said writ petitioner. If so, it follows that the order of the High Court directing the State Government to issue permission to the two writ petitioners ignoring the above circumstances is clearly erroneous. From what is stated above, the judgment of the High Court allowing Special Civil Application Nos. 420 and 421 of 1966 cannot be sustained. Coming to appeal No. 878 of 1968, the facts lie within a very narrow compass. For the year 1965-66, the third respondent in Special Civil Application d unambiguous provision. HEADNOTE: Section 7 of the Bonus Act provides as to how the direct tax payable by an employer is to be calculated for the purpose of computing the available surplus. Clause (e) of s. 7 enacts that no account shall be taken of any 'rebate' or 'relief' or deduction 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 Act for the development of any industry. in the case of an industrial company, which is not a company in which public ,arc substantially interested, the Finance Act. 1966 fixed the rate of income-tax at 55% on so much of the total income as did not exceed Rs. ten lakhs, on the balance, if any, of the total income 60% and 65% in the case of any other ,company. In a dispute between its employees and the appellant, which is an industrial company the latter contended-that for the purpose of computing the available surplus it was entitled to deduct direct tax at 65% and not 55% which was only a confessional levy amounting to a 'relief' for the purpose of development. The Tribunal accepted the contention of the appellant. The High Court allowed the respondent's writ petition under Art. 227 of the Constitution holding that the company being an industrial company could not claim deduction at a rate higher than 55% in calculating the available surplus. On appeal it was contended that the 10% concession in the rate was given to industrial companies with a view to promote development of industry and as such must be deemed to be a 'relief' or 'rebate' in be payment of direct tax contemplated by s. 7(e) of the Bonus Act. Reliance for this had been placed on the speech of the Finance Minister on the budget for the year 1966-67. Dismissing the appeal, HELD : (1) The company being an industrial company with total income not exceeding rupees ten lakhs the rate of tax under paragraph 1(A)(2)(i) of the Finance Act. 1966 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 order to fall within the purview of s. 7(e) of Bonus Act. must be a 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 industry" which is one of the conditions to be satisfied. In the present case it did not satisfy this condition. The Finance Act, 1966 did not say that this difference of 10% in the rate of tax applicable to an industrial company and any other company is to be deemed to be a rebate or relief for the development of industry. No, has it been shown that this difference in the rates is allowed as a rebate or relief under any other extant law 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-D] (b) As a general principle of interpretation, where the words of a statute are ,plain, precise and unambiguous the intention of the Legislature has to be gathered from the language of the statute itself and no external evidence such as Parliamentary debate-, Reports of the Committees of the Legislature or even the statement made by the Minister on the introduction of a measure or by the framers of the Act is admissible to construe those words. It is only where a statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more 543 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 in question. [545D-F] JUDGMENT:
CIVIL 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
appellant.
The Judgment of the Court was delivered by
SARKARIA, 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 a “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 a Private Ltd. Company. it manufactures
automobile ancillaries and other goods in its Factory at
Bombay. It employs about 170 workmen. The workmen demanded
bonus for the year 1964-65. Their demand was not met by the
Company. Conciliation 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 mooted before the Tribunal was, whether in
calculating the available surplus, the direct tax payable by
the Company was deductible at the rate of 55 per cent or 65
per cent. The case of the Mazdoor Saneh (Respondent No. 1)
was that the rate should be 55 per cent as the Company was
paying the tax at the rate 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 a confessional levy
amounting to a “relief” for the purpose of development.
The Tribunal accepted the contention of the Company. After
referring to the speech of the Finance Minister on the
Budget of 196667, the Tribunal held:
assessed to income tax at the rate of 65 per
cent, those engaged in industrial undertakings
have been assessed at the concessional rate of
55 per cent, as a measure of rendering
assistance to their growth. Such a concession
would, unquestionably amount to relief for the
purpose of development as contemplated by
Section 7(e) of the Act.”
Aggrieved, the Mazdoor Sangh impugned the Tribunal’s Award,
dated 29-2-1968, by a Writ Petition under Article 227 of the
Con-
544
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 not claim deduction at a rate higher than
55% in calculating the available surplus. In the result,
the High Court set aside the Award and remitted the case to
the Tribunal for further disposal in accordance with law.
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
are calculated in the manner specified in the First
Schedule, 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 (c) 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 respect of his
income, profits and gains during that year”.
Section 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. Clause (e) of Section 7 is material.
It runs thus :
“no account shall be taken of any rebate
(other than development rebate or development
allowance) or credit or relief or deduction
(not hereinbefore mentioned in section) 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 Act, for the development of any
industry”.
The rates of income-tax applicable to Private Ltd.
Companies tinder Paragraph F, Part I of the First Schedule
fixed by the Finance Act, 1966, are as follows :
1. In the case of a domestic Company(A)
(1)….
(2) where the Company is not a company in
which the public are substantially interested.
(i) in the case of an industrial Company-
(1) on so much of the total income as does
not exceed 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 the
total income”.
It is not disputed that the Company being an industrial
Company with total income for the relevant year, not
exceeding Rs. 10,00,900,,
545
the rate of tax under the above Paragaph 1(A) (2) (i),
applicable to it was 55 per cent and not 65 per cent of the
total income. However, Mr. Bhandare’s contention is that
this was only a concessional rate and not the normal rate
which was prescribed under Clause (ii) of the above
Paragraph 1(A) (2). The point pressed into argument is that
this ten per cent concession in the tax-rate was given to
Industrial Companies with a view to promote development of
Industry and, as such, must be deemed to be a “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 proposed to
provide “certain reliefs” which he considered “necessary for
providing a suitable climate of growth”, and, in that
context, described the rate of 55% tax on Industrial
Companies as a “concessional rate”.
We are 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 clear and unequivocal. It has
to be construed as it stands, according to its plain
grammatical sense without addition or deletion of any words.
As a general principle of interpretation, where the words of
a statute are 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 a measure or by the framers of the Act
is admissible to construe those words. It is only where a
statute is not exhaustive or where its language is
ambiguous, uncertain, clouded 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 in 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 any direct tax in order to fall within the
purview of this clause must satisfy two conditions, viz.,
(i) that it must be a 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 a relief or rebate for the development of
any Industry. In the present case, condition (i) is lack-
ing.
The Finance Act, 1966, does not say that this difference of
10per cent in the rates of tax applicable to an Industrial
Company and any other Company is to be deemed to be a rebate
or relief for the development of Industry. Nor has it been
shown that this difference in the rates is allowed as a
rebate or relief under any other extant law relating to
direct taxes.
546
The High Court was, therefore, right in holding that it was
not ,permissible to use the speech of the Finance Minister
to construe-the clear 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 vide this Court’s order dated February 17, 1972,
which is to this effect
“The order of ex-parte stay is made 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 disposal of the appeal in this
Court, in case the appeal fails in this Court.”
The appeal has been heard ex-parte, we therefore make no
order as to costs.
P.B.R. Appeal dismissed.
547