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

2. Following its earlier decision in Commr. of Income Tax, West Bengal v. Deoria Sugar Mills Ltd. (1971) 80 ITR 408 (Cal), the High Court answered that question in favour of the assessee. Aggrieved by that decision the Commissioner of Income Tax for West Bengal has brought this appeal.3. The facts material for the purpose of deciding this question as could be gathered from the case stated by the Tribunal may now be set out The assessment year with which we are concerned in this case is 1959-60; the relevant accounting year being the calendar year 1958. The assessee is a Tea Company. For the assessment year 1959-60 it was assessed to a total income of Rs. 55,257/-. The Corporation tax payable by the assessee on that amount was computed at Rupees 26,357/-. On that a rebate of Rupees 16,114/- was allowed under the provisions of the Finance Act 1959; Thereafter that rebate was withdrawn by the Income Tax Officer on the ground that there was an unabsorbed reduction of rebate amounting to Rs. 27,144/in the assessment year 1957-58. While making assessment for the assessment year 1959-60 the Income Tax Officer reduced the rebate to nil by taking into consideration the unabsorbed reduction of rebate in the assessment year 1957-58. At this stage it may be noted that in the assessees assessment for the assessment year 1958-59 the loss of Rs. 73,920/- was determined and no corporation tax was levied for that year.4. It was contended before the Income-tax Officer that the unabsorbed reduction in rebate for the year 1957-58 could only be carried forward and set off against the rebate for the assessment year 1958-59 under the provision of the Finance Act,1958, and as there was no rebate available for She assessment year 1958-59, the unabsorbed reduction in rebate exhausted itself and could not be further set off against the rebate available for the assessment year l 959-60. This contention was rejected by the Income-tax Officer. In appeal, the Appellate Assistant Commissioner confirmed the decision of the Income-tax Officer but on a further appeal being taken to the Tribunal, the Tribunal accepted the contention of the assessee and thereafter, at the instance of the Commissioner, the question formulated above was referred to the High Court. As mentioned earlier, the High Court has answered that question in favour of the assessee.

Reasoning:
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.