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It is only if this category of income from a component part of total income that the provision enacted in the section is attracted and the assessee becomes entitled to rebate on income calculated with reference to the "income so included". Ratio |
The argument of the Revenue was that the words "income so included" must mean the quantum of the income included in the total income and, therefore, rebate on income tax granted under section 85A can only be in respect of dividend income computed in accordance with the provisions of the Act and forming part of the tota... |
This argument is, in our opinion, fallacious. Ratio |
It is based on a misreading of the words "income so included" and ignores the context in which these words occur. Ratio |
If the opening part of the section refers to inclusion of the 8 409 SCI/79 1002 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 T.D. r.f. only to the categor... |
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 included". Ratio |
Then it would be obvious indeed it would need no argument to hold that the rebate on income tax is to be calculated 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 received from an Indian company. Ratio |
This was the view taken by the Bombay High Court in the New Great Insurance Co. 's case and we find ourselves in agreement with it. Ratio |
We must now turn to consider section 80M for the purpose of arriving at its true interpretation. Ratio |
There is a close similarity between section 85A and section 80M so far as the opening part of the two section is concerned, but when we come to the latter part, we find that there is a difference, inasmuch as section 85A provides for calculation of rebate of income tax on "income so included", while section 80M provide... |
Even if there by any doubt or ambiguity in regard h to the meaning of the words "income so included" in section 85A, though we do 'not think that there is any scope for such doubt or ambiguity, the language employed by the Legislature in section 80M is much clearer and leaves no doubt that deduction, whether whole or 6... |
Section 80M occurs in Chapter VI A which is headed "Deduction to be made in computing total income". STA |
Section 80A, sub section ( 1 ) provides that in computing the total income of an assessee, the deductions specified in sections 80 to 80 VV shall be made from his gross total income and gross total income, according to the definition in section 80B, clause (5), means the total income computed in accordance with the pro... |
What section 80 A, sub section (1) requires is that first the total income of the assessee must be computed in accordance with the provisions of the Act without taking into account the deductions required to be made under Chapter VI A or under section 280.O and then from the gross total income thus computed, the deduct... |
But sub 1003 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 the gross total income of the assessee so that the total income arrived at after making the deductions specified in sections 80 to 80 VV from the gross total income can n... |
This provision imposing a ceiling on the deduction which may be made under sections 80 to 80 VV clearly postulate that in a given case the aggregate amount of these deductions may exceed the gross total income. STA |
It is in the context of this background that we have to determine the true interpretation of section 80 M, which, as the marginal note indicates, provides for deduction in respect of certain intercorporate dividends. Ratio |
Section 80 M, sub section (1) opens with the words "Where the gross total income of an assessee includes 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"... |
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. Ratio |
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. Ratio |
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. Ratio |
These words merely prescribe a condition for the applicability of the section, namely, that the gross total income must include the category of income described by the words "income by way of dividends from a domestic company. Ratio |
" 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". Ratio |
Now, if the words "where the gross total income of an assessee includes any income by way of dividends from a domestic company" in the opening part of the section refer only to the inclusion of the category of income denoted by the words "income by way of dividends from a domestic company" and not to the quantum of the... |
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... |
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. Rat... |
This was the view taken by the Madras High Court in Madras Auto Service vs Income tax officer Madras(1) and it meets with our approval. Ratio |
It is true that the Gujarat High Court has taken a contrary view in Cloth Traders Pvt. Ltd. vs 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, sub section (1). Ratio |
It 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 ... |
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 section 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 secti... |
We may point out that even though the consistent view taken by the Bombay, Madras and Calcutta High Courts in regard to the inter pretation of section 99, sub section (1), clause (iv) was that the exemption From super tax under that provision was admissible in respect of (1) 1005 the full amount of dividends received f... |
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 company, but it should only be in respect of the amount of dividends computed after deducting allowable expenditure, we have no doubt that the legislature would have amended section 80... |
The legislature in fact amended section 80M 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 decision of the Madras High Court in the Madras Auto Service 's case, but it did not choose to amend the language employed in section 8... |
This would seem to indicate legislative recognition of the interpretation placed by the courts on section 85A and section 80M and it is a circumstance, though not of much weight, which lends support to the view we are taking in regard to the interpretation of section 80M. We may also in this connection refer to section... |
It appears on a plain reading of these secions that the deduction admissible is in respect of the whole of the income received by the assessee and not in respect of the income computed after making the deductions provided under the Act. Ratio |
Vide Madras Auto Service case (supra) and Additional Commissioner of Income Tax vs Isthmian India Maritime P. Ltd.(1). Ratio |
We derive considerable support for our view from the analogy of these sections. Ratio |
H (1) 1006 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 Revenue. Ratio |
The questions referred by the Tribunal in Tax References Nos. 2, 6 to 9, 16 and 18 of 1975 are also answered in favour of the assessee and against the Revenue. Ratio |
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 80M 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 borrowings... |
The Commissioner will pay the costs of the appeals and the references to the respective assessees. RPC |
N.V.K. Appeals allowed. RPC |
Civil Appeal No. 2494 of 1969. FAC |
From the Judgment and Decree dated 24 1 1969 of the Calcutta High Court in Appeal from Original Order No. 111/66. FAC |
D. N. Mukherjee and N. R. Chaudhary for the Appellants. FAC |
P. K. Chatterjee and Sukumar Ghosh for the Respondent. FAC |
The Judgment of the Court was delivered by UNTWALIA, J. FAC |
This is an appeal by certificate filed by the judgment debtors from the decision of the Calcutta High Court given in appeal from that of a learned single Judge of that Court. FAC |
The facts of the case clearly demonstrate the fighting attitude of the judgment debtors to gain time for the satisfaction of the decree. FAC |
On August 15, 1925 one Indera Chand Kejriwal instituted on the original side of the Calcutta High Court a suit on the basis of a mortgage against Ram Chander Saragogi, Sewbux Saraogi and Tejpal Saraogi for recovery of Rs. 38,000/ as principal and Rs. 6,082.8 annas as interest. FAC |
By an equitable mortgage the property mortgaged consisted of two houses (1) No. 126, Harrison Road and (2) No. 13/2, Syed Salley Lane in the town of Calcutta. FAC |
On November 26, 1926 a consent decree was passed for a sum of Rs. 41,000/ together with interest thereon @ 6.3/4% per annum. FAC |
On failure of the judgment debtors to pay the amount the mortgaged properties were to be sold. FAC |
On 3rd of January, 1929 it was ordered and 158 decreed that the mortgaged property be sold. FAC |
On 16th April, 1934 Indera Chand Kejriwal by a deed of assignment assigned his interest in the decree to Mahadeo Prasad Tibrewalla, the respondent in this appeal. FAC |
On the application of the assignee decree holder an order was made on the 8th May, 1934 substituting his name in place of the original decree holder and recording some terms of settlement between him and the judgment debtors. FAC |
The amount with interest quantified on that date was Rs. 60,023.12 annas which was to carry an interest of 6.3/4% per annum. FAC |
Subsequently on an application of the decree holder one Anandilal Poddar was appointed on the 14th June, 1938 a receiver of rents and profits of the mortgaged properties. FAC |
A sum of Rs. 10,000/ was paid to the decree holder on the 7th September, 1939 towards part satisfaction of the decree. FAC |
On the death of Ram Chander Saraogi, one of the judgment debtors, by order dated the 7th August, 1945 Smt.Parbati Devi, Ananta Kumar Saraogi and Suraj Kumar Saraogi, his heirs and legal representatives, were substituted. FAC |
They are appellant Nos. 1 to 3 in this appeal. FAC |
No further payment was made to the decree holder and eventually a consent order was passed by the Court on the 17th June, 1953 on the basis of the terms of settlement arrived at between the parties which were incorporated in the letter written by the Solicitor of the judgment debtors to the Solicitor of the decree hold... |
The terms of settlement are quoted in full in the appellate judgment of the High Court. FAC |
The salient terms of the settlement may be stated as follows: (1) That the total dues on the date came to Rs. 1,10,000/ . FAC |
(2) That Shri Anandilal Poddar, the receiver was to pay Rs. 35,000/ . FAC |
(3) That a sum of Rs. 40,000/ was to be paid by conveying premises No. 13/2 Syed Salley Lane to the decree holder, and, (4) That a sum of Rs. 35,000/ was to be paid in cash by raising money by execution of an another mortgage of premises No. 126, Harrison Road. FAC |
Anandilal Poddar paid the sum of Rs. 35,000/ . FAC |
But nothing further was done by the judgment debtors pursuant to the settlement arrived at on the 17th June, 1953. FAC |
Sewbux Saraogi, one of the judgment debtors, died leaving a Will in which the universal legatee was his daughter Smt.Kapurbai and the sole executor appointed therein was Motilal Jhunjhunwalla, husband of Kapurbai. FAC |
On the 7th 159 June, 1965 the respondent affirmed a tabular statement for execution of the decree. FAC |
A learned single judge of the Calcutta High Court dismissed that application mainly on the grounds (1) that the terms of bargain between the parties recorded on the 17th June, 1953 were entirely different from the original decree and had the effect of superseding it; the former decree, therefore, was not executable; (2... |
In passing, the learned single Judge also expressed the view that the execution was barred under section 48 of the Code of Civil Procedure. FAC |
On appeal by the decree holder the Appellate Bench has reversed the decision of the learned single Judge on all the points. FAC |
Hence this appeal by the judgment debtors. Ratio |
We shall first dispose of the point of limitation. Ratio |
From the facts stated above it is abundantly clear that there was no bar of limitation in the present execution instituted in the year 1965. Ratio |
At no point of time the mortgage decree had been fully satisfied. Ratio |
All through steps were being taken and it was not a case where the execution was barred either under section 48 of the Code of Civil Procedure or Article 183 of the Limitation Act 1908. Ratio |
It was conceded and rightly so by learned counsel for the appellants that the execution was not barred under Article 136 of the . ARG |
But the submission was that it was already barred when that Act came into force on the 1st of January, 1964 under Article 183 of the old Act. ARG |
We have no difficulty in rejecting the argument of limitation. Ratio |
All through steps had been taken by the decree holder. Ratio |
The case was not lying dormant at any point of time for a period of more than 12 years. Ratio |
When in the year 1929 there was an order for sale of the mortgaged properties it appears some payments were made and finally accounts were settled in the year 1934. Ratio |
Thereafter the mode of execution proceeded by appointment of a receiver. Ratio |
A sum of Rs. 10,000/ was paid in the year 1939. Ratio |
In the year 1945 steps were taken for substitution of the heirs and legal representatives of Ram Chander Saraogi, one of the deceased judgment debtors. Ratio |
Parbati Devi, appellant No. 1, was allowed to take some steps for the satisfaction of the decree. Ratio |
But nothing was done. Ratio |
Eventually a settlement was again arrived at on the 17th June, 1953 for satisfaction of the decree but on the judgment debtors ' failure to fulfil the settlement the present proceedings were started by filing the tabular statement on the 7th of June, 1965 well within 12 years of the 17th June, 1953. Ratio |
The point of limitation raised on behalf of the appellants, therefore, must be rejected. Ratio |
160 A statement had been made in the tabular statement that Sewbux Saraogi, one of the judgment debtors, was dead. Ratio |
Kapurbai, his daughter along with others were sought to be substituted in his place. Ratio |
Later on it transpired that she was a universal legatee under a will executed by Sewbux Saraogi. Ratio |
She was, therefore, undoubtedly a legal representative competent to represent the estate of Sewbux Saraogi. Ratio |
Even in absence of the substitution of Motilal Jhunjhunwalla, the sole executor of the will, the execution was not defective. Ratio |
Reference in this connection may be made to the decision of this Court in the case of The Andhra Bank Ltd. vs R. Srinivasan and Others, (1) decision relied upon by the Appellate Bench. Ratio |
Coming to the third and the last point it may be mentioned that the settlement arrived at on the 17th June, 1953 was not an altogether renovation of the old decree. Ratio |
The amount due was quantified and the mode of satisfaction was prescribed giving liberty to the judgment debtors to satisfy the decree by conveying one of the two mortgaged houses and by paying a sum of Rs. 35,000/ in cash by raising the money by mortgage of the other house. Ratio |
The judgment debtors did neither. Ratio |
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