TMI Blog1962 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... hat this was a case to which the provisions of section 23A could be applied and he passed an order on nth March, 1955, under section 23A that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax payable by the company in respect thereof shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the general meeting. The assessee raised an objection to the making of this order and the objection was founded on the provisions of section 3 of the Public Companies (Limitation of Dividends) Ordinance. (No. XXIX of 1948) promulgated on 29th October, 1948. This Ordinance was promulgated by the Government of India in exercise of its powers conferred by section 42 of the Government of India Act, 1935, and the object of the Ordinance was to limit the dividend which may be paid by the public companies. Section 3 of the Ordinance provided: No company shall, after the commencement of this Ordinance, distribute as dividend during any financial year, any sum which exceeds, or which, when taken with any sum already distributed as divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 23A of the Income-tax Act. The contention raised on behalf of the revenue was that section 23A contemplates declaration of dividend not only on the date of the annual general meeting but also at any further point of time within a period of six months from the date of the annual general meeting. The Ordinance was repealed by the Public Companies (Limitation of Dividends) Act (No. 30), 1949. Sub-clause (1) of clause (3) of section 2 of the Act removed the restriction imposed by the Ordinance and it was, therefore, possible for the assessee company to declare further dividends within the said period of six months. The annual general meeting was held on 30th December, 1948, and the six months ' period from that date expired on the 30th of June, 1949. The restrictions imposed by the Ordinance were lifted on 26th April, 1949: between 26th April, 1949, and 30th June, 1949, it was possible for the assessee company to declare further dividends and comply with the requirements of section 23A of the Income-tax Act. The assessee not having done so, the Income-tax Officer was justified in making the order under section 23A. The Tribunal accepted this contention of the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the company, in general meeting are less than sixty per cent of the assessable income of the company of that previous year, as reduced by the amount of income-tax and super-tax payable by the company m respect thereof he shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made the payment of a dividend or a larger dividend than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid, and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income Laying emphasis on the clause distributed as dividends occurring in the commencing part of the sub-section and the clause l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend up to the end of the six months after the accounts of the previous year are laid before the general meeting of the company. It thus contemplates declaration of dividend during the said period. We are, therefore, unable to hold that section 23A contemplates declaration of dividends only at. the annual general meeting and not at any other point of time subsequent thereto up to the expiry of six months therefrom. The first contention raised by Mr. Palkhivala, therefore, should fail. Mr. Palkhivala, relying on certain observations of the Privy Council in Maharaja of Pithapuram v. Commissioner of Income-tax [1945] 13 ITR 221 , contends that the law as prevailing at the commencement of the assessment year, i.e., on April 1,1949, is the law that should govern the case. There were restrictions for declaring larger dividends than that declared by the assessee company on that date. The fact that subsequent to that date the restrictions were removed has no relevance in deciding the issue. The observations, on which reliance is placed, are : By sub-section (1) of section 6 of the Indian Finance Act, 1939, income-tax for the year beginning on the 1st April, 1939, is directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer can make under the sub-section, has been stated in the sub-section, and that omitting the unnecessary portion reads : ... he (the Income-tax Officer) shall... make... an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid ... It is thus clear that the order, which the Income-tax Officer is empowered to make by the sub-section, is that the undistributed income would be deemed to have been distributed amongst the shareholders as at the date of the annual general meeting. It follows that it is not open to the Income-tax Officer to make an order about deeming notional distribution of the income as at any other date. These being the provisions of law, it has to be seen whether it was permissible for the Income-tax Officer to make the order which he has made on March 11,1955. Now, in our opinion, the fiction enacted is not that the undistributed portion of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding part of the sub-section, viz., ........thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income. Mr. Joshi next contended that even assuming that the provisions of the Ordinance came in the way of the Income-tax Officer from making an order, that Ordinance was not on the statute book on March 11, 1955, the date on which the Income-tax Officer made the order. That Ordinance was repealed by section 13 of the Public Companies (Limitation of Dividends) Act, 1949. Placing reliance on the provisions of sub-section (2) of section 13 of that Act Mr. Joshi contends that the effect of the provisions of sub-section (2) of section 13 is that the Ordinance has been completely obliterated from the Statute Book as if it never existed. Therefore, there was no bar in the way of the Income-tax Officer in making the order he made on March 11, 1955. He also referred to us a decision in State of Punjab v. Mohar Singh [1955] 1 SCR 893. In our view, there is hardly any room for considering the effect of a repeal of the Ordinance under section 13 of the Act. As already stated, secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason in enacting section 6 of the General Clauses Act has been give n by their Lordships of the Supreme Court in State of Punjab v. Mohar Singh [1955] 1 SCR 893 on which reliance has been placed by M.R. Joshi. Their Lordships observed : Under the law of England, as it stood prior to the Interpretation Act of 1889, the effect of repealing a statute was said to be to obliterate it as completely from the records of Parliament as if it had never been passed, except for the purpose of those actions, which were commenced, prosecuted and concluded while it was an existing law. A repeal, therefore, without any saving clause would destroy any proceeding whether not yet begun or whether pending at the time of the enactment of the repealing Act and not already prosecuted to a final judgment so as to create a vested right. To obviate such results a practice came into existence in England to insert a saving clause in the repealing statute with a view to preserve rights and liabilities already accrued or incurred under the repealed enactment. Later on, to dispense with the necessity of having to insert a saving clause on each occasion, section 38(2) was inserted in the Interpretation Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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