COMMISSIONER OF INCOME TAX Vs. AFCO PRIVATE LIMITED

JUDGEMENT

(1.) FOR the year of account ending March 31, 1955, Afco Private Ltd.-a private limited company-earned a total income which was finally computed in assessment proceedings by order of the Income-tax Tribunal, at Rs. 49, 843/-. The company declared a dividend of Rs. 11, 7121- on July 13, 1955, and before the close of the year of assessment 1955-56 declared an additional dividend of Rs.5, 612/-, thereby distributing in the aggregate dividend which was not less than 60% of the total income, reduced by the income-tax and super-tax payable by it. The company then claimed rebate at the rate of one anna in the rupee on the amount computed according to Schedule 1, Part 1, Item B read with s. 2 of the Finance Act 15 of 1955. The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a company to which the provisions of s. 23A of the Income-tax Act could not be made applicable. In appeal, the Income-tax Appellate Tribunal, Bombay ', reversed the order of the Income-tax authorities. The Tribunal opined that the expression "cannot be made applicable" in Item B of Part 1 of Schedule 1 of Finance Act 15 of 1955 must be read in conjunction with s. 23A of the Income-tax Act, and the benefit of rebate provided by the Finance Act, 1955, cannot be denied to a Private Company if the conditions prescribed in s. 23A(1) are fulfilled.

(2.) THE following question referred by the Tribunal to the High Court of judicature at Bombay was answered in the affirmative :- "Whether on the facts and in the circumstances of the case, the assessee company having distributed dividends of over 60% of the company's total income less income-tax and super-tax payable thereon is entitled to the rebate of 1 anna per rupee on the undistributed balance of profits as provided in clause (1) of the proviso to item B of Part 1 of the 1st Schedule to the Finance Act of 1955 ?"By the Finance Act 15 of 1955 Schedule 1 Item B read with s. 2 of the Act rates of tax were prescribed in the case of companies. Item B providedthat "in the case of every company- Rate surcharge on the whole of total income Four annas one twen- in the tieth of rupee the rate specified in the pre- ceeding column.