Law:

Section:

Income-tax-Reserve-Super tax rebate on dividends declared in excess of 6 p. c. of paid-up capital-Whether premiums received on issue of shares credited to reserve fund amount to capital " Standing to the credit of the share premium Account"-Meaning of-Finance Acts, 1956 to 1958, Part II, Para. D, Explana tion (i)-Fiscal statutes-Construction-In favour of subject. When the question is of granting relief to the subject in the matter of taxation, there is no room for the application of the rule of strict construction but a liberal construction should be placed in favour of the subject on the relevant statutory provision. The provisions of the relevant Finance Acts must be construed in the context of the law as it prevailed on the first day of the accounting years In question and in the light of the object of the statutory provision contained therein. There is really no contradiction between a reserve and share premium. Premiums received on shares not strictly capital but are, in a sense, a reserve and when the amounts of the premiums are credited into a reserve fund account they do not lose their character as premiums. The expression "standing to the credit of the share premium account" in Explanation (i) of paragraph D of Part II of the Finance Acts, 1956, 1957 and 1958 must be construed to mean "standing credited on account of the share premium" Held, that the share premium amounts lying in the reserve fund account will have to be included in computing the paid up capital of the bank for the purpose of calculating the super tax rebate to be withdrawn on dividends declared in excess of 6 per cent. of the paid up capital under paragraph D of Part II of the First Schedule to the Finance Acts of 1956, 1957 and 1958. Commissioner of Agricultural Income-tax v. Raja Jagdish Chandra Deo (1949) 17 I T R 426; Commissioner of Income-tax v. Allahabad Bank Ltd. (1966) 60 I T R 384; Commissioner of income-tax v. Chamanlal J. Dalal & Co. (1955) 57 I T R 285; Commissioner of Income-tax v. Chugandas & Co. (1960) 38 I T R 241; Kameshwar Singh v. Commissioner of Income-tax (1954) 26 I T R 121; Ramchandra Mardaraj Deo v. Collector of Commercial…