Plain language governs rebate reduction where dividend is declared in the previous year, even if it relates to earlier profits.

In a fiscal rebate provision linked to dividends declared or distributed during the previous year, the Calcutta HC applied the plain language of the statute and held that the reduction of rebate was not confined to dividends paid out of the current assessment year's profits. The court declined to read into the provision a condition not expressed in the text, and treated a dividend declared in the relevant previous year as sufficient to trigger the statutory consequence even if it related to earlier profits. The rebate reduction was therefore to be computed by reference to the dividend actually declared or distributed during that year.

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Issues: Whether, for the purpose of reduction of rebate under clause (1)(c)(iii)(B) of the second proviso to Paragraph F of the First Schedule to the Finance Act, 1965, the reduction had to be computed with reference to the dividend actually declared or distributed during the previous year, or only with reference to dividends out of the profits of the assessment year under consideration.

Analysis: The relevant language made the reduction of rebate depend on the fact of dividend being declared or distributed during the previous year. The provision did not say that the dividend must necessarily arise out of the profits of the year of assessment. In fiscal legislation, the court applied the plain meaning of the words used and declined to add a condition not found in the text. Support was drawn from the principle that a dividend declared during the relevant previous year attracts the statutory consequence even if it relates to earlier profits.

Conclusion: The reduction of rebate had to be computed with reference to the dividend of Rs. 60,000 declared or distributed during the previous year. The question was answered in the negative, in favour of the Revenue.

Ratio Decidendi: Where a fiscal provision links a consequence to dividend declared or distributed during the previous year, the court must apply the plain language and cannot confine the consequence to dividends out of the current year's profits unless the statute expressly so provides.

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