HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
The Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S. C. Mehta, Income-tax Officer and another
Civil Appeal No. 139 of 1962
[1963] Supp 2 SCR 92 ·
Indian Income-tax Act, 1922: section 35(10) · Finance Act, 1956: sections 19 and 28
Holding and result. By a three-to-two majority, section 35(10) applied where the company had declared dividends before that provision commenced, because its language and purpose extended to prior use of profits on which rebate had been allowed. The assessee’s appeal was dismissed with costs.
Sources & disclosures includedDownload original judgment / order
Five-judge bench; majority opinions by A. K. Sarkar, J. and jointly by M. Hidayatullah and Raghubar Dayal, JJ.; S. K. Das and J. L. Kapur, JJ. dissented. · S. K. Das, J. · J. L. Kapur, J. · A. K. Sarkar, J. · M. Hidayatullah, J. · Raghubar Dayal, J.
Assessment years: 1952-53, 1953-54
01 · Facts of the case
The company received a rebate on undistributed calendar-year 1951 profits in its 1952-53 assessment. In April 1954 it declared Rs.19,32,000 as dividend out of those profits. After section 35(10) commenced on 1 April 1956, the officer withdrew the proportionate rebate and demanded Rs.1,20,750; the company challenged retrospective application.
02 · Discussion by the Hon’ble Court
The majority read “subsequently” and “in any year,” together with the rebate scheme’s purpose, as covering dividend declarations preceding commencement. The dissent applied the presumption against retrospective impairment and considered section 35(10) prospective because the crucial event had already occurred before 1 April 1956.
03 · Judicial decision
The majority upheld use of section 35(10) to recall the earlier rebate notwithstanding the pre-commencement dividend declaration. The High Court’s dismissal of the writ petition was affirmed.
04 · Outcome / in whose favour
In accordance with the majority, the company’s appeal was dismissed with costs.
05 · AKHB REVIEW POINT
AKHB analysis: when a later provision reopens a previously correct rebate, identify the event triggering withdrawal and the words fixing temporal reach. The split decision demonstrates why current reliance requires the present statutory text and later precedent rather than a generalized label of “retrospective taxation.”
Source & verification
Download original judgment / order · Open cited source rendition
Complete 35-page SCR asset read in page-preserving text and every page image inspected, including the leading tail of the previous report, all three opinions and the final majority order.
- Exact catalogue SHA-256 and 35-page count verified; the complete report was read and every source page image inspected.
Statutory scope
The decision construes section 35(10) of the Indian Income-tax Act, 1922 and Finance Act, 1956 provisions that are historical.
Later treatment
Source checked 2026-10-12. No comprehensive later-treatment or present-law clearance is represented. This note reports a three-to-two historical ruling on retrospective withdrawal of a rebate.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.