Judgement

P. B. GAJENDRAGADKAR, J. : This appeal arises from the assessment proceedings taken against the appellant, Rajputana Agencies Ltd., Lavanpur, for its income for the assessment year 1952-53,the accounting period being the corresponding Marwadi Year ending in October, 1951. The appellant is a private limited company and it was assassed to income-tax and super-tax by the Income-tax Officer, Morvi Circle, Morvi, on a total income of Rs. 26,385: The Appellant had declared dividend of Rs. 30,000. The Incometax Officer held that out of the said amount of dividend, Rs. 15,159 was excess dividend. On this basis the income-tax Officer determined the additional income-tax payable by the appellant at the rate of forty-four pies in a rupee on the said excess dividend. The additional income-tax payable by the appellant in that behalf was computed at Rs. 3,473-15-0. This order was passed on 25-11-1952.

2. The appellant filed an appeal against this order before the Appellate Assistant Commissioner of income-tax at Rajkot. The appellate authority determined the additional income-tax payable by the appellant at Rs. 2,084-12-0 on 29-8-1953. An appeal was preferred by the appellant against the appellate order before the Income tax Appellate Tribunal, Bombay, but the appellate tribunal confirmed the order under appeal on 27-11-l954. The appellant then moved the appellate tribunal under S 66 (1) of the income-tax Act and the appellate tribunal, by its order passed on 25-4-1955, referred two questions to the High Court at Saurashtra for its opinion in the present appeal, we are concerned with the second of the said two questions. This question as framed by the tribunal was: Whether the expression "at the rate applicable to the total income of the company" as appearing in sub-cl. (b) of cl. (ii ) to the second explanation to proviso to paragraph B of Part I of the First Schedule to the Indian Finance Act, 1952, means the rate at which a company s total income is actually assessed or the rate prescribed by the respective Finance Act without taking into consideration the rebate allowed in the respective years in accordance with the provisions of the Part B States (Taxation Concessions) Order, 1950 (hereinafter called the Order). Section 2 of the Finance Act,1952, provides that the provisions of S. 2 of, and the First Schedule to, the Finance Act, 1951. shall apply in relation to income-tax and super-tax for the financial year 1952-53 as they apply in relation to the income-tax and super-tax for the financial year 1951-52 with the modification that, in the said provisions for the figures 1950, 1951 and 1952 wherever they occur, the figures 1951, 1952 and 1953 shall be respectively substituted; and so in the present case we are really concerned with the material provisions of the Finance Act, 1951 (hereinafter called the Act).

3. By its judgment delivered on 29-3-1956, the High Court answered this question against the appellant and held that the expression "at the rate applicable to the total income of the company" means the rate at which the company s total income is actually assessed. The appellant then applied for and obtained a certificate from the High Court under Art. 133 (1) (c) of the Constitution read with S. 66A (2) of the income-tax Act that the case is a fit one for appeal to this Court. It is with this certificate that the present appeal has been brought to this Court; and the only point which it raises for our decision relates to the construction of the the expression "at the rate applicable to the total income of the company" appearing in the relevant provision of the Act.

4. The appellant does not dispute its liability to pay additional income-tax under cl. (ii) of the proviso to paragraph B of Part I of the First Schedule to the Act. The dispute between the parties is in regard to the rate at which the additional income-tax has to be charged. The appellant has paid income-tax on its total income in the relevant assessment year at