M. M. Parikh, Income-Tax Officer,
Special Investigation Cir Vs. Navanagar Transport & Industries Ltd. &
ANR [1966] INSC 243 (1 November 1966)
01/11/1966 SHAH, J.C.
SHAH, J.C.
RAMASWAMI, V.
BHARGAVA, VISHISHTHA
CITATION: 1967 AIR 823 1967 SCR (2) 38
CITATOR INFO:
D 1968 SC 816 (4) F 1971 SC2471 (9) F 1972 SC
236 (1,4,5,8,10) RF 1977 SC 459 (1,5,6)
ACT:
Indian Income-tax Act (11 of 1922), s.
23A-Order under Whether an "order of assessment" -Section 23A,
whether a charging section Limitation under s. 34(3) if applies.
HEADNOTE:
The appellant-Income-tax Officer issued a
notice to the assessee company to show cause why an order under s. 23A of the
Indian Income-tax Act, 1922 should not be made for the assessment year 1957-58.
The assessee applied to the High Court for 'a writ to restrain the appellant
from giving effect to the notice. The High Court held that an order under s.
23A of the Act after its amendment by the Finance Act, 1955, was an "order
of assessment" to which the period of limitation prescribed by s. 34(3)
applied and since such an order could not be made after the expiration of four
years from the end of the assessment year 1957-58 the proceedings initiated
against the; assessee in respect of the assessment year 1957-58 after March 31,
1962 was without jurisdiction.
HELD Section 23A is not a charging section
and an order made there under is not an "order of assessment" to
which the period of limitation prescribed by s. 34(3) applied.
Section 23A before it was amended by Finance
Act, 1955 was procedural. Section 23A(1), after it was amended by the Finance
Act. 1955 provides within itself machinery for imposition of liability to pay
additional super tax, but it has not on that account been made a charging
section. A charge to tax arises under ss. 3, 4 and 5 of the Act for payment of
income-tax and super tax and not under s. 23A.
[47 E] Section 23A does not use the
expression "assessment" in the body of cl. (1) : and to the title of
the section after it was amended, viz. "Power to assess companies to
super-tax on undistributed income in certain cases", it is impossible to
give any exalted meaning so as lo convert what is an order directing payment of
tax into an order of 'assessment within the meaning of s. 34(3) of the Indian
Income-tax Act, 1922. Every order which contemplates computation of income for
determination of the amount of tax payable is not an order of assessment within
the meaning of the Act : -nor does prescribing of procedure for determining and
imposing tax liability make it an order of assessment. 'Me Income tax Act
contemplates making of diverse orders by Income-tax Officers directing payments
of sums of money by tax payers which are of the nature of orders for payment of
tax, but still are not orders of assessment. [45 A-D]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1082 of 1965.
39 Appeal from the judgment and order dated
February 21, 1964 of the Gujarat High Court in Special Civil Application No.
802 of 1962.
S.V. Gupte, Solicitor-General, R. D.
Karkhanis and R. N. Sachthey, for appellant.
S. T. Desai and K. R. Chaudhari, for the
respondents.
R. Vankatraman and R. Gopalakrishnan, for
intervener No. 1.
S. P. Mehta, D. Pal and D. N. Gupta, for
intervener No. 2.
D. Pal and D. N. Gupta, for intervener No. 3.
R. Gopalakrishnan and S. Swaminathan, for
intervener No. 4.
The Judgment of the Court was delivered by
Shah, J. M/s Navanagar Transport & Industries Ltd.hereinafter called 'the
assessee'-is a company in which "the public are not substantially
interested" within the meaning of s. 23A of the Indian Income-tax Act,
1922. At the annual general meeting held on December 4, 1957, the Company
declared Rs. 8,767/as dividend payable to the shareholders for the year ending
March 31, 1957. The Income-tax Officer, Special Investigation Circle,
Ahmedabad, determined the taxable income of the assessee for the assessment
year 195758 at Rs. 1,10,769/-. Since the dividend declared by the Company was
less than the statutory percentage of the total income of the Company, as
reduced by the taxes specified in cls. (a) & (b) of sub-s. (1) of s. 23A,
the Income-tax Officer issued a notice on November 15, 1961 calling upon the
assessee to show cause why an order under s. 23A should not be made for the
assessment year 1957-58 and submitted the record to the Inspecting Assistant
Commissioner seeking permission under sub-s. (8). The assesses then applied to
the High Court of Gujarat under Art. 226 of the Constitution for a writ of
mandamus restraining the Income-tax Officer from giving effect to the notice
under s. 23A against the assessee.
The High Court held that an order under s.
23A of the Income-tax Act, 1922, after its amendment by the Finance Act, 1955,
is an "order of assessment" to which the period of limitation
prescribed by s. 34(3) applies and since such an order cannot be made after the
expiration of four years from the end of the assessment year 1957-58 the
proceedings initiated against the assessee in respect of the assessment year
1957-58 after March 31, 1962 was without jurisdiction.
The Income-tax Officer has appealed to this
Court with certificates granted by the High Court.
Section 23A has undergone changes from time
to time. Before it was amended by the Finance Act, 1955, s. 23A enacted that 40
where the Income-tax Officer is satisfied, that the dividends distributed by
the Company are less than sixty per cent of the assessable income of the
Company as reduced by the income-tax and super tax payable by the Company, he
shall make an order (except in certain circumstances specified) that the
undistributed portion of the assessable income of the Company computed for
income-tax purposes as reduced by the income-tax and super-tax in respect
thereof be deemed to have been distributed as dividends among the shareholders
and thereupon the proportionate share of each shareholder shall be included in
the total income of each shareholder for the purpose of assessing his total
income. Before an order under s. 23A, as it then stood, became effective, two
steps had to be taken(i) an order had to be made that the undistributed portion
of the assessable income of the Company shall be deemed to have been
distributed as dividends among the shareholders; and (ii) the deemed income of
each shareholder had to be included in the total income of such shareholder for
the purpose of assessing his total -income. An order declaring that the
undistributed portion of the income shall be deemed to have been distributed
was not an order of assessment: the order of assessment was made only when the Income-tax
Officer took action against each shareholder for bringing the deemed income of
each shareholder to tax in his individual assessment. The Legislature did not
provide any period of limitation for making an order declaring that the
undistributed portion of the income shall be deemed to be distributed as
dividends.
But since the order had to be followed up in
the assessments of the -shareholders individually, the order would, if made, be
ineffective, if it was not made within the period prescribed by s. 34(3); see
Commissioner of Income-tax, Bombay City-I v. Robert J. Sas .,and Others.(1).
The procedure for bringing to tax undistributed income of companies which
distributed less than the statutory percentage of its total income was clumsy
and dilatory.
Before tax could be recovered, enquiry had to
be made into the matters referred to in s. 23A (1) and also whether the Company
was one in 'which the 'Public were not substantially interested, and after the
order was made, each individual shareholder had to be separately .,assessed. in
respect of the deemed income.
The Legislature by the Finance Act, 1955,
altered the scheme for imposition and collection of tax. Section 23A as amended
by -the Finance Act, 1955, read as follows:
"(1) Subject to the provisions of
sub-sections (3) and (4), where the Income-tax Officer is satisfied that in
respect of any previous year the profits and gains distributed as dividends by
any company within the twelve months immediately following the expiry of that
previous year (1) [1963] : 209:48 I.T.R. 177.
Supp. 2 S.C.R.
41 are less than sixty per cent of the total
income of the company of that previous year as reduced by(a)the amount of
income-tax and super-tax payable by the company in respect of its total income,
but excluding the amount of any super tax payable under this section;
(b)the amount of any other tax levied under
any law for the time being in force on the company by the Government or by a
local authority in excess of the amount, if any, which has been allowed in
computing the total income and (c)in the case of a banking company, the amount
actually transferred to a reserve fund under section 17 of the Banking
Companies Act, 1949 (X of 1949);
the Income-tax Officer shall, unless he is
satisfied that, having regard to losses incurred by the company in earlier
years or to the smallness of the profits made in the previous year, the payment
of a dividend or a larger dividend than that declared would be unreasonable,
make "an order in writing that the company shall, apart from the sum
determined as payable by it on the basis of the assessment under section 23, be
liable to pay super-tax at the rate of four annas in the rupee on the
undistributed balance of the total income of the previous year, that is to say,
on the total income reduced by the amounts, if any, referred to in clause (a),
clause (b) or clause (c) and the dividends actually distributed, if any:
Provided that(a) in the case of a company
whose business consists. wholly or mainly in the dealing in or holding of
investments; and (b) in the case of any other company where the reserves
(including the amounts capitalised from the earlier reserves) representing
accumulations of past profits which have not been the subject of an order under
this sub-section, exceed either the aggregate of (i) the paid-up capital of the
company exclusive of the capital, if any, created out of its profits and gains
which have not been the subject of an order under this subsection, and (ii)any
loan capital which is the property of the shareholders, or the actual cost of
the fixed assets of the company, whichever of these is greater, Sup. CI/67-4 42
this section shall apply as if for the words sixty per cent of the total
income', wherever they occur, the words 'the whole of the total income' had
been substituted.
(2) No order under sub-section (1) shall be
made'(i) in the case of a company referred to in clause (a) of the Proviso to
that subsection, which has distributed not less than ninety per cent of its
total income as reduced by the amounts, if any, referred to in clause (a),
clause (b) or clause (c) of that sub-section, or (ii)in the case of any other
company which has distributed not less than fifty-five per cent of its total income
as reduced by the amounts, if any, aforesaid, or (iii)in any case where
according to the return made by a company under section 22, it has distributed
not less than sixty per cent of its total income as reduced by the amounts, if
any, aforesaid, but in the assessment made by the Income-tax Officer under
section 23 a higher total income is arrived at, and the difference in the total
income does not arise out of the application of the proviso to section 13
"or sub-section (4) of section 23 or the omission by the company to
disclose its total income fully and truly, unless the company, on receipt of a
notice from the Income tax Officer that he proposes to make such an order,
fails to make within three months of the receipt of such notice a further
distribution of its profits and gains so that the total distribution made is
not less than sixty per cent of the total income of the company of the relevant
previous year as reduced by the amounts, if any, aforesaid.
(3)Where on an application presented to him
in this behalf by a company within the period of twelve months referred to in
sub-section (1) or within the period of three months referred to in sub-section
(2), the Commissioner -of Income-tax is satisfied, having regard to the current
requirements of the company's business or such other requirements as may be
necessary or advisable for the maintenance and development of that business,
the declaration or payment of a dividend or a larger dividend than the proposed
to be declared or paid would be unreasonable, he may reduce the amount of the
minimum distribution required of that company under sub-section (1) to such
figure as he may consider fit and further determine the period within which
such distribution should be made.
The principal change made by the amendment
was that in the conditions prescribed by the section, the Company and not the
43 shareholders were made liable to pay tax, and for that purpose the procedure
was rationalised. The original scheme which contemplated two orders--One
against the Company and the other against each individual shareholder was
replaced by the imposition of tax liability upon the Company, on the income-tax
Officer being satisfied about the existence of preliminary conditions which
attracted liability to additional super-tax.
By the Finance Act 26 of 1957 the section was
further modified. Sub-sections (1) & (2), insofar as they are material,
were substituted by the following sub-sections:
" (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 within the twelve months immediately
following the expiry of that previous year are less than the statutory
percentage of the total income of the company of that previous year as reduced
by(a)the of income-tax and super-tax payable by the company in respect of its
total income, but excluding the amount of any super-tax payable under this
section;
(b) the amount of any other tax levied under
any law for the time being in force on the company by the Government or by a
local authority in excess of the amount, if any, which has been allowed in
computing the total income; and (c) in the case of a banking company, the
amount actually transferred to a reserve fund under section 17 of the Banking
Companies Act, 1949the Income-tax Officer, shall, unless he is satisfied that
having regard to losses incurred by the company in earlier years or to the
smallness of the profits made in the previous year, the payment of a dividend
or a larger dividend than that declared would be unreasonable., make an order
in writing that the company shall, apart from the sum determined as payable by
it on the basis of the assessment under section 23, be liable to pay super-tax
at the rate of fifty per cent in the case of a company whose business consists
wholly or mainly in the dealing in or holding of investments, and at the rate
of thirty-seven per cent in the case of any other company, on the undistributed
balance of the total income of the previous year, that 'is to say, on the total
income reduced by the amounts, if any, referred to in clause (a), clause (b) or
clause (c) and the dividends actually distributed, if any.
44 (2) No order under sub-section (1) shall
be made,(i) in the case of a company whose business consists wholly or mainly
in the dealing in or holding of investments which has distributed not less than
ninety per cent of its total income as reduced by the amounts, if any, referred
to in clause (a), clause (b) or clause (c) of sub-section (1); or (ii)in the
case of any other company whose distribution falls short of the statutory
percentage I by not more than five per cent of, its total income as reduced by
the amounts, if any, aforesaid; or (iii)in any case where according to the
return made by a company under section 22, it has distributed not less than the
statutory percentage of its total but in the assessment made by the Income tax
Officer under section 23 a higher total income does not arise out of the
application of the proviso to section 13 or sub-section (4) of section 23 or
the omission by the company to disclose its income fully and truly;
unless the company, on receipt of a notice
from the Income-tax Officer, that he proposes -to make such an order, fails to
make within three months of the receipt of such notice a further distribution of
its profits and gains, so that the total distribution made is not less than the
statutory percentage of the total income of the company as reduced by the
amounts, if any, aforesaid;" Sub-sections (3) to (7) of s. 23A as
introduced by the Finance Act, 1955, were omitted. By this amendment, the
scheme for imposing liability for payment of additional super-tax was not
altered.
It was urged before the High Court, and the
argument appealed to the High Court, that an order under s. 23A as amended by
the Finance Act, 1955, and as further modified by the Finance Act, 1957, by the
Income-tax Officer directing payment of additional super tax was an order of
assessment which could only be made before the expiry of the period of
limitation prescribed by s. 34(3) of the Income-tax Act, 1922. In support of
this view, it was said that the expression "assessment" used in the
Indian Income-tax Act, 1922, has different meanings in the context in which it
occurs: sometimes it is used as meaning computation of income, sometimes as
determination of the amount of tax payable, and sometimes the procedure for
imposing liability upon the tax-payer.
45 Reliance in this behalf was placed upon
the judgment of the Privy Council in Commissioner of Income-tax, Bombay
Presidency & Aden v. Khemchand Ramdas.(1) But s. 23A does not use the
expression "assessment" in the body of cl. (1):
and to the title of the section after it was
amended, viz.
"Power to assess companies to super-tax
on undistributed income in certain cases", it is impossible to give any
exalted meaning so as to convert what is an order directing payment of tax into
an order of assessment within the meaning of s. 34(3) of the Indian Income-tax
Act, 1922.
Every order which contemplates computation of
income for determination of the amount of tax payable is not an order of
assessment within the meaning of the Act: nor does prescribing of procedure for
determining and imposing tax liability make it an order of assessment. The
Income-tax Act contemplates making of diverse orders by Income-tax Officers
directing payments of sums of money by tax-payers which are of the nature of
orders for payment of tax, but which are still not orders of assessment. For
instance, under s. 18A(1) the Income-tax Officer is entitled to direct advance
payment of tax. An order may also be made under s. 35(9) where the Income-tax
Officer is satisfied that the income-tax payable by a Company on its profits
and gains out of which the Company has declared a dividend, has not been paid
within three years after the financial year in which the dividend was declared,
he may proceed to re-compute the amount by reducing it in, the same proportion
as the amount of income-tax remaining unpaid by the Company bears to the amount
of; income-tax payable by it on such profits and gains. Similarly under sub-s.
(10) of s. 35, before it :was deleted by the Finance Act, 1959, where a rebate
of income tax was allowed to a company on a part of its total income and
subsequently the amount on which the rebate of income tax was allowed was
availed of by the Company, for declaring dividends in any year, the Income tax
Officer had to re-compute the tax by reducing the rebate originally allowed.
Again by s. 35(l1), as added by the Finance
Act of 1958, development rebate in respect of a ship, machinery or plant under
s. 10(2)(vi-b) could be deemed to have been wrongly allowed if the ship,
machinery or plant was sold or otherwise transferred, or the amount credited to
the reserve account under that clause was diverted for another purpose within
ten years, and the Income tax Officer had to re-compute the income, and levy
tax on the footing of such recomputed income. In each of these cases there is
computation of income, determination of tax payable and procedure is prescribed
for imposing liability upon the tax-payer. But still these are not orders of
assessment within the meaning of s. 23. The salient feature of these and other
orders is that the liability to pay tax arises not from the charge created by
statute, but from the order of the Income-tax Officer.
(1) 6 I.T.R. 414.
46 The argument that S. 23A is a
self-contained section imposing liability to pay additional super-tax does not
convert that section into one for assessment of tax. There is undoubtedly a
hearing before liability is imposed for payment of additional super-tax; there
is declaration of liability and the liability is determined in the manner
prescribed by the section. That there is, as was argued before this Court,
"a considerable parallel between ss. 23 & 23A" will not justify
the assumption that what is done by an order under s. 23A as amended is
assessment of tax liability. There is a vital difference between the assessment
of tax under s. 23 and imposition of liability under s. 23A. Tax liability
quantified by an order under s.
23 is a charge statutorily imposed by ss. 3
& 4 of the Act.
It is true that the statutory liability is,
till the last day of the year of account, ambulatory, but the charge is still a
statutory charge on income. The function of the Income-tax Officer is to
compute the taxable income and to crystallize the charge on the taxable income.
Under S. 23A there is no statutory charge in respect of additional super tax
and the liability is imposed by the order of the Income tax Officer. Source of
the liability to pay additional super-tax is not in ss. 3 & 4 of the Act:
it lies in and arises out of the order of the Income-tax Officer. Before
imposing liability for additional super-tax, the Income-tax Officer has to
determine whether the Company is one to which the provisions of s. 23A apply;
he has also to determine whether the Company has distributed within twelve
months immediately following the expiry of the previous year the statutory
percentage of the total income of the Company as reduced by the taxes and
levies prescribed therein; he has also to determine whether, having regard to
the loss incurred by the Company in the earlier years or to the smallness of
the profits made in the previous year, the payment of a dividend or a larger
dividend than that declared would be unreasonable. It is after making these
enquiries that the Income-tax Officer may make the order directing payment of
additional super-tax at the rates prescribed. The process to be followed is not
the process of assessment, but of determining whether the liability should be
charged and imposed. For that purpose the Company is given a right to explain
the reasons for failure to distribute the statutory percentage of profits as
dividends.
In certain special circumstances contemplated
by sub-s. (2) of S. 23A, the order imposing tax liability cannot be made unless
the Company after receiving a notice from the Income tax Officer that he
proposes to make such an order fails to make within three months of the order
further distribution of its income so that the total distribution made is not
less than the statutory percentage of the total income of the Company of the
relevant previous year as reduced by the amounts, if any, aforesaid. Provision
was also made in subs. (3) inserted by the Finance Act of 1955 authorising the
Commissioner of Income-tax to reduce the amount of minimum distribution
required of a Company, if having regard to the current 47 requirements of the
Company's business or such other requirements as may be necessary, or advisable
for the maintenance or development of the business, the declaration or payment
of a dividend or a larger dividend than that proposed to be declared was
unreasonable.
It was urged that under the Indian Income-tax
Act 43 of 1961 the Parliament has prescribed by s. 106 for making an order
under s. 104 (of which the scheme is similar to the scheme of s. 23A as
amended) a period of limitation. Section 106 of the Income-tax Act, 1961,
provides that no order under s.104 shall be made after the expiry of four years
from the end of the assessment year relevant to the previous year referred to
in sub-s. (1) of that section, or after the expiry of one year from the end of
the financial year in which the assessment or re-assessment of the profits and
gains of the previous year aforesaid is made, whichever is later. But the
provisions of s. 23A have to be construed as they stood before the Act of 1961
was enacted, and the mere fact that the Legislature has chosen to specify a
period of limitation for making an order imposing liability under s. 104 of the
Act of 1961 upon a Company which has failed to distribute the statutory
percentage of its distributable income will not justify an inference that such
a period of limitation was implicit in the previous Act.
Section 23A, before it was amended by the
Finance Act, 1955, was undoubtedly procedural: Commissioner of Income-tax,
Bombay City-I v. Afco (Private) Ltd.(1). Section 23A (1), after it was amended
by the Finance Act, 1955, provides within itself machinery for imposition of
liability to pay additional super-tax, but it has not on that account been made
a charging section. A charge to tax arises under ss. 3, 4 & 55 of the Act
for payment of income-tax and super-tax and not under s. 23A. Some additional
indication which supports the view which we have expressed is furnished by ss.
30 & 31 of the Indian Income-tax, Act. Section 30 provides for appeals from
certain specified orders of the Income-tax Officer to the Appellate Assistant
Commissioner. Under s. 30 an assessee denying his liability to be assessed
under the Act may appeal against the order of assessment. If the assessee is a
company it may also appeal against an order made under s. 23A (1) under s. 30.
If an order under s. 23A were to be regarded as an order of assessment, it was
plainly unnecessary to retain, after the amendment by the Finance Act, 1955,
the right to appeal against the order made under sub-s. (1) of s. 23A by an
independent clause. It is true that by s. 20(4) of the Finance Act, 1955, it was
expressly enacted that the provisions of s. 23A of the Income-tax Act as in
force immediately before April 1, 1955, shall continue to apply to a company in
respect of which profits and gains of the (1) [1963] Supp. 1 S.C.R. 766: 48
I.T.R. 76.
48 previous year relating to the assessment
year prior to the assessment year ending March 31, 1956, and also to its
shareholders referred to in sub-s. (1) of s. 23A as then in force in respect of
their appropriate previous years, and this necessitated that the right to
appeal against the order under s. 23A before it was amended be preserved. But
there is nothing. in s. 30 which indicates that the reference to the right of
appeal was restricted to orders under s. 23A, before the Act was amended by the
Finance, Act; 1955, and that it did not refer to an order made under s. 23A(1)
after that clause was amended. The specific clause relating to the right of
appeal reserved against the order under sub-s. (1) of s. 23A is general, and
confers a right of appeal against the order passed under sub-s. (1) of s. 23A
before it was amended by the Finance Act, 1955, and also under s. 23A after it
was amended. There is no such reservation of the nature suggested by counsel
for the assessee, and we see no reason to hold that the Legislature intended to
make such a reservation and did not expressly so provide.
Under sub-s. (2) of s. 30 different periods
of limitation for filing appeals against various orders under the Income tax
Act are prescribed. Against an order of assessment, an appeal lies within 30
days from the date of receipt of notice of demand objected to, and against an
order under s. 23A. an appeal lies within 30 days from the intimation of an
order under that section. The Act does not call the order under s. 23A (1) for
payment of additional super-tax a notice of demand. If the argument that an
order under s. 23A, after it was amended, is an order of assessment, evidently
the period of limitation covered by the first clause, namely, thirty days from
the receipt of notice of demand will apply. It could not have been intended
that the right of appeal could be exercised either within thirty days from the
date on which an order under s. 23A was intimated or within thirty days from
the date of receipt of notice of demand. Similarly, s. 31, which deals with the
right of appeal from an order of assessment to the Appellate Assistant
Commissioner, provides by sub-s. (3) that in disposing of an appeal the
Appellate Assistant Commissioner may, in the case of an order of assessment-(a)
confirm, reduce, enhance or annul the assessment or (b) set aside the
assessment and direct the Income-tax Officer to make a fresh assessment after
making such further inquiry as the Income tax Officer thinks fit, or the
Appellate Assistant Commissioner may direct, etc. and in the case of an order
under sub-s. (1) of s. 23A under cl. (d) confirm, cancel or vary such order. If
an order under sub-s. (1) of s. 23A was an order of assessment, even after the
Act was amended, it was unnecessary to retain cl. (d) in that form.
The right to prefer an appeal could obviously
be exercised both against an order under s. 23A before it was amended and after
it was amended. Since the Legislature has not chosen to make 49 suitable
amendments to restrict the right of appeal only to those cases where the right
is exercised against an order declaring that the undistributed portion of the
income shall be deemed to be distributed, it May reasonably be inferred that
the right is exercisable in respect of the orders made prior to the amendment
made by the Finance Act, 1955, and also orders made thereafter.
It was pointed out that under s. 45 of the
Act reference to sub-s. (3) of s. 23A could only be to the section as it stood
before the amendment by the Finance Act, 1955.
Insofar as it is material, s. 45 provides:
"Any amount specified as payable in a
notice of demand under sub-section (3) of section 23A Shall be paid within the
time, at the place and to the period mentioned in the notice or order Under
sub-s. (3) of s. 23A before it was amended by the Finance Act of 1955, tax
payable on the proportionate share of any member of a company in the
undistributed profits was liable to be recovered from the Company, if it could
not be recovered from the shareholder. By the Finance Act, 1955, this clause
was deleted and another clause which had nothing to do with recovery of tax was
substituted as sub-s. (3).
By the Finance Act, 1957, that new sub-s. (3)
has been deleted. Section 45 deals with recovery of tax and in the context in which
it occurs, reference in s. 45 to sub-s' (3) of s. 23A can only mean reference
to that sub-section as it stood prior to the Finance Act of 1955. But that cannot
be a ground for inferring that by s.23A which is referred to in ss. 30 & 31
only intended to refer to the section as it stood before the Finance Act, 1955.
The appeal is allowed and the petition filed
by the assessee its dismissed with costs in this Court and the High Court.
Y.P.
Appeal allowed.
Back
