(1) The questions that stand referred to us are :
'1. Whether the aforesaid provident fund was a recognised provident fund within the meaning of Ch. IX-A of the Income-tax Act, on 16-8-1956, the date of withdrawal by the assessee?
2. If the answer to the question is in the affirmative, whether the aforesaid sum of Rs. 6920 is exempt under S. 58-G(2).'
The assessee was employed in the newspaper establishment of the 'Hindu'. He was a subscriber to a provident fund maintained by the employer. According to the rules governing the provident fund, the employer also makes a contribution equal to that made by the employee. One of the rules states that an employee, while in service, shall not be allowed to withdraw from the fund. If he so withdrew, he had to cease from the employment, though, for special reasons, the employer could agree to a member withdrawing from the fund and continuing in a service thereafter. On 16-8-1956, the employee assessee closed his account with the provident fund and withdrew the total amount standing to his credit. Of this amount, a sum of Rs. 6920 represented part of the accumulations in the provident fund, exclusive of that contributed by the employee. In the assessment for the year 1957-58, the Income-tax officer held that as recognition of the provident fund was accorded by the Commissioner only in March 1957, the sum mentioned above should be brought in for assessment to tax. The assessee appealed, and his contention was that as a newspaper employee, within the meaning of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, the provident fund in question had to be deemed to be a recognised provident fund under Ch. IX-A of the Indian Income-tax Act, from the date on which the Working Journalists Act was passed, that is, 20-12-1955. He accordingly claimed that under the provisions of the Indian Income-tax Act, the employer's contribution and the interest thereon received by the assessee on 16-8-1956 stood exempted by S. 58-G(2) of the Indian Income-tax Act. The appellate Assistant Commissioner accepted this contention and allowed the appeal.
Against this decision the Department moved the Tribunal in appeal. On an examination of the relevant provisions of the Act and the notifications issued by the Central Government, the Tribunal held that the provident fund in question would not enjoy the status of a recognised provident fund unless and until the scheme framed under the Employees' Provident Funds Act, 1952, had been applied to the establishment in question. Such application was made only by a notification of the Government in S. R. O. 2981 dated 4-12-1956 applying the scheme to Newspaper establishments, which came within the purview of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955. The provident fund in question became a recognised provident fund only from the date specified in that notification, viz., 31-12-1956. It was accordingly the conclusion of the Tribunal that any withdrawal prior to that date was not immune from taxation by reason of S. 58-G(2) of the Income-tax Act.
(2) On the application of the assessee under S. 66(1) of the Act, the questions set out earlier stand referred to us.
(3) It seems to us on a consideration of the several provisions of the concerned enactments that the conclusion reached by the Tribunal is the correct one.
(4) The arguments of Mr. Ramamani, learned counsel for the petitioner, run in this manner. The Employees' Provident Funds Act, 1952, received the assent of the President on 4-3-1952, and came into force on that day. A scheme was framed under the Act and it is not in dispute that that scheme was notified on 2-9-1952. It is also not in dispute that printing as an industry was added to Sch. I of the Act by a notification S.R.O.1566 dated 4-7-1956. This category of printing however excluded printing industry relating to newspaper establishments as defined in the Working Journalists Act. This latter Act, which received the assent of the President on 20-12-1955, applied to newspaper establishments like the 'Hindu'. S. 15 of this Act provided for the application of the Employees' Provident Funds Act, 1952 to such newspaper establishments. This section reads thus :
'The Employees' Provident Funds Act, 1952, as in force for the time being, shall apply to every newspaper establishment in which 20 or more persons are employed on any day, as if such newspaper establishment were a factory to which the aforesaid Act had been applied by notification of the Central Government under sub-section (3) of S. 1 thereof, and as if a newspaper employee were an employee within the meaning of that Act.'
It may be mentioned here that in addition to the scheduled industries contained in Sch. I of the Employees' Provident Funds Act, the Central Government were enabled by S. 1(3)(b) of that Act to apply the Act to any other establishment employing 20 or more persons or to a class of such establishments which the Central Government may by notification in the Official Gazette specify in this behalf. What S. 15 of the Working Journalists Act did was to take the place of the notification, which could have been issued by the Central Government under S. 1(3)(b) of the Employees' Provident Funds Act, so that the newspaper establishments became one to which the Employees' Provident Funds Act applied from the date of the passing of the Working Journalists Act. According to Mr. Ramamani, since the Provident Funds Act applied from 20-12-1955, by virtue of S. 15 referred to, the Employees' Provident Funds Scheme, which had already been notified on the 2nd September 1952, became equally applicable from that date. We are, however, unable to agree that that result follows.
(5) Turning to the various definitions contained in the Act, 'fund' means a provident fund established under a scheme, and a 'scheme' also means a scheme framed under the Employees' Provident Funds Act. Section 5 provides for the framing of the scheme and it enables the Central Government by notification in the Official Gazette to frame a scheme called the Employees' Provident Funds Scheme for the establishment of provident funds under this Act for employees or for any class of employees. A further power to specify the establishments or class of establishments to which the scheme shall apply is conferred. Sub-section 2 of this section again states that a scheme so framed may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in the scheme. It is clear, therefore, that the framing of a scheme to be of general application is by itself insufficient to make it apply to any class of establishments. The Central Government have to specify the class of establishments to which it shall apply and further specify also the date from which it would be applicable. Under S. 7 a power to modify a scheme has been conferred. S. 9 makes a fund which comes into existence on the application of the scheme to be deemed to be a recognised provident fund within the meaning of Ch. IX-A of the Indian Income-tax Act. S. 15 also provides that where any employer has established a provident fund scheme for an establishment, and such a scheme is in force before the application of the Provident Funds Act and the Scheme thereto, on the application of any scheme to that establishment, the accumulation in that provident fund standing to the credit of the employees who became members of the fund under the scheme shall be transferred to the fund. Clearly, the taking over of any accumulations in an existing provident fund to the fund created under the scheme can be effected only after the application of any scheme to that establishment.
Mr. Ramamani contends that in the scheme promulgated, a list of classes of factories and classes of establishments to which the provisions of the Scheme shall apply has been included. Upto 1963, there were as many as 33 entries. The 33rd entry purports to be a residual one and reads:
'As respects factories relating to other industries be deemed to have come into force with effect from the 2nd September 1952.'
According to the learned counsel, this entry would mean that when the newspaper establishments came within the purview of the Employees' Provident Funds Act by virtue of S. 15 of the Working Journalists Act, that is, on 20-12-1955, this residual entry had the effect of applying the scheme to such establishments. S. 15, to our minds, only applied the Act to this class of establishments. But the other provisions of the Employees' Provident Funds Act, still made a difference between the application of the Act and the application of a scheme framed under the Act. The Act does not contemplate that on the application of the Act, any scheme that had been framed should also immediately apply. In fact, both the class of establishments which would come under the scheme and the date from which the scheme would apply to it are matters which had to be specifically decided and notified by the Government.
(6) It has to be mentioned that Ch. X of the scheme was introduced by a notification S. R. O. 2981 dated 4-2-1959. This Chapter contains special provisions in the case of newspaper establishments and newspaper employees. Paragraph 80 of the Scheme as introduced by Chapter X reads :
'The scheme shall in its application to newspaper establishments and newspaper employees, as defined in S. 2 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 come into force on 31st December 1956, and be subject to the modifications mentioned below... '
Clearly then, the scheme was made applicable to the newspaper establishments only from 31st December 1956. It will also be noticed that newspaper establishments were regarded as a special category and special category and special rules framed in that behalf. We may also observe that where certain provisions of the scheme are formulated to over special cases, the ordinary rule of interpretation that the special overrides the general should also lead to the conclusion that the scheme in its general form could not have applied to the special class of establishments.
(7) It was brought to our notice during the course of the arguments that sometime in 1957, the establishment in question made an application to the Commissioner of Income-tax under S. 58 of the Income-tax Act and the Commissioner purported to accord recognition to the provident fund under Ch. IX-A of the Income-tax Act. In the view that we take of the various provisions of the relevant enactments and the notifications issued by the Government, no recognition by the Commissioner is called for. The provident fund became a recognised provident fund by virtue of the notification (extracted above) with effect from 31-12-1956.
(8) Upon this conclusion, it must follow that the withdrawal, made by the assessee on 16-8-1956 prior to the date when the provident fund became a recognised provident fund, is not entitled to exemption from tax. On the questions as framed, it would suffice to answer the first question in the negative. In view of that answer, question No. 2 does not arise. The assessee will pay the costs of the department. Counsel's fee Rs.. 250.
(10) Reference answered.