9911796707
TMI Blog1963 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... n this total income in accordance with the Finance Act, 1956, the Income-tax Officer calculated the reduction in rebate in the following manner : Rs. Rs. Total dividend and bonus declared during the year (The bonus declared is also to be included in the dividend as it is not bonus declared with a view to increasing the capital) ………. 5,49,000 6 per cent, of the ordinary share capital …… 1,83,000 3,66,000 Nil 4 per cent, of the ordinary share capital …… 1,22,000 @ 2 as. 15,250 2,44,000 @ 3 as. 45,750 Total 61,000 2. The Income-tax Officer based his calculation on the paid up share capital at ₹ 30,50,000 (Rupees thirty lakhs and fifty thousand). According to the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived in cash by the company on the issue of its shares, standing to the credit of the share premium account as on the first day of the previous year aforesaid ; . . . " 4. The Appellate Assistant Commissioner also considered the provisions of section 78 of the Companies Act, 1956. This section is as follows : "78. (1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called 'the share premium account' ; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of calculation of rebate of super-tax. 6. The Appellate Tribunal found that the amount received on the issue of shares at a premium were first entered in the "share premium account" and later in the reserve account. Upon going through the balance-sheets ending on the 31st December, 1956, 31st December, 1957, and 31stDecember, 1958, the Appellate Tribunal found that the "reserve fund and other reserves" disclosed the same old figure of ₹ 1,08,00,000 (rupees one crore and eight lakhs). In the balance-sheet as on 31st December, 1958, this account had the following note : "Reserve fund (includes ₹ 45,50,000 as identifiable as premium received on issues of shares in past years)." 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court that he is entitled to the full relief conferred by the first proviso. According to Mr. Pal, the provisions contained in these provisos are meant for encouraging companies to accumulate their funds by not declaring dividends beyond a certain percentage of paid-up capital. This is clear from the second proviso itself. Mr. Pal contends that since the highest quantum of distributable dividend is dependent upon the amount of paid up capital, the legislature has given its own definition of paid-up capital for the purpose of Paragraph D in the Explanation. This definition already noted above should be strictly construed, submits Mr. Pal, and strictly followed. It cannot be loosely used in favour of the assessee. The requirement of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956, applied to Banking Companies, the order of the Tribunal in the instant reference must be upheld. The real question for determination in this reference, therefore, is whether or not section 78 of the Companies Act, 1956, is applicable to banking companies. We have, in the premises, to consider various provisions of the Banking Companies Act, 1949, as it stood at the relevant time. Section 2 of this Act prescribes that its provision shall be in addition to, and not, save as hereinafter expressly provided, in derogation of, the Companies Act, 1956, and any other law for the time being in force. In other words, all the provisions of the Companies Act do apply to banking companies unless any such provision has been expressly excluded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received on the issue of shares. Section 78(1) now requires an account which is to be styled as the "share premium account". Since this requirement did not exist before the 1956 enactment in the Explanation to Paragraph D of the First Schedule to the Finance Act, 1956, the language is "standing to the credit of the share premium account "... The reason is that companies which did not have an account called the share premium account could also take advantage of this Explanation under sub-section (3) of section 78 which is obviously retrospective in operation. The retrospectivity, however, is limited to share premia collected prior to the 1st of April, 1956, forming an identifiable part of the reserves. 12. In this case t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
