HARGOVIND PANT

DR. RAGHUKUL TILAK & ORS.

May 4, 1979

[Y. V. CIIANDRACHUD, C.J., P. N. BHAGWATI, N. L. UNTWAU, I,

S. MURTAZA FAZAL ALI AND R. S. PATHAK, JJ.]

Constitution of India, 1950-Art. 319(d)-Scope of-G<>Vernor-11 an "t'niployee" of the Governn1ent of J11dia-If could be regarded as "fmployed under the Government of India"-Employed-Meaning of.

Article 319fd) of the Constitution provides that on ceasing to hold otliet: a member, other than the Chairman of a State Public Service commission, shall be eligible for appointment as the Chairman or any other member of the Union Public Service Commission or as the Chairman of that or any other State Public Service Commission but not for any other employment either under the Go'Jernment of India or under the Government of a State.

The first respondent, who we.s a member of the Rajasthan State Public Service Commission during the years 1958-59, was later appointed as Governor of the State of Rajasthan. The petitioner contended that by virtue of Art. 319 ( d) of the Constitution the respondent was ineligible to be appointed as Governor of a State because he W&S a member of' the State Public Service Commission earlier.

On the question whether, by reason of Art. 319 (d) the respondent was ineligible for employment either under the Government of India or under the Government of a State and whether the office of Governor was an employn1ent under the Government of India.

HELD : 1. The office of Governor of a State is not an employment under tho Government of India and it does not therefore come with.in the prohibition of cl.(d) of Art. 319. The appointment of the first respondent as Governor of Raiasthan could not be held to be invalid. [982 F).

2. Howsoever wide and expansive a meaning one may give to the words "employment under the Government of India" the office of Governor cannot come within that term. [978 F).

3. The word "employment" is not a word with a. single fixed meaning bur bas many connotations. If the term 0 employment" is construed in the narrow senile of employer employee relationship the office of Gove1nor would not be an employment within the meaning of Art. 319(d) because 1he Governor of a State is not an employee or servant of anyone. He occupie:s a high constitutional office with important constitutional functions and duHes. The executjve

power of the State is vested in him and every executive action of the Government is required to be expressed to be taken in his name. lie contitutes an integral part of the legislature of the State though not in the ful1est sense and is also vested with the legislative power to promulgate ordinances while the Ho:1ses of the Legislature are not in session. He also exercises the sovereign power to grant pardons, reprieves, respite etc. He is vested with the power to summon (972)

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I . ,).._

HARGOVIND v. R. TILAK 973

each House of the Legislature, or to prorogue either House or to dissolve the A legislative assembly and this power may be exercised by him from time to time.

No bill passed by the Houses of the Legislature can become law untes., it is a&sented to by him and before assenting to the bill he may return the bill, (provided it is not a money bill) to the Houses of Legislature for reconsideration.

He has the power to reserve for consideration of the President any bill which in. his opinion would, if it became law, so derogate from the powers of the High Court as to endanger the position which that Court is by the ConstitutioR B designed to fill. Another important function of his is to make a report to the President where he finds that a situation bas arisen in which the Government of a State cannot be carried on in accordance with the provisions of the Constitution. It is the Governor's report which generaily forms the basis for the President taking action under Art. 356, of the Constitution. These powers and func

tions of the Governor make it clear that he is not an employeeor servant in any sense of the term. [978 H; 979 A-B].

4. Though the Governor is appointed by the President, which means in effect and substance the Government of India, it does not make him an employee or

servant of the Government of India. Every person appointed by the President is not necessarily an employee of the Government of India. [979 G].

5. The fact that the Governor holds office during the pleasure of the PrC8ident does not make the Government of India l'l.Il employer of the Governor.

It is only a constitutional provision for determination of the term of oftlce of the Governor. The Governor is the bead of the State and bold! a high constitutional office which carries with it important constitutional functions and duties and be cannot be regarded as tlll employee or servant of the Government of

India. If the word "employment" were construed to mean relationship of E employer and employee, the office of Governor would not be an "employment"

within the meaning of cl.(d) of Art. 319. [979JI].

6. An employment can be said to be under the Government of India if the holder or incumbent of the employment is under the control of the Govera.ment of India vis-a-vi.Y such employment. If this test is applied to the office of Governor, it is impossible to hold that the Governor is under the control of the Government of India. His office is not subordinate or subservient to the Government of India. He is not amenable to the directions of the Government of India, nor is he accountable to them for the manner in which he carries out

hli: functions and duties. His is an independent constitutional office which is not subject to the control of the Government of India.

He is constitutionally the head of the State in whom is vested the executive power of the State ud without whose assent there can be no legislation in exercise of the legislatiYe power of the State. There can be no doubt that the office of Governor is not an employment under the Government of India and it does not come within the prohibition of Art. 319(d). [981 A-BJ.

Pradyat Kumar Bose v. The Hon'ble the Chief Justice of Calwtt• Hih Court, [1955] 2 SCR 1331; Baldev Raj Guliani & Ors. v. The Punjab & Haryana B High Court & Ors., [1977] I SCR 425; Union of lndla v. S. H. Sheth le Anr., [l 978) I SCR 423; referred to.

CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil)- No. 1596 of 1978.

From the Judgment and Order dated 8·11·1977 of the Rajasthan High Court in S. B. Civil Writ Petition No. 311/77.

Sonmath Chatterjee, Dilip Sinha and K. R. Nambiar for the Petitioner.

F. S. Narima11, (for R. 1), Soli !. Sorabjee, Addi. Sol. Genl. (for RR 5 and 6) Dr. S. K. Tewari, S. M. Jain and S. K. Jain for Respondent 1, 5 and 6.

V. M. Tarkunde, C. M. Math11r. Manaj Swarup and Miss La/ita Kohli for Respondents 3 and 4.

The Judgment of the Court was delivered by

BHAGWATI, J., This petition for special leave to appeal is directed against an order made by a Full Bench of the Rajasthan High Court dismissing the writ petition filed by the petitioner for quashing and setting aside an order of reversion passed against him by the 4th re~ pondent in his capacity as the Acting Vice-Chancellor of the University of Rajasthan. The order of reversion was challenged on several grounds, but they were all negatived by the Full Bench and the writ petition was dismissed on a preliminary hearing. The petitioner has raised the same grounds of challenge in this special leave petition, but barring one ground, which calls for a reasoned judgment, we do not think there are any other grounds which require detailed consideration and we reject them in limine. The only ground which needs to be considered . and which we propose to dispose of by this judgment is a constitutional one, namely, whether the appointment of the !st respondent as Governor of Rajasthan is valid. This question becomes material because if it is found that the !st respondent could not be validly appointed as Governor of Rajasthan and his appointment as Governor is invalid, he would not be the Chancellor of the Rajasthan

University and he would have no authority to appoint the 4th respondent as Acting Vice-Chancellor under section 12, sub-section {7) of the University of Rajasthan Act and if the appointment of the 4th respondent as Acting Vice-Chancellor is invalid, the impugned order of reversion made by him would fall. We are, therefore, called upon to consider in this special leave petition whether the appointment of the ht respondent as Governor of Rajasthan is valid. The only ground on which the validity of the appointment has been assailed is that the !st respondent was a member of the Rajasthan Public Service

Commission during 1958-59 and he was, therefore, by reason of Article 319, clause (d) of the Constitution, ineligible for any employment either under the Government of India or under the Government of a State and since the office of Governor is an employment under the Government of India, the 1st respondent could not validly be appointed to that office.

This ground raises a question of considerable importance relating to the applicability of Article 319, clause (d) to the office of Governor.

We shall have to consider the true nature of the office of Governor in order to determine whether it is an employment under the Government of India, but before we do so, we may first have a look at Article 319.

This Article consists of clauses (a) to (d) and these

clause~. on a combined reading, impose prohibition on holding of any employment under the Government of India or the Government of a

Srate by the Chairman or member of the Union Public Service Commission or a State Public Service Commission on his ceasing to be such Chairman or member.

This prohibition has been enacted in public interest with a view to ensuring that no allurement is held out to the Chairman or members of the Union Public Service Commission or a State Public Service Commission which would deflect them from the path of rectitude and duly. The Union and State Public Service Commissions are charged inter alia with the duty of advising the Government on various matters relating to civil services and civil posts such as methods of recruitment, appointments, promotions and transfers and disciplinary matters and it is of utmost importance for the efficiency and integrity of the civil services that this duty should be pedormed by the Union and State Public Service Commissions objectively, impartially and without being influenced by any extraneous considerations. The Union and Stile Public Service Commission have vast powers of recruitment to an immense and increasing host of C'JOvernment posts and in a country with considerable unemployment, these powers may l:>e prone to be abused if the office of Chairman and member of the Union and Srate Public Service Commissions is exposed to executive or political pressures.

The prospect and peril of the executiw or the politician trying to influence overtly or covertly the

Chairman and members of the Union and Stte Public Service Commissions by dangling the carrot or holding out the possibility of employment under the Government after the expiry of their term of office may corrupt the integrity of the institution of the Union and State Public Service Commissions. It is true that by and large the Chairman and members of the Union and State Public Service Commissions would be men of proven merit and intergrity and no allurement, howsoever attractive, would deflect them !ram doing their duty without fear

or favour,, but even so, the possibility of obtaining employment under the Government in future may consciously or unconsciously induce them to fall in line with the wishes of the executive or the politician.

The office of the Chairman and member of the Union and the State Public Service Commissions must, therefore, be zealously kept beyond reproach and above suspicion.

It was pointed out as far back as 1924 by the Royal Commission on Superior Services in India, popularly called the Lee Commission :

"Wherever democratic institutions exist, experi1rnce has shown that to secure an efficient civil 'service it is essential to protect it as far as possible from political or personal influence and give it that position of stability and security which is vital to its successful working as the impartial and efficient instrument by which governmentS, of whatever political complexion, may give effect to their policies.

In countries where this principle has been neglected, and where the 'spoils system' has taken its place, an inefficient and disorganised civil service has been the inevitable result and corrnption has been rampant."

It was as a result of this recommendation that Public Service Com-- missions were set up in the country with the objective outlined by the Lee Commission.

When Article 285(3) of the Draft Constitution providing for ineligibility of the Chairman and members of L'le Union and the S•ate Public Service Commissions for future employment under the Government was being debated in the Constituent ASsembly, Dr. Ambedkar pointed out the raison d'etre of that provision in the following words:

"Now I come to the other important matter relating to the employment or eligibility for employment of the members of the Public Services Commission both the Union and State Public Services Commissions. Members will see that according to Article 285, clause (3), we have made both the Chairman and the Members of the Central Public Services Commission as welJ as the Chairman of the State, Commission and the members of the State Commission, ineligible for reappointment to the same posts : that is to say, once a term of office of a Chairman and Member is over, whether he is a Chair'1lan of the Union Commission or the Chairman of a State Commis- H sion, we have said that he shall not be reappointed.

I think that is a very salutary provision, because any hope that might be held out for reappointment, or continuation in the same

( j

• J ~~ ''>-

appointment, may act as a sort of temptation which may induce the Member not to act with the same impartiality that he is expected to act in discharging his duties.

Therefore, that is a fundamental bar which bas been provided in the draft article."

Shri H. V. Karnath also spoke in the same strain while adverting to this topic :

"It is agreed on all hands that the permanent services play an important role in the administration of any country. With the independence of our country the responsil;?ilities of the services have become more onerons. They may make or mar the efficiency of the machinery of administration call it steel frame or what you will-a machinery which is so vital for the peace and progress of the country."

x x x

"If a Member of the Public Service Commission is under the impression that by serving and kotowing to those in power he could get an office of profit under the Government of India or in the Government of a State, then I am sure he

would not be able to discharge his. functions impartially E or with integrity."

x x x x

"The public here have sometimes been made to feel that family or group interests have been promoted at the expense of the national; and to protect the Ministers against such a charge, it is necessary that the Public Service Commissions mu.•t be kept completely independent of the executive .... "

It is, therefore, clw that the Constitntion makers were anxious to insulate the Chairman and members of the Union and State Public Service Commissions from executive or political pressures or influences and to place them beyond the reach of any allurement or temptation which may cloud their judgment and deflect them from doing their duty. The Constitution makers were keen to ensure that the Chairmen and members of the Union and State Public Service Commissions were above reproach, free from coercion and political influence and they could, if necessary, stand up against the executive and defy any political pressure.

It was with this end in view that the Constitution makers enacted

clauses (a) to (d) of Article 319 prohibiting future employment under the Government of India or under the Government of a State for the Chairmen and members of the Union and State Public Service Commissions.

We are concerned in this special leave petition only with clause ( d) of Article 319 since the 1st respondent was a member of the Rajasthan Public Service Commission and it is on account of that fact that it is claimed that he was ineligible to be appointed Governor of Rajasthan.

Oause (d) of Article 319 provides : "On ceasing to hold office---a member other than the Chairman of a State Public Senrice Commission c shall he eligible for appointment as the Chairman or any other member of the Union Public Service Commission or as the Chairman of thot or any other State Public Service Commission, but not for any other employment either under the Government of India or under the Government of a State". It is, therefore, obvious that the !st respondent could be appointed Chairman or any other member of the Union Public Sero vice Commission or Chairman of the Rajasthan or any other State

Public Service Commission, but he was ineligible for any other employment either under the Government of India or under th<e Government of a State. Now, it was not the case of the petitioner that the office of Governor was an employment under the Government of a State and the only question which, therefore, requires to he considered is whether E the office of Governor can he said to be an employment under the

Government of India. If it is, then undoubtedly the 1st respondent could not be appointed Governor of Rajasthan and hi"s appointment would he invalid.

But we are of the view that howsoever wide and expansive a meaning we may give to the words "employment . . under the Government of India",. the office of Governor cannot come within it.

The tirst question that arises on the applicability of the words "employment. .. under the Government of India" is whether the office of Governor is an 'employment' within the meaning of that expression in G clause (d) of Article 319. What is the sense in which that word has been used in this Article ?

Semantically, !he word 'employment' is not a word with a single fixed meaning but it has many connotations. On the one side it may bear the narrow meaning of relationship of employer and employee and on the other, it may mean in its widest connotation any engagement or any work in which one is engaged. If the former be H the 11ense in which the word 'employment' is used in clause (d) of Article 319, the office of Governor would certainly not be an employment,

because the Governor of a State is not an employee or servant of any

. .J.

...

HARGOV!ND v. R. T!LAK (Bhagwati, J.) 979

one.

He occupies a high constitutional office with important constitutional functions and duties.

The executive power of the State is vested in him and every executive action of the Government is required to be expressed to be taken in his name. He constitutes an integral part of the legislature of the State though not in the fullest sense, and is also

vested with the legislative power to promulgate ordinances while the Houses of the Legislature are not in session.

He also exercises the sovereign power to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence against any law relating to a matter to which the executive power of the State extends.

He is vested with the power to summon each House of the Legislature or to prorogue either House or to dissolve the legislative assembly and this power may be exercised by him from time to time. He is also entitled to address either House of the Legislature or both Houses assembled together and he may send messages to the House or Houses of the Legislature with respect to a bill the~ pending in the legislature or otherwise. No bill passed by the Houses of the Legislature can become law unless it is assented to by him and before assenting to the bill he may return the bill, provided it is not a money bill to the Houses of the Legi'slature for reconsideration. He has also the power to reserve for consideration of the President any bill which in his opinion would, if it became law, so derogate from the powers of the High Court as to endanger the position which that court is by the Constitution designed to fill. There is also one highly significant role which he has to play under the Constitution and that is of making a report where he finds that a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of the Constitution. It is the Governor's report which generally fonns the basis for the President taking action under Article 356 of the Constitution. It will be seen from this enumeration of the constitutional powers and functions of the Governor that he is not an employee or servant in any sense of the term.

It is no doubt true that the Governor is appointed by the President which means in effect and substance the Government of India, but that is only a mode of appointment and it does not make the Governor an employee or servant of the Government of India.

Every person appointed by the President is not necessarily an employee of the Government of India.

So also it is not material that the Governor holds office during the pleasure of the President : it is a constitutional provision for determination of the term of office of the Governor and it does not make the Government of India an employer of the Goverc

nor. The Governor is the head of the State and holds a high constitu- H tional office which carries with it important constitutional functions and duties and he cannot, therefore, even by stretching the language

to a breaking point, be regarded as an employee or servant of the Government of India. If, therefore, the word 'employment' were construed to mean relationship of employer and employee, the office of Governor would certainly not be an 'employment' within the meaning of clause (d) of Article 319.

But if we accept the wider meaning of the word 'employment' "' conn_oting any engagement or any work in which one is engaged, as in the expression 'self-employment'. the office of Governor would clearly be an 'employment' within the meaning of clause (d) of Art. 319. That, however, would not be enough to attract the applicability of this provision. There is a further requirement which is necessary and that is that the employment must be under the Government of India. Now, what is the meaning of this expression "under the Government of India"? Fortunately, there are two decisions of this Court which throw some light on this question.

The first is the decision in Pradyat Kumar Bose v The Hon'ble the Chief Justice of Calcutta High Court(') where the question was as to whether the officers and members of the staff of the High Court could be said to be persons "serving under the Govcrmnent of India or the Government of a State. in a civil capacity" so as to be within the scope of Article 320(3) (c) which requires consu!tation with the appropriate Public Service Commission in disciplinary matter.s. This Court speaking through Jagannadhadas, J., pointed om : "the phrase 'a person' serving under the Government of India or the Government of 'a State' it seems to have reference to such persons in respect cf whom the administrative control is vested in the respective executive Govern .. ments functioning in the name of the President or of the Governor or Olf a Rajpramukh. The officers and staff of the High Court cannot be said to fall within the scope of the above phrase because in respect of them the administrative control is clearly vested in the Chief Justice-". The question which arose in the other decision in Baldev Raj Guliani & Ors.

v. The Punjab & Haryana High Court & Ors.(') was a similar one and it related to the applicability of Article 320(3) ( c) to Judicial Officern in the State.

Here in this case also the Court took the same view anc, after referring to the earlier decision in Pradyat Kumar Bose's case wit'1 nppiovo?, held ti1at "just as the High Court staff are rot strving under the Government of the State, the Judicial Officers are al'so not serving under the State Government", because they arc "entirely under the jurisdiction of the High Court for the purpose of control and discipline".

It will,

(t) [1955] 2 S. C.R. 1)1!.

(21 [1977] I S. C. R. 425.

• }

therefore, be seen that the employment can be said to be under the Go- A•

vernmnt of India if the holder or incumbent of the employment is under the control of the Government of India vis-a-vis such employment. Now, if one applies this test to the office of Governor, it is impo'ssible to hold that the Governor is under the control of the Government of India.

His office is not subordinate or subservient to the Government of India.

B He is not amenable to the directions of the Government of India, nor is he acoountable to them for the manner in which he carries out his functions and duties. His is an independent constitutional office which is not subject to the control of the Government of India. He is constitutionally the head of the State in whom is vested the executivt' power of the State and without whose assent there can be no legislation in exercise of the legislative power of the State.

There can,, therefore, be no doubt that the ollice of Governor is not an employment under the Government of India and it does not come within the prohibition of clause (d) of Article 319.

D We may point out that the Governor of a State is not the only coni; titutional functionary whose employment is not under the Government.

There are under the Constitution many other high functionaries, such as Judges of the Supreme Court and the High Courts, who do not hold any employment under the Government of India, although they exercise State power.

This Court, while examining the constitutional position of a High Court Judge, pointed out in the Union of India v. S. H. Sheth & Anr.(') that a High Court Judge is not a Government servant: there is no relationship Of employee and employer subsisting between him and the Government.

He is a holder of a constitutional office which has important constitutional functions and duties.

One of us (Bhagwati, J.) pointed out in that case at page 463 of the Report that a High Court Judge :

" .... is as much part of the State as the executive Government.

The State has in fact three organs, one exercising executive power, another exercising legislative power and the third exercising judicial power.

Each is independent and supreme within its allotted sphere and it is not possible to say that one• is superior to the other.

The High Court, constituted of the Chief Justice and other Judges, exercising the judicial power of the State and is coordinate in position and status with the Governor aided and advised by the council of Ministers,

(l) [1978] l S. C.R. 423.

who exercises the executive power and the Lgislative Assembly together with the Legislative Council, if any, which exercises the legislative power of the State.

Plainly and unquestionably, therefore, a High Court Judge is not subordinate either to the executive or to the legislature..

It would, indeed, be a constitutional heresy to so regard him. He has a constitutional function to discharge,, "hich includes adjudication of the question whether the executive or the legislature has overstepped the limits of its power under the Constitution. No doUbt Article 217, cl. ( 1) provides for appointment of a person to the office of a_ High Court Judge by the President, which means in effect and substance the Central Government, but that is only laying down a mode of appointment and it does not make the Central Government an employer of a High Court Judge.

In fact a High Court Judge has no employer : he occupies a high constitutional office which is coordinate with the executive and the legislative."

These observations apply equally to the office of a J uclge of the Supreme Court.

We are mentioning this merely to bring home, through comparable constitutional functionaries, the validity of the proposition that holders of high constitutional offices exercising State power and drawing salaries from State coffers may nevertheless be not employes or servants or holders of employment under the Government.

We are, therefore, of the view that the office of Govemor of a State is not an employment under the Government of India and it does not, therefore, come within the prohibition of clause (d) of Article 319 and oo this view, the appointment of the 1st respondent as the Governor of Rajasthan cannot be held to be invalid.

We may point out that in the course of the argument there was much discussion about the paramount public Jx.>licy underlying the need to ban appointment of holders of public offices after retirement to higher office3 and posts under the Government. We do not wish to expand on this policy or to say more on the merits of this contention, but we think it would be appropriate to sound a note of caution that Ceaser's wife must be above suspicion, that purity of public officr:s of high status is a constitutional value in itself, that nothing should be done which may create an impression that a holder of a public office can look forward to a higher appointment after retirement if he pleases the Government of the day and that no appointments should be made which may lend support to the criticism of favourtism or patronage and consequential A weakening of credibility. The confidence of the community in the key instrumentalities is of considerable significance in the maintenance of the rule of law.

These were the reasons for which we made our order dated 23rd November, 1978 rejecting the special leave petition and confirming the B • order passed by the Full Bench of the Rajasthan High Court.

' ~

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P.B.R .

HARGOVIND PANT

RAGHUKUL TILAK & ORS

May 4, 1979

P. N. BHAGWATI

S. MURTAZA FAZAL ALI

R. S. PATHAK, JJ.

Constitution of India

Art. 319(d)

Article 319

Union Public Service Commission

Go'Jernment of India

State of Rajasthan

Art. 319

Art. 319

Art. 319

Raiasthan

Art. 319(d)

Art. 356

Government of India

Government of

India

Art. 319

Art. 319(d)

[1955] 2 SCR 1331

Rajasthan High Court

Sonmath Chatterjee

Dilip Sinha

K. R. Nambiar

F. S. Narima11

Soli !. Sorabjee

S. K. Tewari

S. M. Jain

S. K. Jain

V. M. Tarkunde

C. M. Math11r. Manaj Swarup

La/ita Kohli

BHAGWATI

University of Rajasthan

Rajasthan

Rajasthan

University

section 12

Rajasthan Public Service

Commission

Article 319

Article 319

Article 319

Stile Public Service Commission

Lee Commission

Article 285(3)

Ambedkar

Article 285

Central Public Services Commission

H. V. Karnath

Article 319

Article 319

Rajasthan Public Service Commission

Article 319

Union Public Sero vice Commission

Article 319

Article 319

Article 356

Article 319

Art. 319

Article 320(3)

Jagannadhadas

a Rajpramukh

Article 320(3)

Pradyat Kumar Bose

[1955] 2 S. C.R. 1

Article 319

Supreme Court

Bhagwati

Article 217

Central Government

Article 319

Ceaser

23rd November, 1978


CLOTH TRADERS (P) LTD., ETC .

ADDL. COMMR. OF INCOME TAX, GUJARAT-I, ETC.

May 4, 1979

ll [P. N. BHAGWATI, D. A. DESAI AND A. D. KosHAL. JJ.]

lncome Tax Act, 1961 (43 of 1961)-Sections 85A & SOM-Whether rebate of income tax admissible on the amount of dividend received bJ the assessee company from an Indian company or whether confined onl}' to divideml income as computed under the Act after making lhe deduction on the interest paid on borrowings for making the investmentJ.

The earliest provision granting exemption Of super-tax in respect of in.tercorporate dividends was made aB far back as 9th December, 1933 in a Notification issued by the Governor General in Council and it provided as follows :

'The Governor General in Council is plea<:ed to exempt from super-tax.

(i) so much of the income of any investment trust company as is derived from dividend paid by any other company which hm; paid or will pay super-tax in respect of the profits. out of wliich such dividends are paid."

This Notification was followed by a provision of a similar kind granting exemption from super-tax in respect of certain specified categories of inter- E corporate dividends introduced as s. 56A in the Indian Income Tax Act, 1922.

When this Act was repealed mid the present Act enacted with effect from 1st April, 1962 s. 99, sub-section (1) was introduced in the present Act exempting

crtain categories of income from super-tax and one of such catet..-rics was that set out in cl. (iv). Section 99, sub-section (i) cl. (iv) read as follows:

"99(1) Super Tax shall not be payable by any asse~!lsee in respect of the following amounts which are included in his total income-

(iv) if the assessee is a company, any dividend received by it from an Indian Company, subject to the provi5ions contained in the Fifth Schedule."

This provision continued to be in force upto 31st March, 1965 subject to a minor inconsequentiaJ amendment made by Finance Act, 1964, but by an amendment made by Finance Act 10 of 1965, the provision was omitted and Chapter VI-A and s. 85A were introduced in the present .A.ct with effect from

!st April, 1965. Chapter VIA comprised ss. 80A to SOD providing for certain specified deductions to be made in computing total incomf) while s. 85A pro- I vided for deduction of tax on inter-corporate dividends.

The original Chapter VIA and certain other sections ind.uding s. 85A were deleted from the present Act by Finance (No, 2) Act, 1967 with effect from !st April, 1968 and replaced by a new Chapter VIA which contains a fasciculus of soctions from s. 80A to s. 80VV. Section 80A, sub-sectioa (!) provides that

(984)

...

CLOTH TRADERS V. C.I.T. 985

in computing the total income of an assessee there shall be allowed from his A gross total income, in occordance with and subject to the provisions of Chapter

VIA, the deductions specified in s. BOC to s. SOVV and sub-section (2) of that section imposes a ceiling on slich deductions by enacting that the aggregate. amount of such deductions shall not, in any case, exceed the gross total income of the essessee. The expression "gross total income" is defined in cl. (5) of s.

SOB to mean the total income computed in accordance with the provisions of the Act before making any deduction under Chapter , VJA or -under s. 280. 0 B Section SOM is the new section which corresponds to the repealed s. 85A and it provides for deduction in respect of certain categories of inter-corporate dividends. There were several amendments made subsequently in this section but they relate primarily to the percentage of the income to be allowed as a deduction.

One amendment that was made by Finance Act, 1968, was that the words C "received by it" occurring in sub-section ( l) of s. SOM \vere omitted with effect from 1st April, 1968. The Finance Act of 1968 also provided in sub-section

(2) and (3) of s. 31 that notwithstanding the omission of s. 99, sub-section (I),

cl. (iv) and s. 85.A, the provisions of these sections shall have and be deemed always to have effect, subject to the modification that the words "received by it" in the opening part of these sections were deleted.

The net effect of these amendments was that the words ''received by it" following upon the words )) "'dividend" were omitted with retrospective effect from s. 99 sub-section (1), cl.

(iv) and s. 85A and s. SOM was to be read as if the words "received by it" were not in the opening part of that section.

The Gujarat High Court having taken a view against the assessees (appellants), appeals were preferred against the judgment relating to the ruisessment years 1965-66 and 1966-67 when s. 85A was in force.

In view of the conflict of opinion between the view of the Gujarat High Court, and the view taken by the Bombay, Madras and Calcutta High Courts, the Income Tax Appellate Tribunal, referred similar matters under s. 257 of the Act to this Court.

In the appeals and references before this Court, the question was whether

on a true interpretation of Sections 85A and SOM of the Income Tax Act, 1961, rebate of incme tax is admissible on the actual amount of dividend recetved F by nu nssessee, being a company, from an Indian company, or it is confined only to the dividend income as computed in accordance with the provisions of the Act, that is after making the deductions specified in s. 57 including deductions of the interest paid on borrowings fOr making the investments.

Allowing the appeals and answering the questions referred by the Tribunal in favour of the assessees :

HELD :

1. The assessees are entitled to relief under s. SSA for the assess- G meat years 1965-66, 1966-67 and 1967-68 and under s. 80M for the assessment years 1968-69 and 1969-70 in respect of the entire amount of dividend income without deductions of interest paid on borrowings for acquiring the shares. . .

[1006 BJ

2. Sections 85A and SOM were not written by the Legislature on a clean s!ate,. nor were they the outcome of any new or innovative exercise of legislative Judgment: but they were preceded by similar provisions granting rebate of H supertax or income tax on inter-corporate dividends and these provisions as

7-409SCI/79 : l ·:'''

A interpreted by the Courts throw light on the true meaning and content on ss. SSA and SOM. [991 F].

3. It is clear from the Notes on cl. 31 which subsequently became s. 31 of the Finance Act. 1968, that the amendments retrospectively deleting the words "received by it'' from the opening part of s. 99, subsection (1), cl. (iv) and s. 85A were made with a view to widening the scope of the relief granted under these sections, as it was felt that the presence of these words might render these sections inapplicable in cases where the shares to which the divi 4 dend relates are registered in the name of a person other than the asscssee and the dividend is, there.fore, received strictly speaking, by such other person and not by the assessee. The object of introducing these am1ndments was to widen the scope of the tax relief provided under s. 99, sub-section (1). cl. (iv) and s. 85A by making it available to the assessee even though the shares tc> which the dividend related were registered in the name of a person other than the assessee and not to narrow it down by restricting it to n~:t dividend computed after making deductions allowable under the provisions Qf the Act.

[99S-&GJ.

4. Even after the deletion. of the words "received by it", the~ expressions "any dividend from an Indian company" and "e.ny income by way of dividends from an Indian company" occurring in the opening part of these sections continue to mean the same thing, namely, the full amount of dividend derived or obtained from an Indian company. The decisions of the Bombay, Calcutta and Madras High Courts interpreting these sections cannot, therefore, be said to be

displaced by the retrospective omission of the words "received by it." (998 H-

999 BJ.

S. It is clear on a plain natural construction of the language of s. 99 subaection (1), cl. (iv), tbe.t it grants exemption from super-tax in respect of

•any dividend from an Indian company" and these last mentioned words cannot mean anything else than the full amount of dividend derived from an Indian company. They cannot obviously mean dividend fron1 an Indian company minus any expenses incurred in earning it, or less any other deduction allowable under the Act. [999 C-D].

6. The words, "the following amounts which are included in his total in- J! come", in the opening part of s. 99, sub-section (1) do not have any limitative effect so as to restrict "dividend from an Indian Company" in respect of which 'llo.. exemption from super-tax is granted to dividend computed i11 accordance with • the provisions of the Act and forming part of the total income. The exemption from supertax granted under s. 99 sub-section (1) is not only in respect of "dividend from an Indian company" referred to in cl. (iv), but also in respect of other items of income mentioned in clauses (i) to (iii) and (v).

G m

7. The legislature clearly wanted to provide that the different categories of income mentioned in clauses (i) to (v) should be eligible for exemption from super-tax, only if they are included in the total income and the Legislature could have made such a provision separately in respect of each category cf income in the opening part of s. 99 sub-section (1), but instead of adopting such legislative device, which would have been both inapt and inelegant, the Legislature chose to use an omnibus expression, "the follow.ing amounts which are included in his total incomen, which would cover. all the~ different items of income dealt with in clauses (i) to (v). [999 F-G].

CLOTH TRADERS v. C.I.T. 987 .. ' S. It would, therefore, seem that though the exemption from super-tax ,. -granted under clause (iv) of sub-section (i) of s. 99 would be applicable oilly 1f the particular item of income namely, "dividend from an In_dian company" is .included in total income, what is exempted is "dividend from an Indian company" which can only mean the full amount of dividend received from an Indian company. [1000 BJ.

Commissioner of Income Tax, Kera/a v. South India Bank Ltd., 59 ITR a 763; referred to .

9. Section 85A in its opening part by using the words "where the tolal income of an asessee . . . . includes any income by way of dividends, from an Indian Company", lays down a condition for its applicability, which is that the total income must include income by way of divdend from an Indian company. It is only if this category of income forms a component part of total C income that the provisions enacted in the section is attracted and the assessee becomes entitled to rebate on income calculated with reference to the "income so inc!nded".

[1001 FJ.

10. The meaning of the section would become clear if the words "income by way of dividends from an Indian company", are substituted for the words "income so included." Then it would be obvious that the rebate on income D tax is to be calculated by applying the average rate of tnx to the "income by

way of dividends from an Indian company" which can only mean the full amount of dividend received from an Indian company, [1002 B-C].

_J.

Commissioner of Income Tax v. Indian Guarantee & General Insurance Co.

Ltd., 903 ITR 348 approved.

11. There is a close similarity between s. SSA and s. SOM so far as the E opening part of the two sections is concerned, but in the latter part, there is a difference inasmuch as s. 85A provides for calculation of rebate of income tax on ~'income so included", whiles. SOM provides-for deduction of the whole or part of "such income by way of dividends". The language employed by the legislature in s. SOM leaves no doubt that the deduction, whether whole or 60 per cent, is to be calculated with reference to the entire amount of income by way of dividends. [1002 D-E].

12. Section SOM occurs in Chapter VIA which is headed "Deduction to be made in. computing total income". The marginal note to the section, indicates, that it provides for deduction in respect of certain inter-corporate dividends. [1002 F, 1003C] .

13. Section 80A sub-section (1) provides that in computing the total income of an aascssee, the deductions specified in s. SOC to SOVV shall be made from his gross total income, and gross total income, according to the definition in s. SOB, cl. (5) means the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VIA or under s.

2SO.O. What s. SOA, sub-section (I) requires is that first the total income of 1he assessee must be computed in accordance with the provisions of the Act without taking into account the deductions required to be made under Chapter VIA or under s. 280.0 and then from the gross total income thus computed, the deductions specified in s. SOC to SOVV must be made in order to arrive 'at the total income. But sub-section (2) of s. SOA provides that the aggregate

A amount of the deductions required to be made under Chapter VIA shall not exceed the gross total income of the assessee so that the total income arrived ait ""!--

1.E

after making the deductions specified in s. SOC to 80VV frorr.t the grOM total income can never be a minus or. negative figure.

This provision imposing a ceiling on the deductions which may be made under sections SOC lo 80VV clearly postulates that in a given case the aggregate amount of these deductions may exceed the gross total income. [1002 0·1003 B].

14. The words "where the gross total income of an assesse~: .... includes any income by way of dividends from a domesti.; company" are intended only to provide that a particular category of income, namely, income by way of dt~1i-·

dends from a domestic company should form a component part of the gros~1 total income. These words merely prescribe a condition for the applicability ef the section namely, that the gross total income must includ~~ the ootegory of income described by the words "Income by way of dividends from a domestic company". If the gross total income includes this particular category of income, whatever be the quantum of such income included, the condition would be satisfied and the assessee would be eligible for deduction of the whole or 60 per cent of "such income".

[1003 F-G].

15. The words "such income" as a matter of plain grammar must be substituted by the words "income by way of dividends from a do.mestic company", in order to arrive at a proper construction of the section and if that is done, it would be obvious that the deduction is to be in respect of the whole or 60 per cent of the "income by way of dividends from a domestic companyn which &an only mean the full amount of dividends received from a domestic compe.ny.

The deduction permissible under the section is, therefore, to be calculated with

reference to the full amount of dividends received from a domestic company and not with reference to the dividend income as computed in accordance with the provisions of the Act, that is, after making deductions provided under the Act.

[1004 BC].

16. If the Legislature was of the view that the deduction should not be in respect of the full amount of dividends received from a domestic compan:y, ll but it should only be in respect of the amount of dividend computed after deducting a1!owable expenditnre, the legislatnre would have undoubtedly amCitded s. SOM, sub-section (!) and made its intention quite clea!C. (1005 CJ.

17. The legislature in fact amended s. 80M several tirnes in respect of other ttK1.tters subsequent to the decision of the Bombay lligh Court in the New Great Insurance Co.'s case and the decision of the M'adras High Court in the Madras Auto Service's case, but it did not choose to amend the language employed in s. 80M, subRsection (1) for the purpose of overriding tl1e interpretation placed by the courts. This indicates legislative recognition of the interpretation placed by the Courts on s. S5A and s. SOM. (1005 DEJ.

IS. Section SOK read with rule 20, s. SOMM, s. SON and s. S0.0 which occur_ in the same group of sections as s. &OM, use the same legislative formula as s. SOM and open with the identical words "where the gross total income Of an assessee-includes any income:· It appears on a plain reading of these sections that the deduction admissible is in respect of the whole of the income

CLOTH TRADERS V. C.I.T. 989

re.ceived by the assessee and not. in respect of the income computed after making the deductio!'s provided under the Act. [1005 F-G]

Madras Auto Service v. Income Tax Officer, 101 ITR 589; approved.

ClvIL APPELLATE JURISDICTION : Civil Appeal Nos. 117-118 of 1975. (From the Judgment and Order dated 28-11-1973 of the Gujarat High Court in I.T.R. No. 21 of 1972).

TAX REFERENCE NO. 2 OF 1975

(From the Tax Reference made by the Income Tax Tribunal Ahmedabad against its order dated 7-7-1973 in LT.A. No. 643

(AHD) /71-72).

TAX REFERENCE NOS. 6-9 OF 1975

(Fr~ the Tax Reference made by the Income Tax Tribunal Ahmedabad in R.A.

Nos. 103-106/AHD/74-75 arising out of I.T.A. Nos. 946-949iAHD/72-73 for Assessing years 1966-67 to

1969-70). p

TAX REFERENCE NO. 16 OF 1975

(From the Tax Reference made by the Income Tax Tribunal Ahmcdabad in Refe.rence Application No. 62/ AHD/74-75 arising out of LT.A. No. 580/AHD/72-73).

TAX REFERENCE NO. 18 OF 1975 (From the Tax Reference made by the Income Tax Appellate Tribunal, Ahmedabad Bench in R.A. No. 271/AHD/74-75 arising out of I.T.A. No. 2431/AHD/72-73 decided on 29-7-74 assessment year 1969-70).

CIVIL APPEAL NOS. 117-118/75 For the Appellant : Mr. B. Sen, I. N. Shroff and H. S. Parihar .

For the Respondent : S. N. Kacker, Sol. Gen., B. B. Ahuja and Miss A. Subhashini .

For the Interveners: (1) Ramakrishna Sons Ltd. : S. P. Mehta,

T. A. Ramachandran and M/s. J. Ramachandran, (2) M/s. Jardine G Henderson Ltd. : Dr. Debi Pal and D. N. Gupta, . (3) Indore Exporting & Importing Co. Ltd. : Dr. Debi Pal, Miss Bina Gupta and Mr. Prneen Kumar, and ( 4) Keto Investments (P) Ltd. : S. T. Desai, Mrs. A. K. Verma and J. B. Dadachanji, K. J. John and Shri Narain.

TAX REFERENCE NO. 2 OF 1975 R " For the Appellant: S. N. Kacker, Sol. Gen!, S. P. Nayar and Miss A. Subhashini.

A For the Respondent : F. S. Nariman, I. N. Shroff, and

H. S.

Parihar.

For the Interveners : (1) M/s. Jardine Henderson Ltd.

Dr.

Debi Pal and D. N. Gupta, (2) Indore Exporling & Imporling Co.

Ltd. : Dr. Debi Pal, Miss Bina Gupta and Mr. Praveen Kumar, and B

(3) M/s. Ajay Inv!estment Co. : Praveen Kumar and Miss Bina Gupta.

TAX REFERENCE NOS. 6-9 OF 1975 For the Appellant : F. S. Nariman, I. N. Shroff, and H. S. Parihar.

For tlze Respondent : S. N. Kacker, Solicitor General, S. P. Nayar 0 and Miss A. Subhashini.

For the Intervener Central India Industries : Dr. Debi Pal, Miss.

Bina Gupta and Mr. Praveen Kumar. •

TAX REFERENCE NO. 16 OF 1975 For the Appellant : Mrs. A. K. Vemm and J. B. Dadachanji, K. J.

D John and Shri Narain.

For the Respondent : S. N. Kacker, Sol. Genl. and Miss A.

Subhashini.

For the lnterveners-Central India Industries : Dr. Debi Pal, Miss.

Bina Gupta and Mr. Paveen Kumar.

TAX REFERENCE NO. 18 OF 1975 For the Appellant : S. P. Mehta, K. C. Patel, Shri Narain, J. B.

Dadachanji, Mrs. A. K. Verma and Miss Arti Mehta.

For the Respondent : Miss A. Subhashini.

For the Intervener-Central India Industries Ltd : Dr. Debi Pal, Miss Bina Gupta and Mr. Praveen Kumar.

The Judgment of the Court was delivered by

BHAGWATI, J.-This group of appeals and References raises ashort question of construction of sections 85A and SOM of the Income Tax Act, 1961 (hereinafter referred to as the present Act).

The question is whether on a true interpretation of these sections, rebate of income tax is admissible on the actual amount of divident received by an assessee, being a company, from an Indian company, or it is confined only to the dividend income as computed in accordance with the provisions of the Act, that is, after making the deductions specified H in section 57 including deduction of the interest paid on borrowings for making the investments.

The Gujarat High Court has taken a view against the assessee while a different view has been taken by the

Bombay, Madras and Calcutta High Courts.

The appeals are preferred by the assessee, namely, Cloth Traders (P) Ltd. against the judgment of the Gujarat High Court and they relate to the assessment years 1965-66 and 1966-67 when section 85A was in force.

The Reference before us have been made directly by the Tribunal under section 257 of the Act in view of the conflict of opinion amongst the High Courts.

Out of these References, three are at the instance of the assessees, namely, C. V. Mehta (P) Ltd., M/s. Distributors (Baroda) Pvt. Ltd., and H. K. (Investment) Co. Pvt. Ltd. and one is at the instance of the Commissioner of Income-tax, Gujarat. They relate to different assessment years : assessment year 1969-70 in case of C. V. Mehta (P) Ltd. and Distributors (Baroda) Pvt. Ltd. and assessment years 1965-66 to 1969-70 in case of H. K. (Investment) Co. Pvt. Ltd.

TI1e interpretation of both sections 85A and 80M is involved in these References since section 85A with some minor alterations made in it from time to time was in force during the assessment years 1965-66 to 1967-68 and section 80M followed upon it with effect from the commencement of the assessment year 1968-69 as part of Chapter IV A.

Though the language of sections 85A and 80M is almost identical, there are some verbal dissimilarities, but as we shall presently point out, they do not make any difference in interpretation so far as the present question is concerned.

We are concerned in these appeals and References only with the interpretation of sections 85A and 80M but in order to arrive at the true interpretation of these sections, it is necessary to refer briefly to the history of the legislation enacted in these sections, since these sections were not written by the Legislature on a clean slate, nor were they the out come of any new or innovative exercise of legislative judgment, but they were preceded by similar provisions granting rebate of super tax or income tax on inter-corporate dividends and these provisions as interpreted by the courts throw light on the true meaning and content of sections 85A and SOM .

The earliest provision granting exemption of super-tax in respect of inter-corporate dividends was made as far back as 9th December 1933 in a Notification issued by the Governor General in Council and it provided as follows :

"The Governor General in Council is pleased to exempt from snper-tax-

(i) s? muh of the income of any investment trust company as 1s derived from dividend paid by any other company

G '

which has paid or will pay super-tax in respect of the profits out of which such dividends are paid."

This provision came up for consideration before a Division Bench of the High Court of Bombay in Commissioner of Income Tax v.

Industrial Investment Trust Co. Ltd. (1) and the question was whether the dividend income exempted from super-tax was the entire income

by way of dividend received by an investment trust company or the dividend income as computed in accordance with the provisions of !be Act, that is, after deducting the expenses incurred in earning it.

The High Court of Bombay held that the "dividend income which was exempted under the notification would be the dividend income received by the assessee and not the said income less any further amounts", because ''the notification must be regarded as a self-contained one and not controlled by any .other provisions of the Act" and there was "no

warrant to construe the word 'Income' in the notification as total income, nor to qualify the dividend income specified in the said notifi cation as the dividend income computed under section 12 of the Act".

It was thus held that the entire amount of dividend received by an investment trust company would be exempt from super-tax and not the amount of dividend minus the expenses incurred in earning it. This Notification was followed by a provision of a similar kind granting exemption from super-tax in respect of certain specified categories of inter-corporate dividends introduced as section 56A in the Indian Income-tax Act, 1922 (hereinafter referred to as the Old Act) by Finance Act, 1953. It is not necessary to make any detailed reference to this provision since there is no decided case which has considered this provision or expressed an opinion upon it.

When the old Act was repealed and the present Act enacted with eM'ect from 1st April, 1962, section 99, sub-section (1) was introduced in the present Act exempting certain categories of income from super-tax and one of such categories was that set out in clause (iv).

Section 99, sub-section (1), clause (iv) read as follows :

"99(1) Super-tax shall not payable by an assessee in respect of the following amounts which are included in his total income.

(iv) if the assessee is a company, any dividend received by it from an Indian company, subject to the provisions contained in the Fifth Schedule".

(I) 67 l. T. R. 436.

'(-

This provision continued to be in force upto 31st March, 1965 :subject to a minor inconsequential amendment made by Finance Act,

1964. Now a question arose before the High Court of Bombay, in Commissiuner of Income Tax v. Indian Guarantee & General Insurance Co. Ltd. (1) whether the exemption granted under this provision was in regard to the entire amount of dividend received by the assessee from an Indian company or it was limited to the dividend income computed in accordance with the provisions of the Act and forming part of total income.

The argument of the assessee based on the words 'any dividend received by it from an Indian company' was that it was the full amount of dividend received by the assessee which was exempt from super-tax, while the Revenue relying on the words "amounts which are included in his total income" contended that it was only the amount of dividend computed in accordance with the provisions of the Act and forming part of total income which was entitled to the benefit cf exemption under this provision. The High Court accepted the contention of the assessee and pointed out that on a plain reading of sub-clause (iv) of sub-section (1) of section 99 it was clear that the, exemption from super-tax was granted in respect of "any dividend received by it from an Indian company" and these last words, according to their plain grammatical construction, could mean only one thing, uamely, the entire amount of dividend received by the assessee from an Indian company and nothing less. The High Court emphasised the word "received" following immediately upon the word 'dividend' and observed that the use of this word also showed that the exemption was in regard to the dividend received and not in regard to the "dividend received minus the expenses". Th.e High Court pointed -out that the words "amounts which are included in his total income"

in the opening part of section 99 sub-section ( 1) did not have any !imitative effect, but they were used merely as a convenient mode of describing the different items of income set out in clauses (i) to (v) .of that sub-section. Clanses (i) to (v) referred to different items of -

income which were sought to be exempted from super-tax under subsection (1) of section 99 and it was only if these items of income were included in the total income of the assessee that the question of exemption from super-tax would arise and hence the legislature used the general words "amounts which are included in his total income" in the opening part of sub-section ( 1) of section 99 as an omnibus formula to cover these different items. These words according to the High Court wefe descriptive of the items of income included in the .::omputation of the total income and were not indicative of the qnantum

(!) 90 I. T. R. 348.

of the amounts of the different items included in such computation and they did not, therefore, have the effect of cutting down the plain. natural meaning of the words "any dividend received by it from an.

Indian company" which represented the quantum of income in respect of which exemption from super-tax was granted under tbe section.

This view, observed the High Court, not only followed logically and inevitably from the words used in the statutory provision, but was also in consonance with the object of the legislation, which was to prevent donble taxation of the amount of dividend with the view to encouraging investment by companies in the share capital of other companies. It may be pointed out that the same view in regard t0< the construction of clause (iv) of sub-section (1) of section 99 was. taken by the Calcutta High Court in Commissioner of Income-tax v ..

Darbhanga Marketing Co.('')· and it was held that under tbat provision, exemption from super-tax was granted to an assessee in respect of "any dividend received by it" which meant the full amount of dividend received by tl1e asscssee and not "dividend received minus the amount of interest on monies borrowed for earning the same".

The Calcutta High Court observed : "The expressions 'which are included' in his total income' in sub-section ( 1) of section 99 and 'incomes forming part of total income' in the heading are descriptive of tbe items included in the computation of the total income and not indicative of the quantum of the amounts included under the diffe-rent items in the computation of total income.

Such a construction of these expressions would be in harmony with the obvious meaning of the expression 'dividend received' ".

The decision of the Bombay High Court in Industrial Investment Trust Co's case

(supra) was. strongly relied upon by the Calcutta High Court in coming to this decision and the view taken by the Calcutta High. Court was noted with approval by the Bombay High Court in New Great Insurance Co's case (supra).

The same view was also taken by the Madras High Court in Commissioner of Income-tax v. Madras Motor and General' lnsutance Co. Ltd.(') and it was approved in later decision of the same Court in Madras Auto Service v. Income-tax Officer( 8). It would, thus, be seen that notwithstanding the words "amounts which are included in bis total income" in the opening part of sub-section

(1) of section 99, all the three High Courts, namely, Bombay, Calcutta and Madras took the view that the entire amount of dividend' received by the assessee from an Indian Company was exempt from:

(!) 80 L T. R. 723,

(2) 99 I. T, R. 243.

(3) IOI I. T. R, 589.

super-tax and the exemptiou was not limited to dividend income computed in accordance with the provisions of the Act and forming part of the total income.

Section 99, sub-section (1) however remained in force only upto the close of the assessment year 1964-65 and by an amendment made by Finance Act 10 of 1965, section 99, sub-section (1) was omitted and Chapter VI-A and section 85A were introduced in the present Act with effect from 1st April, 1965. Chapter VI-A comprised sections 80A and 80D providing for certain specified deductions to be made in computing total income while section 85A, in so far as material, provides as follows :

"85A. DEDUCTION OF TAX ON INTER-CORPO- RATE DIVIDENDS :-Where the total income of an assessee being a company includes any income by way of dividends received by it from an Indian company or a company wbich has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, the assessee shall be entitled to a deduction from the income-tax with which it is chargeable on its total income for any assessment year of so much of the amount of income-tax calculated at the average rate of income-fax on the income so included (other than any such income on which no income-tax is payable under the provisions of this Act) as exceeds an amount of twenty-five per cent thereon; .......... "

There were some amendments made in section 85A by Finance Act, F 1966 but they are not material for our present purpose and we need not refer to them.

Section SSA also came to be considered by the Bombay High Court in the New Great l11sura11ce Co's case (supra) because two of the assessment years with which the Bombay High Court was concerned in that case were assessment years 1965-66 and 1966-67 when section 85A was in force.

The Bombay High Court

G', pointed out that except for some minor verbal changes section 85A was almost in the same terms as section 99, sub-section (1), clause (iv), the only real differences being that the exemption granted under section 99, sub-section (!). clause (iv) was in regerd to super-tax, while the deduction allowed under section 85A was in regard to income-tax.

The same interpretation was, therefore, placed on section HI 85A as in the case of section 99 sub-section ( 1), clause (iv) and it was held that under section 85A, the assessee would be entitled to deduction of income-tax in respect of the whole of the dividend received from an Indian company.

The expression "where the total income ........ includes any income by way of dividends" in the opening part of section SSA was construed as referring to the category of income by way of dividends received from an Indian company so that if this particular category of income is included in the computation of total income, the assessee would be entitled to a deduction of so much of the amount of income tax calculated at the verage rate of incometax ou the "income so included" as exceeds an amount of twenty-five per cent of such income.

The words "income so included" were read to mean not the quantum of the "income by way of dividends" included in the total income but the income falling within the category of "income by way of dividends from an Indian company" included in the total income.

Thus the view taken by the Bombay High Court was that under Section SSA also, the deduction admissible was in respect of the entire dividend received by the assessee from an Indian 'company and not in respect of dividend income minus deductions allowable under tl1e provisions of the Act in computing the tot;,! incom.e.

The original Chapter VI-A and certain other sections including section 85A were deleted from the present Act by Finance (No. 2) Act, 1967 with effect from !st April, 196S and replaced by a new Chapter VI-A which contains a fasciculous of sections from section SOA to section 80VV. Section SOA, sub-section ( 1) provides that in computing the total income of an assessee there shall be allowed from bis gross total income, in accordance with and subject to the provisions of Chapter VI-A, the deduction specified in section SOC to section 80VV and sub-section (2) of tba~ _section imposes a ceiling on such deductions by enacting that the aggregate amount of such deductions shall not, in any case, exceed tbe gross total income of the assessee.

The exl'ression "gross total income" is defined in clause (5) of section SOB to mean the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A or under section 280.0. Section 80M is the new section which corresponds to the repealed section 85A and it provides for deduction in respect of certain categories of inter-corporate dividends. It is the ir.terpretation of this section which constitutes the subject matter of controversy between the parties and hence it would be desirable to set it out in extenso.

This section has undergone changes from time to time since the date of its enactment and we will, therefore, reproduce it in the form in which it was during the assessment years 1968-69 and 1969-70 being the assessment years with which we are concerned in these cases :

• ), ~'

"SOM. DEDUCTION IN RESPECT OF

CERTAIN

INTER-CORPORATE DIVIDENDS:

(1) Where the gross total income of an assessee being a company includes any income by way of dividends received by it from a domestic company, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction from such income by way of dividends of an amount equal to-

(a) where the assessee is a foreign company-

(i) in respeet of such income by way of ends

received by it from an Indian company which is not such a company as is referred to in section 1 OB and which is mainly engaged in a priority industry .......... 80% of such income

(ii) in respect of such income by way of dividends other than the dividends referred to in subclause (i) .......... 65% of such income.

(b) where the assessee is domestic company in respect of any such income. by way of dividends ........ 60% of such income."

There were several amendments made subsequently in this section but they relate primarily to the percentage of the income to be allowed as a deduction nd do not hav~ ny bearing on the question of interpretation posed before us. , One amendment is, however, material and that was made by Finance Act 1968 by which the words "received by it" occurring in sub-section (1) of section SOM were omitted with effect from 1st April, 1968. The Finance Act of 1968 also provided in sub-sections (2) and (3) of section 31 that notwithstanding the omission of section 99, sub-section (1), clause (iv) and section 85A, the provisions of those sections shall have and be deemed always to have effect, subject to the modification that the words "received by it" in the opening part of those sections were deleted.

The net effect of these amendments was that the words "received by it" following upon the word "dividend" were omitted with retrospective effect from section 99, sub-section (1), clause {iv) and section 85A and section

SOM wa& to be read as if the words "received by it" were not in the opening part of that section.

We shall presently consider the language of section SOM for the purpose of arriving at its true interpretation, but before we do so, we must refer to an ari:ument advanced on behalf of the Revenue that whatever might have been the interpretation placed on section 99, subsection (1), clause (iv) by the Bombay, Calcutta and Madras High Courts and on section 85A by the Bombay High Court, it cannot hold good any more in view of the retrospective deletion of the words' "received by it" in the opening part of these sections. The argument was that the decisions of the Bombay, Calcutta and Madras High Courts

upholding~ view that !he exemption from super-tax under section 99, sub-section (1), clause (iv) and the deduction of income-tax under section 85A were admissible i'n re<>pect of the entire amount of dividend received by an asses&"e without any deduction, were based on the words "received by it" and since these words were retrospectively omitted, these decisions could no longer be regarded as valid.

We do not think this contention of the Revenue can be sustained if we have regard to the object a'nd purpose for which the words ''received by it" were deleted.

It is clear from the Notes on clause 31 which subsequently became section 31 of the Finance Act, 1968 that the amendments retrospectively deleting the words "received by it" from the opening part of section 99, sub-section (1), clause (iv) and section 85A were made with a view to widening scope of the relief granted under these sections, as it was felt that the presence of these words might render those sections inapplicable in cases where the shares to which the dividend relates are registered in the name of a person other than the assessee and the dividend is, therefore, received, strictly speaking, by such other person and not by the assessee. The object of introducing these amendments was to widen the scope of the tax relief provided under section 99, sub-section (1), clause (iv) and section 85A by making it available to the assessee even though the shares to which the dividend related were registered in the name of a person other than the assessee and not to narrow it down by restricting it to not dividend computed after making deductions allowed under the provisions of the Act. The omission of the words "received by it" does not, therefore, make any difference in the interpretation of section 99, sub-section (1), clause (iv) and section SSA so far as the present question is concerned. Even after the deletion of the words "received by it", the expressions "a'ny dividend from an Indian company" and "any income by way of dividends from an Indian company"

occurring in the opening part of these sections continue to mean the

• ' <

i '-'} •

• •

CLOTH TRADERS v. C.I.T. (Bhagwati, J.) 999 ' :same thing, namely the full amount of dividend derived or moving A •from an Indian company.

The decisions of the Bombay, Calcutta and Madras High Courts interpreting these sections cannot, therefore, be said to be displaced by the retrospective omission of the words ·"received by it".

So far as section 99, sub-section (1), clause (iv) is concerned, we have no doubt that the interpretation placed cm this provision by the Bombay, CaJcutta and Madras High Courts is correct. The .reasoning given by the Bombay High Court in New Great Insurance

Co.'s case (supra) is unexceptionable and we find ourselves in agreement with it.

It is clear on a plain natural construction of the language of this provision that it grants exemption from super-tax iu Tespect of "any dividend from the Indian company" and these last mentioned words can'not mean anything else than the full amount of -dividend derived from an Indian company. They cannot obviously

mean dividend from au Indian company minus any expenses incurred in earning it, or less any other deduction allowable under the Act.

It is no doubt true that the opening part of section 99, sub-section (1) -contains the words "the following amounts which are included in his total income", but these words do not have any !imitative effect so as to restrict "dividend from an Indian company" in respect of which exemption from super-tax is granted to net dividend computed in accordance with the provisions of the Act and forming part of the total income.. It may be noticed that the ememption from supr-tax granted under section 99, sub-section (1) is not only in respect of "dividend from an Indian company" is not referred to in clause (iv), but also in respect of other items of income mentioned in clauses (i) to (iii) and (v). The Legislature clearly and understandably wanted to provide that the different categories of income mentioned in clauses (i) to (v) should be eligible for exemption from super-tax only if they are included in the total income and the Legislature could have made such a provision separately in respect of each category of income in the opening part of section 99, sub-section (1), but instead of adopting such legislative device, which would have been both inapt and inelegant, the Legislature chose to use an omnibus expression "the following amounts which are included in his total income", which would cover all the different items of income dealt with in clause (i) to (v). These words were introd?ced mere!! to provide that the category of income in respect of which exemption from super-tax is claimed must be included in the total ncome .and they. were not intended to refer to the quantum of

sue~ mcome mclude~ the to:al incom~ for exempting it from supertax. they were descriptive of items of mcome included in the total

income and were not indicative of the quantum of the amounts included under different items in the computation of the total income.

It would, therefore, seem that though the exemption from super-tax granted under clause (iv) of sub-section (1) of section 99 would be applicable only if the particular item of income, namely, "dividend from an Indian company" is included in the total income, what is exempted is "dividend from an Indian company" which can only mean the full amount of dividend received from an Indian company.

This view which we are taking is clearly supported by the decision of this court in Commissioner of Income-tax, Kera/a v. South Indian Bank Ltd.(') where the question was so as to the true interpretation of a notification issued by the Central Government under section 60A of the old Act which was in the following terms :

"No income-tax shall be payable by a'n assessee on the interest receivab1e on the following income-tax free loans issued by the former Government of Travancore or by the former Government of Cochin, provided that such interest is received within the territories of the State of Travancore- Cochin and is not brought into any other part of the taxable territories to which the said Act applies.

Such interest shall, however, be included in the total income of the assessee for the purposes of section 16 of the Indian Income-tax Act, 1922."

The argument of the Revenue was that the exemption from income tax granted under this notificatio'n was in respect of interest receivable on securities minus the expenses incurred in earning it and not in respect of the entire amount of interest because it was only that amount of interest arrived at after computation in accordance with section 8 of the old Act which was includible in the total income and liable to bear tax and the exemption from tax could, therefore, only be in respect of such amount.

This argument was negatived by the Court and it was pointed out by Subba Rao, J., that : "this notification does not refer to the provisions of section 8 of the Income-tax Act at all. It gives a total exemption from income-tax to an assessee in respect of the interest receivable on income-tax free loans mentioned therein. It gives that exemption subject to two conditions, namely, (i) that the interest is received within the territories of the State of Travancore- Cochin, and (ii) that it is not brought into any other part of the taxable territories.

It includes the said exempted interest in the total

(I) 59 I. T R. 763.

• ).. ) ., ' -"'- . j

...J.

I • r

J,.__

., •

income of the assessee for the purpose of section 16 of the Income1-tax Act Shortly stated, the notification is a self-contained one; it provides an exemption from income-tax payable by an assessee on a particular class of income subject to specified conditions.

Therefore, there is no scope for controlling the provisions of the notification with reference to section 8 of the Income-tax Act.

The expression "interest receivable on income-tax free loans" is clear a'nd unambiguous.

Though the point of time from which the exemption works is when it is received within the territories of the State of Travancore-Cochin, what is exempted is the interest receivable. "Interest receivable" ca:n only mean the amount of interest calculated as per the terms of the securities.

It cannot obvious; y mean i'nterest receivable minus the amount spent in receiving the same." It may be noted that the last part of this notification provided for inclusion "of such interest", that is, interest in respect of which exemption from tax was granted, in the total income of the assessee and obviously this would have to be done after computation in accordance with the provisions of section 8 of the old Act.

But even so, it was hdd that the exemption from tax was in respect of the entire amount of interest received on the securities.

The rea , saning adopted in this decision clearly supports the view we are taking in regard to the construction of clause (iv) of sub-section (1) of section 99 and we-must hold that the decisions of the Bombay, Calcutta and Madras High Courts lay down the correct law on the interpretation of this provision.

Tu,, next provision we must consider is section 85A which came in the wake of S'ection 99, sub-section (1), clause (iv).

This section lays down a condition for its applicability in its opening part by using the words "whc; e the total income of an assessee-i'ncludes any in•

come by way of dividend from an Indian company".

The condition is that the total income must include income by way of dividends from an Indian company.

It is .only if this category of income from a compo'nent part of total income that the provision enacted in the section is attracted and the ass•, ssee becomes entitled to rebate on income calculated with reference to the "income so included". The argument of the Revenue was that the words "income so included" must mean the quantum of the income included in the to.ta! income and therefore reba.te. on income tax granted ndcr section 85A can only in respec; of dlVldend mcome computed m accordance with the provisions of the Act and forming part of the total income and not in respect of the full

amoun~ ?f dividcn? received by the assessee.

This argument is, in our opm10n, fallac10us.

It 1s based on a misreading of the words "mcome so included" and ignores the context in which the~ words occur. If the ope'ning part of the section refers to inclusio f th

8-409 SC!/79 n o e

particular category of income denoted by the words "income by way of dividends from an Indian company", the words "so included" cannot have reference to the quantum of the income included, but they must be held to r::fer only to the category of income included, that is, income by way of dividends from an Indian company.

The meaning of the section would become clear if we substitute the words "income by way of dividends from an Indian company" for the words "income so inclucl; d''.

Then it would be obvious-indeed it would need no argument to hold-that the rebate on income tax is to be calcuiated by applying the average rate of tax to the "income by way of dividends from an Indian company" which can only mean the full amount of dividend reo;, ived from an Indian company.

This was the view taken by thz Bombay High Court iu the New Great Insurance Co.'s case and we find ourselves in agreement with it.

We must now turn to consider section SOM for the purpose of arriving at its true interpretation. There is a close similarity between section SSA and section SOM so far as the opening part of the two

ctions is concerned, but when we come to the latter part, we find that there is a difference, inasmuch as section SSA provides for calculation of rebate of income tax on "income so included", while section

SOM provides for deduction of the whole or part of "such incom~ by way of dividends": Even if there by any doubt or ambiguity in regard to the meaning of the words "income so included" in section SSA, though we do 'not think that thre is any scope for such doubt or ambiguity, the language employed by the Legislature in section SOM is much clearer and leaves no doubt that deduction, whether whole or 60 pr cent, is to be calculated with reference to the entire amount of

' income by way of dividends received from a domestic company. Section SOM occurs in Chapter VI-A which is headed "Deduction to be

made in computing total income".

Section SOA, sub-section ( 1) provides that in computing the total income of an assessee, the deductions specified in sections SO C to SO VV shal! be made from his gross total income and gross total income, according to the definition in section SOB, clause (5), means the iota! income computed in accordance with the provisions of the Act before making any deduction under Chapter VI A or under section 280.0. What section SO A, sub-section ( 1) requires is that first the total income of the assessee must be com.puled in accordance with the provisions of the Act without taking into account the deductio'ns required to be made under Chapter VI-A or under section 2SO.O and then from the gross total income thus computed, the deductions specified in sections SO C to

SO W must be made in order to arrive at the total income. But sub-

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section (2) of section 80 A provides that the aggregate amount of the deductions required to be made under Chapter VI-A shall not exceed

th~ gross total' income of the asscssee so that the total income arrived at after making the deductions specified in sections 80 C to 80 VV from the gross total income can never be a minus or negative figure.

This provision imposing a ceiling on the deductions which may be made under sections 80 C to 80 VV clearly postulate that in a given case the aggregate amount of these deductions may exceed the gross total income.

It is in the context of this background that we have to determine the true interpPtation of section 80 M, which, as the marginal note indicates, provides for deduction in respect of certain intercorporate dividends.

Section 80 M, sub-section ( 1) opens with the words "Where the gross total income of an assesseeincludes any income by way of dividends from a domestic company". and proceeds to say that in such a case there shall be allowed in computing the total income of the assessee a deduction "from such income by way of dividends" of an amount equal to the whole of such income or 60 per cent of such income, as the case may he, depending on the nature of the domestic company from which the income by way of dividends is received.

Now the words "such income by way of dividends'" must . be referable to the income by way of dividends mentioned earlier and that would be income by way of dividends from a domestic company which is included in the gross total income. The whole of such income that is, income by way of dividends from domestic company or 60

per cent of such income, as the case may be, would be deductible from the gross total income for arriving at the total income of the assessee. The words "where the gross total income of an assessee .... includes any income by way of dividends from a domestic company" are intended only to provide that a particular category of income, namely, income by way of dividends from a domestic company, should form a component part of the gross total income.

These words merely prescribe a condition !or the applicability of the section, namely, that the gross total i"ncome must include the category of income described by the words "income by way of dividends from a domestic company." I! .the gross total income includes this particular category of income, whatever be the quantum of such income included, the codition would be satisfied and the assessee would be eligible for deduction of the whole or 60 per cent of "such income".

Now ii the words "where the groos total income of an assessee-include~ any income by way of dividends from a domestic company" in the

opning part of the section refer only to tl1e inclusion of the category of mco.me denote~, by the words "income by way of dividends from a domesttc company and not to the quantum of the income so included ,

the words "such income" yannot have reference to the quantum of the income included, but they must be held referable only to the category of the income included, that is, income by way of dividends from a domestic company.

The words "such income'' as a matter of plain grammar must be substituted by the words "income by way of dividends from a domestic company" in order to arrive at a proper construction of the section and if that is done, it would be obvious that the deduction is to be in respect of the whole or 60 per cent of the "income by way of dividends from a domestic company" which can only mean the full amount of dividends received from a domestic company.

The deduction permissible under the section is, therefore, to be calculated with reference to the full amount of dividends received from a domestic company and not with reference .to the dividend income as computed in accordance with the provisions of the Act, that is, after making deductions provided under the Act.

This was the view taken by the Madras High Court in Madras Auto Service v. Income-tax Officer, Madras(') and it meets with our approval. It is true that the Gujarat High Court has taken a contrary view in Cloth Traders Pvt.

Ltd. v. Commr. of Income-tax, Gujarat, which is the subject matter of Civil Appeals Nos. 117 and 118 of 1975, but we think it proceeds on an erroneous interpretation of the language of section 80M, sul>Csection ( 1 ) .

Tt wrongly construes the words "such income" to be referable to the quantum of income includible in the gross total income, overlooking the fact that the opening words in the section, namely, "where the gross total income of an assessee-includes any income by way of dividends from a domestic company" refer only to the inclusion of the category of income by way of dividend from a domestic company and they are not indicative of the quantum of the income included in the gross total income. It is true that on this view the deduction in respect of the income by way of dividends from a company falling within cl. (a) of sub-section ( 1) of s. 80M may exceed the quantum of such income included in the gross total income, but that possibility is indeed contemplated and taken care of by section 80A, sub-section (2) which provides that the aggregate amount of the deductions shall not in any case exceed the gross total income of the assessee.

We may point out that even though the consistent view taken by the Bombay, Madras and Calcutta High Courts in regard to the interpretation of section 99, sub-section (1), clause (iv) was that the exemption from super-tax under that provision was admissible in respect of

(I) IOI J. T. R. 589.

the full amount of dividends received from an Indian company and was not limited to the dividend income computed in accordance with the provisions of the Act and forming part of total income and the same view was taken by the Bombay High Court in the New Gredt Insurance Co. case, (supra) in regard to the interpretation of s. SSA which contained the opening words "where the total income of an assessee--includes any income by way of dividends from an Indian company", similar to the opening words in sub-section (1) of section SOM and the Madras High Court aiso placed the same interpretation on section SOM, sub-section

( 1) in Madras Auto Service case (supra), the legislature did not choose to make any amendment in the language of 'section SOM, sub-section ( 1) with a view to setting at naught this judicial interpretation. If the legislature was of the view that the deduction should not be in respect of the full aniount of dividends received from a domestic company, bnt it should only be in respect of the amCYU11t of dividends computed after deducting allowable expenditure, we have no doubt that the legislature would have amended section SOM, sub-section ( 1) and made its intention quite clear.

The legislature in fact amended 'section

SOM several times in respect of other matters subsequent to the decision of the Bombay High Court in the New Great Insurance Co.'s case and the dedsion of the Madras High Court in the Madras Auto Service's case, but it did not choose to amend the language employed in s. SOM, sub-s. ( 1) for the purpose of overriding the interpretation placed by the courts.

This would seem to indicate legislative recognition of the interpretation placed by the courts on s. SSA and s. SOM and it is a circumstance, though not of much weight, which lends support to the view we are, taking iri regard to the interpretation of s. SOM.

We may also in this connection refer to section SOK read with Rule 20, section SO MM, section SO N and section 80 0 which occur in the same group of sections as section SO-M.

These sections use the same legislative formula as section SO-M and open with the identical words

"where the gross total income of an assessee ........ includes any income ...... ". It appears on a plain reading of , these sec ions that the deduction admissible is in respect of the whole of the income re- <:eived by the assessee and not in respect of the income computed after making the deductions provided under the Act.

Vide Madras Auto Service case (supra) and_ Additional Commissioner qf Income Tax v.

Isthmian India Maritime P. Ltd. (1').

We derive considerable support for our view from the analogy of these sections.

(I) (1978) 113 I. T. R. 570 (Mc.d.)

We, therefore, allow Civil Appeals Nos. 117 and 118 of 1975 and answer the question referred to the Tribunal in those appeals in favour of the assessee and against the Re'venue.

The questions referred by the Tribunal in Tax Reforences Nos. 2, 6 to 9, 16 and 18 of 1975 are also answered in favour of the assessee and against the Revenue.

We hold that the assessees in these appeals and References are entitled to relief under section 85A for the assessment years 1965-66, 1966-67 and 1967-68 under section SOM for the assessment years 1968-69 and 1969-70 in respect of the entire amount of the dividend income without deduction of interest paid on borJ"owings for acquiring the shares.

The Commissioner will pay the costs of the appeals and the references to the respective assessees.

N.V.K.

Appeals allowed.

• •

CLOTH TRADERS (P) LTD.

May 4, 1979

P. N. BHAGWATI

D. A. DESAI

A. D. KosHAL

Tax Act, 1961

Sections 85A

9th December, 1933

s. 56A

Indian Income Tax Act, 1922

1st April, 1962

s. 99

Section 99

Fifth Schedule

31st March, 1965

Finance Act, 1964

s. 85A

ss. 80A

s. 85A

s. 85A

s. 80A

s. 80V

Section 80A

s. 280

s. 85A

1st April, 1968

s. 31

s. 99

s. 85

s. 99

s. 85A

Gujarat High Court

s. 85A

Bombay, Madras and Calcutta High Courts

s. 257

Sections 85A

SOM of the Income Tax Act, 1961

s. 57

s. 80M

Sections 85A

cl. 31

s. 31

s. 99

s. 85A

s. 99

s. 85A

Bombay, Calcutta and Madras High Courts

s. 99

s. 99

s. 99

s. 99

s. 99

Section 85A

s. 85A

Section 80A

s.

2S

s. 280

s. 80M

Bombay lligh Court

New Great Insurance Co.

M'adras High Court

Madras Auto Service

s. 80M

B. Sen

I. N. Shroff

H. S. Parihar

S. N. Kacker

B. B. Ahuja

A. Subhashini

Ramakrishna Sons Ltd.

S. P. Mehta

T. A. Ramachandran

J. Ramachandran

Jardine G Henderson Ltd.

Debi Pal

D. N. Gupta

Indore Exporting & Importing Co. Ltd.

Bina Gupta

Prneen Kumar

Keto Investments (P) Ltd.

S. T. Desai

A. K. Verma

J. B. Dadachanji

K. J. John

Narain

S. P. Nayar

F. S. Nariman

N. Shroff

H. S.

Parihar

Jardine Henderson Ltd.

Indore Exporling & Imporling Co.

Ltd.

Praveen Kumar

Ajay Inv!estment Co. : Praveen Kumar

A. K. Vemm

Narain

A.

Subhashini

Paveen Kumar

K. C. Patel

J. B.

Dadachanji

Arti Mehta

BHAGWATI

sections 85A

SOM of the Income Tax Act, 1961

section 57

Cloth Traders (P) Ltd.

section 85A

section 257

C. V. Mehta (P) Ltd.

H. K. (Investment) Co. Pvt. Ltd.

sections 85A and 80M

section 85A

section 80M

sections 85A and 80M

sections 85A and 80M

sections 85A

9th December 1933

High Court of Bombay

section 12

section 56A

Indian Income-tax Act, 1922

Finance Act, 1953

section 99

Section 99

Fifth Schedule

Finance Act

section 99

section 99

section 99

section 99

section 99

Calcutta High Court

section 99

Bombay High Court

Industrial Investment Trust Co

Calcutta High.

New Great Insurance Co

Madras High Court

section 99

Bombay

Calcutta

Madras

Section 99

section 99

section 85A

1st April, 1965

sections 80A and 80D

section 85A

India

section 85A

section 85A

section 85A

section 99

section 99

section 85A

section 99

section 85A

section 85A

April, 196S

section 80V

section 80V

section 280

Section 80M

section 85A

section 1

Finance Act 1968

section 31

section 99

section 85A

section 99

section 85A

SOM

section 99

section 85A

section 99

section 85A

clause 31

section 31

Finance Act, 1968

section 99

section 85A

section 99

section 85A

section 99

section 99

Bombay, CaJcutta and Madras High Courts

New Great Insurance

Co.

section 99

section 99

section 99

section 99

Central Government

section 60A

Travancore

Cochin

Travancore- Cochin

section 16

Indian Income-tax Act, 1922

section 8

Subba Rao

section 8

Income-tax Act

State of Travancore- Cochin

section 16

section 8

Income-tax Act

Travancore-Cochin

section 8

section 99

section 85A

section 85A

section 280

section 2S

section 80

sections 80

sections 80

section 80

Section 80

section 80M

s. 80M

section 80A

section 99

New Gredt Insurance Co.

section 80

Vide Madras Auto Service

Isthmian India Maritime P. Ltd.

section 85A