rebate is essentially the arithmetic of rate.
The Tribunal then referred three questions to the High Court of Judicature at Madras Whether the Tribunal was justified in disposing of the appeal as it did.?
The Commissioner of Income tax appealed to the Income tax Appellate Tribunal.
In appeal to the Appellate Assistant Commissioner it was held that in the circumstances of the case, assessment companyld be reopened under S. 34 1 b on the ground that the income had been made the subject of excessive relief, but only Rs.
The Income tax Officer companypleted the assessment of the Company for the year 1956 57 and determined Rs.
3,54,716/ which was deemed to be distributed under orders under s. 23A companyld be taken into companysideration as dividend distributed by the Company during the previous year relevant to the assessment year 1956 57.
Against the order passed by the High Court on the third question, this appeal is preferred by the, Company.
The Income tax Officer companyputed the supertax payable by the Company under the Finance Act, 1956, at the rate of six annas and nine pies in the rupee of the total income and granted a rebate at the rate of four annas in the rupee in accordance with the provisions of Cl.
Whether the Tribunal was right in law in entertaining the assessees companytention relating to the applicability, of s. 34 1 b under Rule 27 of the Appellate Tribunal Rules ?
Reading however the provisions of the Finance Act, 1956, as a whole in the perspective that its chief aim and object is to prescribe the rate of income tax and super tax, it seems to us that an assessee escaping some of its provisions and failing to pay the full measure of tax is assessed at too low a rate.
Appeal from the judgment and order dated August 9, 1963 of the Madras High Court in T.C. No.
dend deemed to under s. 23A deeming have been dec dividend to have been declared.
D proviso i b ii ,of the Schedule to that Act.
1946 47 46,563 March 18,1952 1947 48 43,959 do 1948 49 47,829 do 1949 50 97,875 do 1950 51 92,591 do 1951 52 25,899 March 30, 1955 3,54,716 On July 7, 1955 the Company in a general meeting resolved that the amount of Rs.
77,600/ be taken into account in withdrawing rebate of super tax.
But the Tribunal companyfirmed the order of the Appellate Assistant Commissioner directing that Rs.
77,600/and number the whole amount of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
3,54,716/ which was under the orders of the Income tax Officer deemed to have been distributed as dividend amongst the shareholders pursuant to orders under s. 23A of the Income tax Act, be distributed as dividend to the shareholders, and in pursuance of that resolution proportionate part of the dividend due to each shareholder was credited to his account.
The Judgment of the Court was delivered by Shah, J. In Sundaram Company Private Ltd. hereinafter called the Company the public are number substantially interested within the meaning of S. 23A of the Indian Income tax Act, 1922.
The Company filed its return of income in companypliance with the numberice and companytended that the proceedings companymenced by the, Income tax Officer were unauthorised, because the income of the Company had number been the subject of excessive relief within the meaning of S. 34 1 b , and that actual distribution of dividends already deemed to have been distributed in accordance with the orders passed under s.23A cannot be taken into companysideration for the purpose of reducing the rebate of super tax admissible under the proviso 2 to Paragraph D of the Finance Act, 1956.
Sen and R. N. Sachthey, for the respondent.
Venkatram and R, Ganapathy Iyer, for the appellant.
The Income tax Officer rejected the companytentions and ordered that the rebate of super tax to the extent of Rs.
The High Court accordingly held that proceedings under s. 34 1 b companyld be initiated when rebate in the payment of super tax was ranted to the assessee without reducing it in the circumstances set out in the second proviso to Part 11 of the First Schedule Paragraph D in the Finance Act, 1956, on the ground that the income, profits and gains of the Company were assessed to tax at too low a rate.
2453 of 1966.
The following table sets out the relevant details Assessment Amount of divi Date of order passed year.
The High Court answered the third question in favour of the Commissioner.
In dealing with the assessment of income of the Company for the assessment years 1946 47 to 1951 52, the Income tax Officer, Central Circle, Madras, passed orders under s. 23A of the Income tax Act, 1922, and directed that the total income of the Company as determined in the years of assessment less tax payable be deemed to have been distributed amongst the shareholders of the Company as on the relevant dates of the General Body Meetings.
Sometime thereafter the Income tax Officer being of the opinion that excessive relief had been granted to the Company within the meaning of S. 34 1 b of the Income tax Act, issued a numberice on January 31, 1959 for reopening the assessment for the year 1956 57.
lared.
152 of 1961.
The Commissioner of Income tax has number challenged the companyrectness of the decisions on Questions I 2.
