COMMISSIONER OF INCOME TAX DELHI AND RAJASTHAN NEW DELHI IN BOTH APPEALS Vs. ANANT RAO B KAMAT IN BOTH THE APPEALS

JUDGEMENT

(1.) These are appeals by the Commissioner of Income-tax on certificates granted by the Rajasthan High Court under S. 66A (2) of the Indian Income-tax Act, 1922 (11 of 1922), hereinafter referred to as the Act, against the judgment of he high Court in a consolidated reference under Section 66 (1) of the Act. The High Court answered the question, reproduced below, in the affirmative. The reference was made by the Income-tax Appellate Tribunal in the following circumstances.

(2.) The respondent, Anant Rao B. Kamat, hereinafter referred to as the assessee, had received in the previous years (1950-1 and 1951-2) dividends from two companies, Associated Stone Industries (Kotah) Ltd., and Rajputana Mining Agencies Ltd. For the assessment years 1951-2 and 1952-3, the assessee claimed before the Income-tax Officer that the dividends received by him should be 'grossed up' under S. 16 (2) of the Act, without taking into consideration the rebate allowed to the said companies under the Part B States (Taxation Concessions) Order, 1950, hereinafter called the Concession Order. According to the assessee, on a true construction S. 16 (2) of the Act, the rate applicable to the total income of the said companies was the rate prescribed by the relevant Indian Finance Acts. The Income-tax Officer disallowed the grossing up at the Indian rate but allowed at the State rate, defined by paragraphs 3 (v) of the Concession Order. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer, but the assessee succeeded before the Income-tax Appellate Tribunal. On the application of the Commissioner of Income-tax, the Tribunal referred the following question to the High Court:

(3.) The learned counsel for the appellant has contended before us that the rate applicable to the total income of the said companies was the rate as finally applied after taking into consideration the effect of the Concession Order. He has further urged that the word 'rebate' occurring in S. 16 (2) does not include the relief given to the said companies under the Concession Order for the Concession Order is not concerned with granting rebate but is concerned with the determination of the tax payable. In this connection, he relied on S. 60A of the Act under which the Concession Order was made, and said that this section enabled the Central Government to make an exemption, reduction in rate or other modification in respect of income-tax but not to grant a rebate. The learned counsel for the respondent controverted these arguments and supported the judgment of the High Court. Before addressing ourselves to the contentions at the Bar, it is necessary to reproduce the relevant statutory provisions. These read thus: