Judgment :- VEERASWAMI J. The following questions have been referred to us under section 66(1) of the Income-tax Act, 1922 "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Officer is right in withdrawing the rebate of super-tax on Rs. 3, 68, 750 ? (2) Whether, on the facts and in the circumstances of the case, the computation of the rebate under the provisions of Part B of the Finance Act, 1956, is right in law ?" * The circumstances leading to this reference may be shortly stated. The matter relates to the assessment year 1956-57, relevant to the previous year ended April 30, 1955. For that assessment year, the assessee, which is a subsidiary of Messrs. Amalgamations Ltd., returned a total income of Rs. 25, 65, 397. The Income-tax Officer determined the total income as Rs. 25, 30, 252. In assessing the tax, he withdrew rebate on a sum of Rs. 3, 68, 750, after overruling the assessee's contention that no rebate could be withdrawn in respect of a sum of Rs. 68, 750 in the particular circumstances of the case. For the assessment years 1949-50 and 1950-51, the assessee had returned certain total incomes which were recomputed by the Income-tax Officer. Finding that the dividends declared out of the profits referable to those assessment years were only 55 per cent. of the assessable incomes less the tax payable, be called upon the assessee to take steps to declare the deficiency. In compliance with the direction, the assessee at its extraordinary general meeting on March 5, 1955, resolved to declare a further dividend in order to make up 60 per cent. of the assessable income. The resolution reads as follows "PROPOSED BY Mr. S. Anantharamakrishnan and seconded by K. Hariharan that an additional dividend of Rs. 68, 750, be declared to the shareholders, the dividend being applicable in respect of holdings as on 30th April, 1948, and 30th April, 1949." * Out of Rs. 68, 750, Rs. 33, 750 related to the year ended April, 1948, and the balance to the year ended April, 1949. It appears the shareholders were assessed on the respective shares out of these sums in the assessment years 1949-50 and 1950-51. At the annual general meeting held on January 29, 1955, the assessee declared a dividend of Rs. 68, 750, Rs. 33, 750 related to the year ended April, 1948, and the balance to the year ended April, 1949. It appears the shareholders were assessed on the respective shares out of these sums in the assessment years 1949-50 and 1950-51. At the annual general meeting held on January 29, 1955, the assessee declared a dividend of Rs. 3 lakhs for the accounting year ended April 30, 1954, which was 10 per cent. of the paid up capital as on May 1, 1954. On the basis of the declaration of the further dividend of Rs. 68, 750, there was a withdrawal of rebate of Rs. 2, 109-6-0 for 1949-50 and Rs. 2, 187-8-0 for 1950-51, the order withdrawing rebates being dated March 15, 1955. While computing the corporation tax, the Income-tax Officer deducted rebate at four annas in the rupee and withdrew rebate on the sum of Rs. 3, 68, 750, on the ground that the sum of Rs. 68, 750 was not distinguishable in any way from the sum of Rs. 3 lakhs declared as dividend in the accounting year ended April 30, 1954. The Income-tax Officer rejected the contention of the assessee that the sum of Rs. 68, 750 related to the deficiency in dividend for the assessment years 1949-50 and 1950-51 and as such no withdrawal of rebate on that sum should be made. Both the Appellate Assistant Commissioner as well as the Tribunal concurred with the Income-tax Officer. The Tribunal found that the conditions of the Finance Act, 1956, were satisfied in this case, namely, that there was a dividend declared during the previous year and that it exceeded 6 per cent. of the paid up capital and that, therefore, the withdrawal of rebate on the entire sum of Rs. 3, 68, 750 was in order. The Tribunal was also of the view that the deeming effect of the declaration of dividend had no bearing upon the scope and application of the Finance Act of 1956, in relation to the withdrawal of rebateBefore us the contention of the assessee is that what the Income-tax Officer has done worked injustice because, on the basis that the sum of Rs. 68, 750 pertained to dividends for the earlier years, there was a withdrawal of rebate, as we mentioned, for 1949-50 and 1950-51 and, again, on the basis that the entire amount of Rs. 68, 750 pertained to dividends for the earlier years, there was a withdrawal of rebate, as we mentioned, for 1949-50 and 1950-51 and, again, on the basis that the entire amount of Rs. 3, 68, 750 represented dividend declared for the assessment year 1956-57, withdrawal of rebate has been made. Learned counsel adds that the sum of Rs. 68, 750 was declared as further dividend because of the direction of the Income-tax Officer and such declaration of dividend should be deemed to be for the years 1949-50 and 1950-51. In no sense, according to him, could the sum be regarded as dividend pertaining to the assessment year 1956-57. While we have sympathy for the assessee because of those circumstances, we are unable to accept his contention The Finance Act, 1956, by its First Schedule, Part II, provides for what is termed as corporation tax or super-tax at the rate of six annas and nine pies in the rupee. Section D in the Schedule has two provisos, the first of which says that a rebate at the rate of five annas per rupee of the total income shall be allowed in the case of any company which satisfied the conditions mentioned in the two parts (a) and (b). Clause (ii) of the proviso is to the effect that a rebate of four annas per rupee of the total income shall be allowed in the case of any company which satisfies condition (a), but not condition (b), of the preceding clause. This applies to the assessee. The second proviso enacts for reduction of rebate in certain circumstances. If the dividend declared is 6 per cent. or less of the paid up capital, there will be no reduction. But if the dividend exceeds that limit, withdrawal of rebate is provided on a slab basis. The first slab is applicable to that part of the dividends which exceeds 6 per cent. but does not exceed 10 per cent. of the paid up capital and the second slab relates to dividends which exceed 10 per cent. of such capital. The second slab would be attracted in the instant case if the sum of Rs. 68, 750 is also included in the dividends declared for the assessment year in question. but does not exceed 10 per cent. of the paid up capital and the second slab relates to dividends which exceed 10 per cent. of such capital. The second slab would be attracted in the instant case if the sum of Rs. 68, 750 is also included in the dividends declared for the assessment year in question. Clause (i)(b) of the second proviso reads "ROVIDED further that---- (i) the amount of the rebate under clause (i) or clause (ii), as the case may be, of the preceding proviso shall be reduced by the sum, if any, equal to the amount or the aggregate of the amounts, as the case may be, computed as hereunder (b) in addition, in the case of a company referred to in clause (ii) of the preceding proviso which has distributed to its shareholders during the previous year dividends in excess of six per cent. of its paid up capital, not being dividends payable at a fixed rate...." * What clause (b), for its application, contemplates is that there should be a declaration of dividend, that it should be distributed to the shareholders during the previous year and that it should be in excess of six per cent. of its paid up capital. There can be no doubt that the sum of Rs. 68, 750 does satisfy each of the three requirements. It is not necessary for the application of clause (b) that the dividend declared must be for a previous year. The clause will be attracted if the dividend was distributed to shareholders during the previous year. This language of the Finance Act, 1956 The questions are answered against the assessee with costs, counsel's fee Rs 259.