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TMI Blog1966 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Section 23A of the Act, as it stood at the material time, stated as follows : 23A. Power to assess individual members of certain companies.---(1) Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that previous year are laid before 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 in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to it. It was also admitted that the dividend declared by the respondent complied with the requirements of the Ordinance. It was contended by the respondent that the Ordinance prohibited it from declaring any larger amount as dividend than that already declared by it. The contention was rejected by the Income-tax Officer. The order of the Income-tax Officer dated March 11, 1955, was confirmed by the Appellate Assistant Commissioner in appeal and, on further appeal, by the Tribunal, At the instance of the respondent, the Tribunal referred the following question of law for the determination of the High Court : " Whether, on the facts of this case, an order under section 23A for the assessment year 1949-50 was validly made in the case of this company to which the provisions of the Public Companies (Limitation of Dividends) Ordinance, 1948, applied on the date of the annual general meeting but to which the Act replacing the Ordinance ceased to apply within the period of 6 months referred to in section 23A(1) ?" By its judgment dated September 27, 1962, the High Court answered the question of law in favour of the respondent. In support of this appeal Mr. S. T. Desai put forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain conditions set out therein the Income-tax Officer shall make an order in writing that the undistributed portion of the assessable income of the respondent of the previous year as computed for income-tax purposes and reduced by the amount of income-tax and super-tax " shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the general meeting aforesaid ". It is clear therefore that the order which the Income-tax Officer is empowered to make under section 23A of the Act is that the undistributed income shall be deemed to have been distributed amongst the shareholders " as at the date of the annual general meeting ". Now, the question is whether it was legally permissible for the Income-tax Officer to make the order which he has made on March 11, 1955, in the present case. The legal fiction as enacted under section 23A of the Act is that the undistributed portion of the assessable income is deemed to have been distributed as dividend amongst the shareholders as at the date of the annual general meeting. In other words, the notional distribution is not by the Income-tax Officer but is by the company itself at its annual general meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer there is no factual distribution of dividend but it is only a fictional or notional distribution of dividend which was not, in fact, received by the shareholders. The section merely enacts that notional dividend is deemed to have been distributed as at the date of the annual general meeting, but even for bringing into existence that legal fiction there must be no statutory prohibition as the Ordinance in the present case. We proceed to consider the next contention of the appellant that section 13 of the 1949 Act repealed the Ordinance completely and the effect of this section was that the Ordinance was obliterated from the statute book as if it never existed and, therefore, there was no bar in the way of the Income-tax Officer to make the order on March 11, 1955. Section 13 of the 1949 Act provides : " 13. (1) The Public Companies (Limitation of Dividends) Ordinance, 1948 (XXIX of 1948), is hereby repealed. (2) Notwithstanding such repeal, any rules made, action taken or thing done in exercise of any power conferred by or under the said Ordinance shall be deemed to have been made, taken or done in exercise of the powers conferred by or under this Act, as if this Act had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing 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 of 1889, which provides that a repeal, unless the contrary intention appears, does not affect the previous operation of the repealed enactment or anything duly done or suffered under it and any investigation, legal proceeding or remedy may be instituted, continued or enforced in respect of any right, liability and penalty under the Repeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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