P.B. Mukharji, J.
1. The statement of the case raises the following two points for an answer :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the statutory percentages applicable under Section 23A(1) of the Income-tax Act, 1922, to the distribution of dividends on 24th March, 1960, were 45 per cent. and 60 per cent. in respect of processing receipts and trading receipts respectively ?
2. Whether, on the facts and in the circumstances of the case, the shortfall in the distribution of dividend by the assessee was less than 5 per cent. of the total income as reduced by the amounts mentioned in Section 23A(1) of the said Act, and the assessee as such was entitled to a notice under Section 23A(2)(ii) thereof '
2. The facts giving rise to this question may be briefly summarised : The assessee, Bombay Photo Stores Pvt. Ltd., is a private limited company to which the provisions of Section 23A are applicable. In the present case, the assessment year is 1960-61 for which the previous year ended on June 30, 1959. The assessee's net profit accounts came up to Rs. 72,959. The Income-tax Officer determined the assessee's total income at Rs. 87,103 and tax payable thereon at Rs. 39,196, leaving a balance of Rs. 47,907 available for distribution as dividend. According to the Income-tax Officer, the effective statutory percentage applicable to the company was 57.5 per cent. and on this basis the minimum distribution of dividend required for complying with the provisions of Section 23A was Rs. 27,546. The actual distribution made by the company was Rs. 20,295. The shortfall was therefore more than 5% of the distributable surplus. The Income-tax Officer accordingly passed an order under Section 23A with the previous approval of the inspecting Assistant Commissioner of Income-tax levyingadditional super-tax @ 37 per cent. on the undistributed balance of Rs. 27,612. On appeal before the Appellate Assistant Commissioner, there was an interim order dated December 13, 1962, by which he asked for a report from the Income-tax Officer. The Income-tax Officer submitted his remand report on January 24, 1963.
3. The statement of the case also makes it clear that the assessee carried on two activities : (1) developing and printing, and (2) trading. The Income-tax Officer adopted 50 per cent. in respect of the first part and 65 per cent. in respect of the second part of the business and this resulted in the average statutory percentage 57'5 per cent. The assessee's contention then was that having declared a dividend of Rs. 20,295 in March, 1960, when the statutory percentages were 45 per cent. and 60 per cent., respectively, for these two activities, the average would be only 52.5 per cent. In fact the assessee claimed to be entitled to be given an opportunity for declaring additional dividends. The Appellate Assistant Commissioner negatived the contention and held that the statutory percentages would be 50 per cent. and 65 per cent. as enacted by the Finance Act of 1959 and therefore the assessee was not entitled to an opportunity to declare additional dividends. It was further held by the Appellate Assistant Commissioner that further distribution of dividends was not impossible. In the result, the Appellate Assistant Commissioner upheld the Income-tax Officer's order under Section 23A.
4. Before the Tribunal the main contention was that the percentage of 50 per cent. and 65 per cent. would be effective on and from the 1st April, 1960, and for distributions prior to that date the applicable statutory percentages were 45 per cent. in respect of manufacture, etc., and 60 per cent. in respect of trading. The Tribunal came to the conclusion that the exposure of the film was one of the stages of taking and producing of the photograph and that when admittedly developing of the exposed film was processing, there was every justification to treat the exposure of the film itself as part of the proceeding. On that basis the assessee's net profit consisted of Rs. 67,006 arising from processing and Rs. 5,95.3 for trading. The Tribunal applied 45 per cent. and 60 per cent. to these two activities of the business, and came to the conclusion that the shortfall worked out to be less than 5 per cent. of the distributable surplus. The conclusion of the Tribunal therefore was that the assessee should be afforded an opportunity to make a further distribution of dividends to raise it up to the requisite statutory percentage. The Commissioner therefore called for this reference.
5. As will be clear from the facts stated above the answers to the questions mainly depend on an interpretation of Section 23A of the Income-tax Act. The battle of arguments raged round the point of time and the lawapplicable in this respect. It has already been noticed that the previous year in this case is 1959-60. The actual distribution of the dividends could be made in the 12 months following the previous year according to Section 23A which means 1960-61. Thirdly, the assessment year in this case as already noticed is also 1960-61. It may be noticed also that the actual assessment by the Income-tax Officer was made on the 17th March, 1961. The order of the Appellate Assistant Commissioner covered a period from 13th December, 1962, when the remand order was made and the report and orders following thereafter in 1962-63, culminating in the final order of the Tribunal on the 4th August, 1965.
6. The main controversy arises out of the fact that the Finance Act, 1959, amended the rate of statutory percentage. The crux of the problem is which statutory percentage applies to the facts of such a case on these facts Does the old rate apply which ruled at the time of the previous year or does the amended rate apply The major argument in favour of applying the old rate of statutory percentage is that that was the rate governing at the time of the previous year. The major argument in favour of applying the new rate of statutory percentage is that that was the rate which governed at the point of time when the Income-tax Officer made his assessment and order and he could look to the rate as amended and not to the old rate which had been repealed.
7. Quite a good deal of argument has been advanced from the Bar on the question of prospective and retrospective legislation. Much of it is not quite relevant on the point though such arguments create a good deal of confusion. The answer primarily must depend on the correct interpretation of Section 23A of the Income-tax Act read with the relevant provisions of the Finance Act, 1959. Proceeding to the interpretation of Section 23A of the Income-tax Act bearing on the points arising for an answer, the following considerations are relevant:
8. First, the words 'in respect of any previous year'; secondly, 'distributed within 12 months immediately following the expiry of the previous year'; thirdly, 'are less than the statutory percentage of the total income' ; fourthly, 'of that previous year'. Section 23A of the Income-tax Act, inter alia, provides as follows:
'Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the 12 months immediately following the expiry of that previous year are less than the statutory percentage of the total income of the company of that previous year.....'
What follows is that this amount is reduced by certain considerations mentioned in Clauses (a), (b) and (c) of that section.
9. It will be clear from the above words that the expressions quoted above are relevant for a determination of this question. This is a section for assessing companies to super-tax on the undistributed income in certain cases. It is not a charging section as has been said and as has been noticed in different authorities, to some of which I shall make a reference later on in this judgment. It is a statutory liability recognised by this particular section of the Income-tax Act. The basic condition is satisfaction of the Income-tax Officer. The next consideration is that it is with regard to dividends. The third consideration is that it is not with regard to dividends actually declared or proposed by the company itself but which the Income-tax Officer thinks should have been distributed. The distribution period is expressly said to be within the 12 months immediately following the expiry of that previous year. But nevertheless the dominating consideration which must operate on the Income-tax Officer is that it is 'in respect of any previous year.' The next consideration is that the Income-tax Officer has to be satisfied that the dividend which the company distributed fell short or were less than the statutory percentage. The question, therefore, arises, statutory percentage at what point of time? Is it the statutory percentage prevailing at the time of the previous year If the Income-tax Officer is considering dividends which should have been declared in respect of the previous year but in fact was not done, common sense and plain logic, apart from fairness, demand that the rate should be the rate prevailing for the previous year. The words 'of that previous year', although coming after the words 'total income' in the portion of Section 23A quoted above, can very well govern not merely the total income of the previous year but the statutory percentage itself of the previous year. These considerations lead to the conclusion that the Tribunal was right in holding that the statutory percentage operating for the previous year was the right and proper statutory percentage to apply in this case.
10. There are some other considerations bearing on this point. Explanation 2 of Section 23A sets out for the purpose of that section the statutory percentages. The relevant statutory percentages here in this case are to be found in Sub-clauses (ii) and (iii) of Explanation 2 of Section 23A of the Income-tax Act. These statutory percentages appearing in this Section 23A were altered and raised by the Finance Act of 1959. It will be appropriate now to make a reference to the Finance Act of 1959. Section 11 of the Finance Act, 1959, which received the assent of the President on the 28th April, 1959, provides:
'11. Amendment of Section 23A.--In Section 23A of the Income-tax Act, in Explanation 2, for the figures '45 per cent. and 60 per cent.' in both the places where they occur, the figures '50 per cent. and 65 per cent.' shall respectively be substituted.'
11. The message of the expression 'shall respectively be substituted' should not be missed because it indicates that it is a future and not a past. The substitution is to take place in the future. The second relevant section is Section 19(3) of the Finance Act, 1959, which provides :
'The amendments to the Income-tax Act made by Section 5, Section 7, Clause (ii) of Section 8, Section 11, Section 12, Section 13, Section 14 and Section 15 shall have effect on and from the 1st day of April, 1960.'
12. In short, its effect is that this Section 19(3) says that the amendment made by Section 11 of the Finance Act, 1959, in Section 23A of the Income-tax Act 'shall have effect on and from the 1st day of April, 1960.' That expression 'shall have effect on and from the 1st day of April, 1960' again indicates that the effect of the amendment of raising the statutory percentages will only operate on and from the 1st day of April, 1960, and not before. Now, reading Section 11 and Section 19(3) of the Finance Act, it seems to follow that the substitution was to take effect in future and that it would take effect from the 1st April, 1960. The express language, 'shall respectively be substituted', in Section 11 and 'shall have effect on and from the 1st day of April, 1960' in Section 19(3) of the Finance Act of 1959 clearly indicates that the old statutory percentage was to continue until the 1st of April, 1960. Therefore, the previous year and its dividend and the consideration how much should have been declared on the basis of statutory percentage under Section 23A of the Income-tax Act can only mean the statutory percentage prevailing for the previous year in this case.
13. This meets the argument that at the time when the Income-tax Officer was making the assessment and the order under Section 23A of the Income-the Act, he could not apply the old statutory percentage, because it had already gone amended and repealed. It was not amended or repealed in that sense but it preserved its vitality and effect until the 1st April, 1960, as expressly indicated by the language used in Section 11 and Section 1.9(3) of the Finance Act, 1959. Had the old rate completely gone in the sense that it was even inoperative for the previous year 1959-60, then in that case the more serious consequence would have been that the assessee would be totally exempt from the operation of Section 23A of the Income-tax Act for the very simple reason that the Income-tax Officer could not apply the old rate which was gone according to this contention and could not apply the new rate which was not operative for the period for which the super-tax was being determined by the Income-tax Officer.
14. But, then, Mr. Pal, for the revenue, here raised another consideration for this court by relying on Section 19(4) of the Finance Act, 1959, which says:
'Notwithstanding anything contained in Sub-section (2) or Sub-section (3), in relation to dividends declared or payable by a company in respect of any previous year relevant to any assessment year prior to the assessmentyear 1960-61, the Income-tax Act shall have effect as if the amendments contained in Section 5, Section 7, Section 9, Section 10, Section 14, Section 15, Section 16 and Section 18 had not been made.'
15. Therefore, Mr. Pal for the revenue argues that the omission to state Section 11 in Section 19(4) of the Finance Act, 1959, shows that assessments under Section 23A of the Income-tax Act do not get the benefit mentioned in Section 19(4) of the Finance Act, 1959. On a careful consideration of this branch of the argument I am unable to accept Mr. Pal's contention for the revenue on this point. The primary reason for not accepting is that Section 19(4) of the Finance Act, 1959 was only speaking of 'dividends declared or payable by a company' Section 23A of the Income-tax Act and therefore Section 11 of the Finance Act of 1959 do not deal with dividends declared or payable by a company. In fact it is the dividend which the Income-tax Officer is satisfied should have been distributed but in fact not done by the company. Another argument was advanced by Dr. Pal, appearing for the assessee, on the basis that the sections mentioned in Section 19(4) of the Finance Act, 1959, are sections which relate more or less to grossing up of dividends and specially dividends which have passed into the hands of the shareholders. In fact Dr. Pal was prepared to take us through, and he in fact did, the Finance Minister's Budget Speech introducing the Finance Act of 1959, specially paragraphs 67, 68 and 69, which is to be found in  35 I.T.R. (St.) pages 57-58. It will not be necessary for us to refer to the Finance Minister's Budget Speech on that point. On the construction itself, as I have said, it is clear that Section 19(4) deals only with 'dividends declared or payable by a company' and not such dividends as mentioned in Section 23A of the Income-tax Act.
16. It is plain that under Section 23A of the Income-tax Act what the Income-tax Officer considers is first, the dividend actually distributed by the company with the 12 months immediately following the expiry of the previous year and, secondly, whether that distribution is less than the statutory percentage of the total income of the company of that previous year. The distribution of the dividend therefore by the company is the first consideration and the second consideration is whether such distribution is less than the statutory percentage. It is possible that when the company has distributed dividends it could not anticipate what amendments in rates, if at all, would be proposed by the Finance Act. No doubt it covers a whole period of 12 months following the expiry of the previous year which in this case would include the last two or three months on the dates mentioned above. But that is a question bearing on the possibility of knowledge of the assessee of the new amended rate during the course of the 12 months immediately following the previous year. But the question of knowledge is irrelevant in the construction of Section 23A that I haveproposed. It is to be borne in mind that here is an instance when a temporary annual Act like the Finance Act was amending a permanent Act like the Income-tax Act itself by altering the rates of statutory percentages engrafted in Section 23A of the Income-tax Act. This is one of the examples where a yearly temporary Act like the Finance Act produces a permanent change in the permanent statute like the Income-tax Act, a questionable but permissible device frequently adopted in modern statutory jurisprudence.
17. This brings me to the consideration of another aspect of this problem. What the revenue is really trying to do in this is to tax an assessee only by implication. Normally, a tax should be imposed in clear language without leaving any doubt whether the tax is payable or not. It would be unnecessary to go into the leading authorities or. this subject except perhaps to refer to two leading cases--one of the House of Lords and another of the Supreme Court of India--definitely laying down the law that there can be no tax by implication or inference. The first case is London Investment & Mortgage Co. Ltd. v. Worthington,  38 T.C. 86 where Viscount Simonds observed at page 115 as follows :
'My Lords, I cannot accede to this argument. I hesitate, in any case to introduce by way of implication in a taxing statute a provision which cries aloud for express statement, if it is intended. But I am not satisfied of any such intention.'
18. Surely, this is one of these cases. Here, the revenue is trying to impose a higher rate of super-tax under Section 23A, which was, at any rate, not prevailing for the previous year and that, in my view, must be done in clearer language if that was the intention of the legislature.
The Supreme Court of India in Commissioner of Income-tax v. Provident Investment Co. Ltd., : 32ITR190(SC) reaffirmed at page 195 the previous decision in A.V. Fernandes v. Stale of Kerala,  8 S.T.C. 561 in these terms :
'If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.'
19. Now, what the revenue is trying to do before us in this reference is to impose the higher rate of super-tax by inference or by analogy or by inviting us to probe into the intention of Parliament and by asking us to consider what was the substance of the matter against which the Supreme Court made the above observations
20. As already indicated, quite a storm of argument was raised to distinguish some of the cases on which Mr. Pal for the revenue relied. Mr. Pal relied first on Maharajah of Pithapuram v. Commissioner of Income-tax,  13 I.T.R. 221 (P.C.) a decision of the Privy Council, where Lord Thankerton observed, inter alia, as follows at pages 223-24 of the report:
'In the second place, it should be remembered that the Indian Income-tax Act, 1922, as amended from time to time, forms a code, which has no operative effect except so far as it is rendered applicable for the recovery of tax imposed for a particular fiscal year by a Finance Act......
This can only refer to the Indian Income-tax Act, 1922, as it stood amended at the date of the Indian Finance Act, 1939, and necessarily includes the alterations made by the Amending Act, which had already come into force on the 1st April, 1939.'
21. The next case relied on by Mr. Pal was the decision of the Supreme Court in Union of India v. Madan Gopal Kabra, : 25ITR58(SC) where Patanjali Sastri C. J., at page 70, observed as follows :
'Nor can it be said, in strictness, that the Finance Act, 1950, is retroactive legislation. That Act, as already noticed, purports by Section 2 to charge income-tax and super-tax at specified rates 'for the year beginning on the 1st day of April, 1950'. The case is thus one where the statute purports to operate only prospectively, but such operations, as, under the scheme of the Indian income-tax law, could take into account income earned before the statute came into force. Such an enactment cannot, strictly speaking, be said to be retroactive legislation, though its operation may affect acts done in the past.'
22. The third case on which the revenue relied is again one of the Supreme Court, in Commissioner of Income-tax v. H.E.H. Mir Osman Ali Bahadur, : 59ITR666(SC) where Subba Rao J., at page 677, observed as follows:
'The legal position as we apprehend may be stated thus : under the Act, an individual is assessed to income-tax on the income of the previous year at the rate or rates fixed for the year by the annual Finance Act. The total income of the assessee during the previous year is computed in accordance with the provisions of the Income-tax Act after giving the relevant allowances and deductions therefrom. If during the assessment year an individual is assessable to tax, the fact that during the previous year he was not liable to tax at all because there was no Income-tax Act in the area to which the Act was extended or because that under an Income-tax Act in force therein during that year his income was exempted from tax or because of any other law, including International law, he was so exempt from tax, would not be of any relevance.'
23. Dr. Pal, appearing for the assessee, tried to draw a distinction based on the theory that all these cases were really on the basis of the charging sections like Section 3 of the Income-tax Act and he tried to distinguish such a charging section as Section 3 of the Income-tax Act from Section 23A of the Income-tax Act which is not a charging section but a section creating a statutory liability for super-tax under certain circumstances on the dividends mentioned here. But whether that distinction is followed or not need not deter us because we are of the view that legislation must be interpreted on its own terms and having regard to the language used in Section 23A of the Income-tax Act and Sections 11 and 19 of the Finance Act of 1959, we have come to the conclusion that, quite independent of any consideration of retrospective or retroactive or prospective legislation, the point is quite clear that the statutory percentage rate remained operative and was to be the rate applicable by reason of the fact that the higher amended rate did not come into effect until 1st April, 1960, indicating thereby that the old statutory percentage was effective until April 1, 1960.
24. Dr. Pal also relied on two decisions on this point. One is the decision of the Supreme Court in M.M. Parikh, Income-tax Officer, Special Investigation Circle 'B' v. Navanagar Transport & Industries Ltd. : 63ITR663(SC) .The gist of that decision is that an order under Section 23A of the Income-tax Act, as amended by the Finance Acts of 1955 and 1957, is not an order of assessment within the meaning of Section 34(3) of the Act and, therefore, to such an order the period of limitation prescribed under Section 34(3) did not apply. It further decides that every order which contemplates computation of income for determination of the amount of tax payable is not an order of assessment within the meaning of the Act; nor does prescribing of procedure for determining and imposing tax liability make it an order of assessment. In fact, this case draws a vital distinction between the assessment of tax under Section 23 and imposition of liability under Section 23A. It makes clear that the tax liability quantified by an order under Section 23 is a charge statutorily imposed by Sections 3 and 4 of the Act. Under Section 23A, there is no statutory charge in respect of additional super-tax and the liability is imposed by the order of the Income-tax Officer. This case proceeds to point out that the source of the liability to pay additional super-tax is not Sections 3 and 4 of the Act; it lies in and arises out of the order of the Income-tax Officer. That consideration, however, is not so much in support of Dr. Pal's contention for the assessee as in favour of Mr. Pal's contention for the revenue. Shah J., at page 672, of that report, however, makes the following point clear:
'Section 23A, before it was amended by the Finance Act, 1955, was undoubtedly procedural ...... Section 23A(1) after it was amended by theFinance Act, 1955, provides within itself machinery for imposition of liability to pay additional super-tax, but it has not on that account been made a charging section. A charge to tax arises under Sections 3, 4 and 55 of the Act for payment of income-tax and super-tax and not under Section 23A.'
25. The other authority, which we need not discuss in detail, is Dr. Pal's reference to the Finance Minister's Budget Speech introducing the Finance Act, 1959, the relevant paragraphs of which we have already mentioned.
26. For the reasons and on the authorities stated above, we answer the first question in the affirmative in favour of the assessee and hold that the Tribunal was right in applying the statutory percentage rates of 45% and 60% in respect of processing receipts and trading receipts respectively.
27. The second question is a shorter one. Normally, on the facts of this case, the answer to the second question should follow the first one. The answer to the second question should, therefore, be also in the affirmative. But then Mr. Pal for the revenue tried to raise this question that even then the application of 5% rule is open to objection on the Tribunal's decision. The point shortly is that by the order of the Income-tax Officer, the net profit from processing was taken to be Rs. 17,714. But what the Tribunal did was to increase this figure to Rs. 67,006 as the net profit from processing without sufficient consideration or without any real basis of evidence on the point. There is some force in the argument of Mr. Pal for the revenue in this branch of the case. But his handicaps are many and, in our view, insuperable in the particular facts of this case. In the first place, it raises the question whether the exposure of the film is one of the stages of the whole process of taking and developing the photograph, specially in the light of the distinction made between the trading activities of the assessee and his other activities, viz., developing and printing. The first handicap of Mr. Pal on this branch is the finding of the Tribunal, which may be called a finding of fact of some kind, to the effect that the Tribunal disallowed to question which was attempted to be raised before it. However, the 'exposure' of the film came into the question of 'processing' of films. This is really an intricate way of bringing up this rejected question on which no further attempt was made to ask for a reference by the revenue. Dr. Pal naturally described this as a back-door way of opening a question, the front-door of which was closed. He was not wrong. But then it was perhaps within the ambit of the second question in the way it has been framed. The second question as stated above raised the problem of shortfall in the distribution of dividend by the assessee and whether such shortfall was less than 5% of the total income as reduced by the amounts mentioned in Section 23A(1) of the Income-tax Act, Whether the shortfall was less than, 5% would depend on the amount of processing receipts and trading receipts. TheIncome-tax Officer applied the rule of thumb of 50 : 50 to this branch of the case. He came to the finding that the assessee has classified 'Studio Receipts' at Rs. 98,585 under the head of 'processing'. His view was that processing of films and exposure of films were two different aspects and he indicated that it was possible for an individual to run a photographic studio where he could only expose the films and get them processed elsewhere. Therefore, in that view of the matter, he said he could not consider the whole of the receipts of Rs. 98,585 under the head 'Studio receipts' as 'processing receipts'. That is the reason why he took it at 50 : 50. We do not think that sufficient consideration was paid by the Tribunal to the processing receipts and to consider what exactly processing was on the facts of this case. Exposing a film may or may not be a part of the 'processing' depending on the nature of the business carried on by the assessee. If the assessee only prints and develops exposed films brought by customers, then the 'exposure' is not part of 'processing' as a business by the studio itself. Whether it is so or not in a particular case depends on the facts. The Tribunal should have applied its mind to this consideration and, if necessary, to take technical evidence on the point or asked for it. In the accounts themselves also, there does not seem to be an indication of the awareness either of the assessee or of the revenue on this point. The figure of Rs. 67,006 which the Tribunal has taken, however, may not altogether be unsupportable having regard to the fact that the net profit for processing, as appearing from the order at Rs. 70,306 when reduced by the director's remuneration at Rs. 3,300, exactly leaves the sum of Rs. 67,006. Therefore, in these circumstances and facts, we are not in a position to say that the Tribunal's order is entirely without any evidence at all. We must, however, make it plain to the Tribunal and the authorities concerned that in such cases there should be a more careful regard to the actual parts of business and specially in a photographic business where processing may be a technical term influenced by the actual consideration of the facts of the business of the particular studio whose assessment is under consideration.
28. We, therefore, do not wish to interfere in this matter. The answer to question No. 2 also follows in the affirmative in favour of the assessee.
29. No order as to costs.
Sabyasachi Mukharji, J.
30. I agree.