Ajit Kumar Sengupta, J.
1. The petitioner is a non-resident company. It was assessed by the Income-tax Officer, Central Circle XXXI, on November 28, 1964, under Section 143(1) of the Income-tax Act, 1961, for the assessment year 1964-65 (the accounting year ending March 31, 1964). From the assessment order, it appears that the income of the petitioner for the said assessment year consisted of dividend from Indian companies, viz., Oil India Limited and Burmah-Shell Refineries Ltd., totalling to Rs. 3,07,72,919 and the tax payable thereon was computed at the rate of 25% at Rs. 76,93,229.75 without allowing any rebate in accordance with the proviso to Paragraph D of Part I of the First Schedule to the Finance Act, 1964. After giving credit for the tax deducted at source, the tax payable was determined at nil.
2. The Indian company, i.e., M/s. Burmah-Shell Refineries Ltd., was assessed under Section 143(3) of the Income-tax Act, 1961, for the assessment year 1964-65 on March 26, 1969. In the said assessment, the said Burmah-Shell Refineries Limited was treated as a company in which public were not substantially interested within the meaning of Section 2(18) of the said Act. The Income-tax Officer who assessed the said Burmah-Shell Refineries Limited also held that the said company was not engaged in the business of manufacture or production of one of the articles or things as specified in Part IV of the First Schedule to the Finance Act, 1964.
3. On March 28, 1969, the petitioner-company through its constituted attorney, M/s. Price Waterhouse Peat & Co., made an application before the Income-tax Officer under Section 237 of the said Act claiming refund of a sum of Rs. 18,17,291.83 paid in excess of the amount of tax with which the petitioner-company was properly chargeable under the Act. It was explained that as the time for filing an application for refund under Section 237 of the said Act was to expire on March 31, 1969, and as the original application was sent to the non-resident petitioner-company for signature, M/s. Price Waterhouse Peat & Co. filed the said application within the period prescribed under Section 239(2)(a) of the Act.
4. By another letter dated April 19, 1969, M/s. Price Waterhouse Peat & Co. filed an application for refund duly signed by the secretary of the petitioner-company in substitution of the application dated March 28, 1969, already submitted by them.
5. The said Burmah-Shell Refineries Limited preferred an appeal against the said order of assessment for the assessment year 1964-65. The Appellate Assistant Commissioner of Income-tax, ' A ' Range, Bombay, in his order dated April 28, 1971, upheld the finding of the Income-tax Officer and held that the said company was not one in which public were substantially interested within the meaning of Section 2(18) of the Act. However, the Appellate Assistant Commissioner held that the business carried on by the said company can be attributed to the business of manufacture and production of mineral oil and accordingly it would be eligible for the higher rebate of tax under the Finance Act, 1964, provided other conditions specified in that behalf in the relevant Schedule are fulfilled.
6. Neither the said company nor the Income-tax Officer preferred any appeal against the said decision of the Appellate Assistant Commissioner and the same has become final.
7. By a letter dated June 8, 1971, M/s. Price Waterhouse Peat & Co. sent a reminder to respondent No. 3, the Income-tax Officer, Central Circle-XXIII, Calcutta, for the issue of the refund. The petitioner-company also filed an application under Section 154 of the said Act for rectification of the order of assessment and grant of a refund of Rs. 18,17,291-83.
8. Respondent No. 3 disposed of the applications made by the petitioner-company under Section 237 of the Act filed on March 31, 1969, and on April 19, 1969, and held that as the refund claimed by the petitioner arose only because of lower rate of tax application as a result of the decision in the case of Burmah-Shell Refineries Ltd., the case of the petitioner was not covered by Section 237 of the said Act. By a letter dated July 1, 1976 Price Waterhouse Peat & Co. requested respondent No. 1 to issue refund within a week from the date of receipt of the letter. It was stated in the said letter that the reason given for rejecting the claim of the petitioner-company for refund was not at all well-founded because the dividend income assessed in the assessment was received from the company to which Section 108 of the said Act did not apply and the said companywas engaged in the production of mineral oil, an article specified in the list in Part IV of the First Schedule to the Finance Act, 1964.
9. By a letter dated July 16, 1976, the Income-tax Officer informed M/s. Price Waterhouse Peat & Co. that the matter was receiving attention and they would be intimated as soon as the decision was taken. By a letter dated August 30, 1976, the Income-tax Officer informed the petitioner-company that on reconsideration of the matter, the claim could not be entertained under Section 237 of the said Act.
10. In the application, the petitioner has challenged the said decision of the Income-tax Officer and asked for direction upon him for refund of the amount claimed. No one has appeared for the respondents nor has any affidavit been filed.
11. The case of the petitioner in short is that the petitioner-company has been charged in respect of the dividend income received from the said Burmah-Shell Refineries Limited atithe rate of 25%. In view of the fact that the said company in its own assessment has been treated as not a company in which the public are substantially interested within the meaning of Section 2(18) of the said Act and is engaged in the business of manufacture and production of petroleum products which has been held by the Appellate Assistant Commissioner of Income-tax as mineral oil appearing in the list specified in Part IV of the First Schedule to the Finance Act, 1964, rate of taxes applicable to the said dividend income received from the said Burmah-Shell Refineries Limited is 15% and not 25%. In view of the lower rate of tax applicable to the said dividend income for the assessment year 1964-65, the excess amount of tax paid by the petitioner was Rs. 18,17,292. Thus the said amount was paid by the petitioner in excess of the tax to which the petitioner-company is chargeable under the said Act. Therefore, the petitioner under Section 237 of the Act is entitled to a refund of the said excess.
12. I have considered the contention of the petitioner. Section 237 provides for refund of excess tax paid. Under that section, an assessee is entitled to claim a refund of tax, if the tax paid by him or on his behalf, for any assessment year exceeds the tax which he is liable to pay for that assessment year. The question is whether the tax paid by the petitioner company in this case exceeds the tax which it is liable to pay for the assessment year 1964-65. This question is to be considered in the light of the relevant provisions of the Act and the assessment made and tax paid by the petitioner-company for the assessment year 1964-65 as well as the assessment made on the dividend-paying company. It has not been disputed nor can it be disputed that the petitioner company paid tax at the rate of 25% on the dividend income received by it from Burmah-Shell Refineries Limited.
13. Paragraph D of the First Schedule to the Finance Act, 1964, provides as follows--See [1964] 52 ITR 37 :
' In the case of every company,--
Rate of income-tax
On the whole of the total income ... 25%.
Provided that a rebate at the rate of ten per cent. on so much of the total income as consists of dividends from an Indian company which is not such a company as is referred to in Section 108 of the Income-tax Act and which is wholly or mainly engaged in the business of generation or distribution of electricity or of manufacture or production of any one or more of the articles specified in the list in Part IV of this Schedule, shall be allowed in the case of a company which has not made the prescribed arrangements for the declaration and payment of dividends within India.
Explanation.--For the purposes of this Paragraph and Part III of this Schedule, a company shall be deemed to be mainly engaged in the business of generation or distribution of electricity or of manufacture or production of any one or more of the articles specified in the list in Part IV of this Schedule, if the income attributable to any of the aforesaid activities included in its total income for the previous year is not less than fifty-one per cent of such total income.'
From the assessment order, it will appear that the petitioner-company paid income-tax at the rate of 25%. From the assessment order of Burma-Shell Refineries Limited for the relevant assessment year, it is evident that the Income-tax Officer held that the said company is not a company where the public are substantially interested. The said finding of the Income-tax Officer was affirmed by the Appellate Assistant Commissioner on appeal. Thus the said company is not a company as is referred to in Section 108 of the said Act. In other words, the said company is a closely held company. Thus, the first condition of Paragraph D for rebate has been satisfied in this case. The second condition is that the said company must be wholly and mainly engaged in the manufacture or production of any one or more of the articles specified in the list in Part IV of the First Schedule to the Finance Act, 1964. One of the articles mentioned in Part IV is 'mineral oil'. The Appellate Assistant Commissioner, following the judgment of the Bombay High Court in the case of Burmah-Shell Refineries Limited : [1966]61ITR493(Bom) , held that the business of the said company could be attributed to the business of manufacture or production of 'mineral oil'. Accordingly, it will be eligible to a higher rebate of tax. Thus, the second condition of Paragraph D has also been fulfilled in this case. No appeal has been preferred by the Income-tax Officer or Burmah-Shell Refineries Limited against the said findings of the Appellate Assistant Commissioner.
14. As indicated earlier, the petitioner paid tax at the rate of 25%. Since the conditions prescribed in Paragraph D of the First Schedule to the Finance Act, 1964, have been fulfilled by the dividend-paying company, the petitioner-company is entitled to rebate at the rate of 10% on the dividend income. During the year ending on March 31, 1964, being the previous year for the assessment year 1964-65, the total income is Rs. 3,07,72,919. The total income-tax chargeable in respect of such total income at the rate of 15% (25% minus 10%) is Rs. 58,75,937.85. The total amount of income-tax paid or treated as paid under Section 199 is Rs. 76,93,229.68. Thus, the petitioner has claimed a refund of Rs. 18.17,291.83 (Rs. 76,93,229.68 minus Rs. 58,75,937.85).
15. Having regard to the facts and circumstances of this case, I am of the view that the petitioner's contention must be accepted and the petitioner is entitled to succeed. It may be mentioned that it has not been disputed that if the petitioner-company is entitled to rebate of tax at the rate of 10% under Paragraph D of the First Schedule to the Finance Act, 1964, in that event the said sum would be refundable to the petitioner-company being the excess tax paid.
16. For the reasons aforesaid, this application succeeds. The order dated May 5, 1976, passed by respondent No. 1 is set aside. It is on record that the petitioner-company has made an application under Section 154 of the said Act for rectification of the assessment to enable the Income-tax Officer to grant the necessary refund. The Income-tax Officer concerned is directed to rectify the assessment and issue consequential refund to the petitioner-company in the light of the observation made in the judgment within eight weeks from the date of communication of this order.
17. The rule is made absolute to the extent indicated above. There will, however, be no order as to costs.