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of <h1>Court affirms grossing up dividends; excludes rebate under Income-tax Act; 'rebate' includes Concession Order.</h1> <h3>Commissioner Of Income-Tax, Delhi And Rajasthan Versus Anant Rao B. Kamat</h3> Commissioner Of Income-Tax, Delhi And Rajasthan Versus Anant Rao B. Kamat - [1964] 53 ITR 307 Issues Involved:1. Grossing up of dividends under Section 16(2) of the Indian Income-tax Act, 1922.2. Applicability of the Part B States (Taxation Concessions) Order, 1950.3. Interpretation of the term 'rebate' in the context of Section 16(2) and the Concession Order.Issue-wise Detailed Analysis:1. Grossing up of dividends under Section 16(2) of the Indian Income-tax Act, 1922:The core issue was whether the dividends received by the assessee should be grossed up under Section 16(2) of the Act without considering the rebate allowed to the companies under the Concession Order. The assessee argued that the applicable rate should be the one prescribed by the Indian Finance Acts, while the Income-tax Officer applied the State rate as defined by the Concession Order. The High Court had ruled in favor of the assessee, stating that the rate applicable to the total income of the companies should not take into account any rebate allowed under the Concession Order.2. Applicability of the Part B States (Taxation Concessions) Order, 1950:The appellant contended that the rate applicable to the total income of the companies should consider the effect of the Concession Order, which allows for certain rebates. The appellant argued that the Concession Order was concerned with determining the tax payable and not granting a rebate. However, the court found that the Concession Order itself uses the term 'rebate' in several paragraphs, including paragraphs 5, 6, and 6A, and that the term should be interpreted consistently across these provisions.3. Interpretation of the term 'rebate' in the context of Section 16(2) and the Concession Order:The court examined the statutory provisions and concluded that the term 'rebate' as used in Section 16(2) includes any rebate granted under the Concession Order. The court noted that Section 16(2) explicitly states that the rate applicable to the total income of the company should be considered 'without taking into account any rebate allowed.' The court emphasized that ignoring these words would effectively rewrite Section 16(2). The court also found that the Concession Order's use of the term 'rebate' was not loose but intentional, as evidenced by the language in paragraph 6A, which explicitly mentions a rebate.In conclusion, the court agreed with the High Court's interpretation that the rate applicable is the one actually applied, excluding any rebate allowed to the company. The court dismissed the appeals, affirming that the dividends should be grossed up without considering the rebate allowed under the Concession Order. The appeals were dismissed with costs, and the answer to the question referred was in the affirmative.
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