ANANDJI HARIDAS.& CO. PVT. LTD versus ENGINEERING MAZDOOR SANGH & ANR.

ANA.NDJI HARIDAS.& CO. PV't. LTD

ENGINEERING MAZDOOR SANGH & ANR. February 13, 1975

(A. ALAGIRISWAMI AND R. S. SARKAR.IA, JJ.J

Bonus Act, 1965-.s. 'l(e)......Scope of-Speech of Minister in Pa•liame111 tJr iLegislature--lf could be u.ied in consmdng clear and unambiguouJ' provis/011.

Secti0n 7 of the Bonus Act provides as to how the dircc:t tax payable by an em-ployer is to be calculated for the purpose of computing the available surplus. <Clause (e) of s. 7 enacts that no ao::ount shall be taken of any 'rebate' or 'relief' or deductio11 in the payment of any direct tax allowed unde~ any law for the time 'being in force relating to direct !axes or under the relevant annual F:innnce Act .for the development of anv industry,

In the case of an industrial company, which is not company in which public '1l'e substantially interested, the Finance Act. 1966 fixed the rate of income-lax at 55% on so. much of the total income as did not ex.:eed Rs. ten lak.lis, on the IJalance, if any, of the total income 60% and 65 % in the case of n,iy other ·company.

In dispute between its employees and the appellant, which is an1 industrial ·company the latter contended that for the purpose of computing the available surplus it Wi!S entitled to deduct direct tax at 65% and not 55% which was only concessimlal levy amounting to 'relief' for the purpose of development. ·The Tribunal accepted the contention of the appellant. The High Court allowed the 1 espondent's writ petition under Art. 227 of :he Constitution holding that the com-·pany being an industrial company could not claim deduction at rate higher than 55 % in cakulating the available surplus.

On appeal it was contended that the 10 % concession in the rate was given to industrial companies with view to promote development of industry and as such must be deem•d to be 'relief or 'rebate' in !he payment of direct ta)[ contem-plated bv s. 7(e\ of th<> Bnnir; Act Rrli<>ncr fo• thi• ha~ h-en nlaced on the speech of the Finance Minister on the budget for the year 1966-67.

Dismissing the appeal,

HELD : (I) The company being an industrial company with total income not . ,;:xceeding rupees ten lakhs the rate of tax under paragraph l(A)(2) 0) of the Finance Act, 196~ applicable to it was 55% and not 65% of the total income. [544H-545A]

(2) The 'rebate or relief' in the payment of any direct tax, in ord.er to fall within the purview of s. 7(e) of Bonus Act. must be rebate or relief "allowed under any law for the time being in force relating to direct taxes or under the relevant Finance Act. for the development of any ind11stry" which is one of the condi'ions to be satisfied. Jn the present case it did not satisfy this c:ondition. The Finance Act, 1966 did not say that this difference of 10% in the rate of tax applicable to an industrial .~ompany and any other company is to be deemed to be rebate or relief for the development of industry. No• has it been shown that this diffe'ence in the rates i;; allowed as rebate or relief under any other .extant Jaw relating to direct taxes. [545F-H] .

3 (a) It was not permissible to use the speech of the Finance Minister to -construe the clear language of the statute. [545C-DJ

(b) As general principle of interpretation, where the words of statute are plain, rirecise and unambiguous the intention of the Legislature has to be g~thered from the language of the statute itself and no external evidence such as ParlialllCll· tary debates. Reoorts of the Committees of the Legislature or even the statement made bv the Minister on the introduction of measure or by the framers of the Act is admi<Sible to construe t~o.e words. It is only whece statute is not exhau-stive or where its language is ambiguous, uncertain, clouded or susceptible of more

.1 han one meaning or .shades of meaning that external evidence as to the evils. if any, which the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertain-ing the object which the Legislature had in view in using the words in question. F545I>-FJ

CIVU. APPELLATE JURISDICTION: Civil Appeal No. 2053 of 1971.

Appeal by special leave from the Judgment & Order dated the 8th July, 1971 of the Bombay High Court in S.C.A. No. 1346/68.

M. C. Bhandare, P. H. Parekh and S. Bhandare, for the appel-

.lant.

The Judgmenfof the Court was delivered by

SARKAR!A, J.-Whether the difference of 10 per cent between an Industrial Company and other Companies in the levy· of Income-tax provided in the Finance Act, 1966 is to be construed "rebate" or "relief'' in the payment of any direct tax, for the development of an industry for the purposes of s. 7(e) of the Payment of Bonus Act, 1965, (for short, the Bonus Act) is the short question that falls to be answered in this appeal by special leave.

The appellant is Private Ltd. Company. It manufactures auto-mobile ancilliaries and other goods in its Factory at Bombay. It em-ploys about 170 workmen. The workmen demanded bonus for the year 1964-65. Their demand was not met by the C-Ompany. C-Onci-Jiation proceedings before the Conciliation Officer having failed, the dispute was submitted to the Government which by its Order, dated May 2, 1967 referred the same for adjudication to the Industrial Tribunal.

One of the points moot~ before the Tribunal was, whether in calculating the available surplus, the direct tax payable by the Com-pany was deductible at the rate of 55 per cent or 65 per cent. The case of the Mazdoor Sangh (ResPondent No. 1) was that the rate should be 55 per cent as the Company was paying the tax at the rate only, As against this, the Company contended that it was entitled to deduct as per s. 7(e) of the Bonus Act, direct tax at the normal rate of 65 per cent and not at 55 per cent which was· only concessional levy amounting to "relief" for the purpose of development.

The Tribunal accepted the contention of the Company. After re-ferring to the speech of the Finance Minister on the Budget of 1966-67, the Tribunal held : I

" .... while the private companie& have been normally assessecl to income tax at the rate of 65 per cent, those engaged in industrial undertakings have been assessed at !he concessional rate of 55 per cent, as measure of reridermg assistance to their growth. Such concession would. un-questionablv amount to relief for the purpose of development as contemplated bv Section 7 ( e) of the Act."

Aggrieved, the Mazdoor Sangh impugned the Tribunal's Award, dated 29-2-1968, by Writ Petition under Article 227 of the Con·

stitution before the High Court of Bombay. The High Court held that the Company being an Industrial Company, was liable to pay tax under the Finance Act, 1966 at the rate of 55% only on its total income after deducting depreciation. Therefore it could nor claim deduction at rate: higher than 55% in calculating· the availabfo sur-plus. In the result, the High Court set aside the Award and remit-ted the case to the Tribunal for further disposal in accordance with Jaw. Hence this appeal by the Company.

Broadly, the scheme of the Bonus Act is this : At first, the gross profits derived by an employer from an establishment arc cal-culated in the manner specified in the First Scheduie, or the Second Schedule, whichever may be applicable ( s. 4). On the basis of such gross profits, the available surplus for the particular accounting year is computed. This is. done by deducting therefrom the sums referred to in Section 6. According to Clause (cl of Section 6, one of the sums so deductible is :

"Subject to the. provisions of Section 7, any direct tax. which the employer is liable to pay for the accounting year in res.peel: of his income, profits and gains during that year". S.::ction 7, to which s. 6( c) is subject, provides how for the purposes of the Act, the direct tax payable by the employer is to be calculated .. Oau~e ( e) of Section 7 is material. It runs thus :

"no account shall be taken of anv rebate (other than development rebate or development allowance) or credit or relief or deduction (not hereinbefop~ mentioned in ''m sec-tion) in the payment of any direct tax allowed under any law for the time being in force relating to direct taxes. or under the relevant annual Finance ,~ct, for the development of any industry", .

The rates of income-tax applicable to Private Lt<l. Companies under Paragraph F, Part I of the First Schedule fixed by the Finance Act, 1966, arc as follows :

I. In the c:ase of domestic Company-

( A) (1) ....

(2) where the Company is not company in which the public are substantially interested.

(i) in the case of 211 industrial Company-

(1) on so much of the total income as <locs not exc~cd Rs. 10,00,000-55 per cent.

(2) on the balance, if any of the total income--60 per cent.

(ii) in any other case-65 per cent of foe total income".

., It is n?t disputed that the Company being an industrial Company Wllh total mco:me for the relevant year, not exceeding Rs. 10,00,000,

the rate of tax under the above Paragraph I(A)(2)(i), applicable to· it was 55 per cent and not 65 per cent 01 the total income. However, Mr. Bhan.dare's contention is that this was only concessional rate and not the normal rate which was prescnbcd under Clause (ii) of the above Paragraph I(A) (2). The point pressed into argument is that this ten per cent concession in the tax-rate was given to Indus-trial Companies with view to promote development of Industry and, as such, must be deemed to be "relief" or "rebate" in the payment of direct tax of the kind contemplated by Section 7 ( e) of the Act. Reliance for this contention has been placed on the speech of the Finance Minister on the Budget of 1966-67, wherein he propased to provide "certain reliefs" which he considered "necessary for provid-ing suitable climate of growth", and, in that context, described the rate of 55% tax on Industrial Companies as "concessional rate".

We arc afraid what the Finance Minister said in his speech cannot be imported into this case and used for the construction of Clause (e) of Section 7. The language of that provision is manifestly clenr and unequivocal. It has to be construed as it stands, according to its plain grammatical sense without addition or deletion of any words.

AS general principle of interpretation, where the words of · statute arc plain, precise and unambiguous, the intention of the Legislature is to be gathered from the language of the statute itself and no external evidence such as Parliamentary Debates, Reports of the Committees of the Legislature or even the statement made by the Minister on the introduction of measure or by the framers of the Act is admissible to construe those words. It is only where statute is not exhaustive or where its language is ambiguous. uncertain. cloud-ed or susceptible of more than one meaning or shades of meaning, that external evidence as to the evils, if any, which the . statute was intended to remedy, or' of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertain-ing the object which the Legislature had in view in using the words ln question.

In the case before us, the language of Section 7 ( e) is crystal clear and self-contained. It indicates in unmistakable terms that the 'rebate or relief' in the payment of anv direct t:ix ;n order to fa 11 with;n the purview of this clacse must satisfy two conditions, viz., (i) that it must be rebate or relief "allowed under any law for the time being in force relating to direct taxes or under the relevant annual Finance Act'', . and further, (ii) that it must be relief or rebate for the deve-~opment of anv Industry. In the present case, condition (i) is lack-mg.

The Finance Act, 1966, docs not say that this difference of 10 per cent in the rates of tax applicable to an Industrial Company and any other Company is to be deemed to be rebate or relief for the development of Industry. Nor has it been shown that thi< niffcrence in the rates is allowed as rebate or relief under any other extant law relating to dirCCL taxes.

'fbc High Court was, therefore; right in holding that it was not permissible to use the speech of the Finance Minister to constrne the dear language of the statute.

For the forgoing reasons the question posed above is answered in the negative and the appeal is dismissed.

As regards the costs, the delay in payment of the bonus caused by the pendency of this appeal has been amply compensated vid1~ this Court's order dated February 17, 1972, which is to this effect :

'The order of ex-parte stay is mage absolute on the condition that the petitioner-appellant shall pay six percent interest on any amount that is found payable by the appellant to the respondent-workmen from the date the award become enforceable till the disppsal of the appi~al fu this Court, in case the amieal fails in this Court\."

The appeal has been heard ex-parte, we therefore make no order as to costs.

Ol'.B.R.

ppea[ dismissed.