Case: The Commissioner Of Income-Tax, West Bengal,Ii Calcutta Vs. M/S. Naga Hills Tea Co. Ltd

was referred to the High Court. As mentioned earlier, the High Court has answered that question in favour of the assessee.5. We may now read the relevant provisions of the Finance Act, 1959. They are found in Paragraph D of Part II of the First Schedule to the Finance Act, 1959 and are as under:"In the case of the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (XXXI of 1956),RATE OF SUPER-TAXOn the whole of its profits and gains from life insurance business. ... 11% In the case of every other company,- RATE OF SUPER-TAXOn the whole of the total income... 50% Provided that, -(i) a rebate at the rate of 40 per cent on so much of the total income as consists of dividends from a subsidiary Indian company and a rebate at the rate of 35 per cent on the balance of the total income shall be allowed in the case of any company which-(a) in respect of its profits liable to tax under the Income-tax Act for the year ending on the 31st day of March, 1960, has made the prescribed arrangement for the declaration and payment within India of the dividends payable out of such profits and for the deduction of super-tax from dividends in accordance with the provisions of sub-section (3-D) of Section 18 of that Act, and(b) is such a company as is referred to in sub-section (9) of Section 23-A of the Income-tax Act with a total Income not exceeding Rs. 25,000;(ii) a-rebate at the rate of 40 per cent on so much of the total income as consists of dividends from a subsidiary Indian company and a rebate at the rate of 30% on the balance of the total income shall be allowed in the case of any company which satisfied condition (a) but not condition (b) of the preceding clause;(iii) a rebate at the rate of 40% on so much of the total income as consists of dividends from a subsidiary Indian company and a rebate at the rate of 20% on the balance of the total income shall be allowed in the case of any company not entitled to a rebate under either of the preceding clauses: Provided further that,-(i) the amount of the rebate under clause (i) or clause (ii) shall be reduced by the sum, if any, equal to the amount or the aggregate of the amounts, as the case may be, computed as hereunder:(a) on that part of the aggregate of the sums arrived at in accordance with clause (i) of the second proviso to paragraph D of Part II of the First Schedule to the Finance Act, 1958 (XI of 1958), as has not been deemed to have been taken into account, in accordance with clause (ii) of the said proviso, for the purpose of reducing the rebate mentioned ~ clause (i) of the said proviso to nil;(b) ............"6. At the outset we may mention that the provision of law is extremely confusing.It required more than one reading on our pert to understand what it means. One thing is clear from the provision, namely it does not provide for carryover of any unabsorbed rebate from year to year. Mr. Ramachandran contended that when the Finance Act says "on that part of the aggregate of the sums arrived at in accordance with clause (i) of the second proviso to Paragraph D of Part II of the First Schedule to the Finance Act 1958 (Act XI of 1958) as has not been deemed to have been taken into account, in accordance with clause (ii) of the said proviso, for the purpose of reducing the rebate mentioned in clause (i) of the said proviso to nil", it means that the unabsorbed reduction of rebate can be carried forward until it is reduced to nil. We are unable to accept this contention as correct. In our opinion, all that provision provides for is that i! there is any unabsorbed reduction of rebate in the assessment year 1958-59, then that can be taken into consideration while allowing rebate in the assessment year 1959-60.We are unable to read into the provision in question a power to the Revenue to take into consideration any unabsorbed reduction in rebate for any year prior to l958-59. That is e view taken by the Calcutta High Court in the case mentioned earlier. The Calcutta High Court opined in that case that the second proviso to Paragraph D of Part II of the First Schedule to the Finance Act, 1559 provides that the amount of rebate to be allowed under clauses (i) and (ii) of the first proviso thereto has to Ix reduced to the sum, if any, equal to the amount or the aggregate of the amount, as the case may be, computed in the manner set out in the second proviso. It further observed:"Now, clause (i) (a) of the second proviso refers to the aggregate of the sums arrived, at in accordance with clause (i) of the second proviso to Paragraph D of Part II of the First Schedule to the Finance Act of l958. The aforesaid proviso in 1958 Act, therefore, can apply only when there was a total income in terms of 1958 Act and certain reduction from that total income remained unabsorbed in 1958. If a particular assessee had suffered loss in 1958, there was no income to which a rate of super-tax prescribed in the 1958 Act could be applied and if no rate of super-tax was applicable, there was no question of rebate or reduction in rebate to be allowed under the 1958 Act" We are in entire agreement with the view expressed therein At any rate the view taken by the High Court appears to be a reasonable view. If a provision of a Taxing Statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well accepted view of law.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In our opinion, all that provision provides for is that i! there is any unabsorbed reduction of rebate in the assessment year 1958-59, then that can be taken into consideration while allowing rebate in the assessment year 1959-60.We are unable to read into the provision in question a power to the Revenue to take into consideration any unabsorbed reduction in rebate for any year prior to l958-59. That is e view taken by the Calcutta High Court in the case mentioned earlier. The Calcutta High Court opined in that case that the second proviso to Paragraph D of Part II of the First Schedule to the Finance Act, 1559 provides that the amount of rebate to be allowed under clauses (i) and (ii) of the first proviso thereto has to Ix reduced to the sum, if any, equal to the amount or the aggregate of the amount, as the case may be, computed in the manner set out in the secondare in entire agreement with the view expressed therein At any rate the view taken by the High Court appears to be a reasonable view. If a provision of a Taxing Statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well accepted view of law.