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The proviso was framed to discourage the paying of large dividends quite disproportionate to the income. For this purpose, A ceiling was laid down. That ceiling was nine annas in the rupee of the total income reduced by any portion of that income which was exempt from income-tax. If only nine annas in the rupee from the income were paid as dividend, there were no consequences in law. If, however, the dividends paid amounted to less, a rebate of one anna in the rupee in the tax was given. This was provided by the first part of the proviso. There was, however, a provision for enhanced tax. in the second part, which worked the other way round. Where the dividend distributed exceeded the total income as reduced by seven annas in the rupee, there was charged on the total income an additional, income-tax equal to the sum, if any, by which the aggregate amount of income-tax actually borne by such excess We. (hereinafter referred to as the " excess dividend ") falls short of the amount calculated at the rate of five annas per rupee on the excess dividend. In simpler language, there was a rebate of one anna on anything saved from 9/16th of the total income, and there was an extra payment of one anna on the amount paid in excess of it. The income-tax, in either event, was payable on the total income and the additional incometax on the excess dividends. Now, the difficulty arises in applying this proviso. Where there is a total income and there is a payment of dividend either more or less than the limit fixed, one can easily find the figures by which the total income as reduced exceeds or falls short of the dividends and the additional tax that has to be paid. But when the total income is a negative figure and no tax on the total income is levied, the words of the second part of the Paragraph 'total income ', 'profits liable to tax', 'dividends payable out of such profits' and ' an additional income-tax', cease to have the meaning they were intended to convey. The Commissioner contends that some of these words may be ignored as being surplusage or a drafting error, and refers to rulings in which such a course was adopted. The first case he relies on is Curtis v. Stovin (1). In that case, the words of the statute were:

The next case relied upon is Special Commissioners of Income-tax v. Linsleys Ltd. (3). It dealt with an obvious drafting error. Section 68(2) of the English Finance Act,1952, contained a reference to Paragraph(a) of the proviso to sub-s. (2) of s. 262 of the Incometax Act, 1952, and the section went on to say of that Paragraph parenthetically " which relates to the deductions allowable in computing the actual income from all sources of an investment company in relation to which a direction is in force under sub-section I of (1) [1959] 35 I.T.R. 408 S.C. (2) (1925) 10 T.C. 88, 11o.