Case: Commissioner Of Income-Tax, Bombay City-1 Vs. Godavari Sugar Mills Ltd

permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs." It is, indeed, true that as a result of the order of the Income-tax Officer 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. 4. We proceed to consider the next contention of the appellant that S. 13 of the 1949 Act repealed the Ordinance completely the effect of this Section was that the Ordinance was obliterated from the Statute Book as if it never existed and, therefore, there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 follows:"13 (1). The Public Companies (Limitation Dividends) Ordinance 1948 (XXIX 1948) is hereby repealed.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 come into force on the 29th day of October 1948." We are unable to accept this argument as correct. In the first place, the repeal of the Ordinance under S. 13 of the 1949 Act is immaterial for, as we have already stated, Section 23A has created a fiction of distribution of the undistributed income as dividend and the Section further states that it would be deemed as if it was distributed on the date of the Annual General Meeting. Since the notional distribution contemplated by Section 23A of the Act is as if the notional distribution took place at the date of the Annual General Meeting it is the law which prevailed as on the date of the Annual General Meeting which has to be taken into account in considering the issue as to the legal validity of the order made by the Income-tax Officer. In the second place, Mr. S. T. Desai is not right in his contention that the effect of S. 13 of the 1949 Act is to obliterate the Ordinance completely from the Statute Book Section 6 of the General Clauses Act (Act 10 of 1897) states as follows:"6. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears the repeal shall not- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder: or (c) affect any right privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege. obligation, liability, penalty, forfeiture or punishment as aforesaid: and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." The reason for enacting S. 6 of the General Clauses Act has been described by this Court in State of Punjab v. Mohar Singh, (1955) 1 SCR 893 at p. 897: (AIR 1955 SC 84 at p. 87) as follows: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, S. 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 repealed Act as if the Repealing Act had not been passed. Section 6 of the General Clauses Act, as is well known is on the same lines as S. 38 (2) of the Interpretation Act of England." Section 13 of the 1949 Act is almost identical in language with S. 11 of Punjab Act XII of 1948 which was the subject-matter of consideration in State of Punjab v. Mohar Singh, (1955) 1 SCR 893 at p. 897: (AIR 1955 SC 34 at p. 87), and for the reasons given by this Court in that case the provisions of S. 6 (c), (d) and (e) of the General Clauses Act are applicable to this case since there is no contrary intention appearing in the repealing statute. Mr. S. T. Desai is, therefore, unable to make good his submission on this aspect of the case.

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

Explanation:
0[ds]It is not, in our opinion, necessary to express any concluded opinion on this aspect of the case, because we consider that, in any event, in view of the fact that the Ordinance was in force on the date of the holding of the Annual General Meeting of the respondent thex Officer had no power to pass any order under S. 23A of the Act. The Ordinance was in force on December 30, 1948 on which date the Annual General Meeting of the respondent took place and a sum of Rs. 3,68,433 was declared as dividend. Section 23A provides that on the fulfilment of certain conditions set out therein thex 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 ofx 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 S. 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 thex Officer to make the order which he has made on March 11, 1955 in the present case. The legal fiction as enacted under S. 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 thex Officer but is by the Company itself at its Annual General Meeting. Since the provisions of the Ordinance imposed the restriction on the declaration of dividend beyond a particular limit that restriction will equally be binding for thex Officer; and if the respondent prevented from declaring a higher dividend than that declared on the date of the Annual General Meeting, thex Officer would be likewise prohibited by the Ordinance from passing an order that a higher dividend than that actually declared shall be deemed to have been declared at the date of the respondents Annual General Meeting. To put it differently, if in actuality a higher dividend could not lawfully have been declared by the respondent, thex Officer could not pass an order that such higher dividend should be deemed to have been declared, for the deemed declaration will suffer from the same legal restrictions which an actual declaration is subject to. In our opinion, the prohibition imposed by S. 3 of the Ordinance applies not only to the actual dividend declared but also to notional dividend deemed to have been declared under Section 23A of the Act. There is a manifest repugnancy between the provisions of the Ordinance and of S. 23A of the Act and it must be taken that there is an implied repeal of S. 23A of the Act to the extent of that repugnancy created by S. 3 of the Ordinance and so long as the Ordinance remains in force. In view of the provisions of Ss. 3 and 12 of the Ordinance the fiction created by S. 23A cannot, therefore, be brought into existence and thex Officer cannot pass an order under the provisions of that SectionIt is, indeed, true that as a result of the order of thex Officer 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 caseWe are unable to accept this argument as correct. In the first place, the repeal of the Ordinance under S. 13 of the 1949 Act is immaterial for, as we have already stated, Section 23A has created a fiction of distribution of the undistributed income as dividend and the Section further states that it would be deemed as if it was distributed on the date of the Annual General Meeting. Since the notional distribution contemplated by Section 23A of the Act is as if the notional distribution took place at the date of the Annual General Meeting it is the law which prevailed as on the date of the Annual General Meeting which has to be taken into account in considering the issue as to the legal validity of the order made by thex Officer. In the second place, Mr. S. T. Desai is not right in his contention that the effect of S. 13 of the 1949 Act is to obliterate the Ordinance completely from the Statute Book Section 6 of the General Clauses Act (Act 10 of 1897)