Surtax assessments fail where underlying income-tax assessments are cancelled, leaving no valid basis for the levy.

Surtax assessments on the successor company could not stand because they were based on the corresponding income-tax assessments for the same years, and those income-tax assessments had already been cancelled. The Tribunal had found that the underlying income-tax assessments were no longer in force, and the court noted that the same controversy had been decided in the assessee's favour in the connected income-tax references. As the foundation for the surtax assessments had disappeared, the surtax assessments were held bad in law and the issue was answered in favour of the assessee and against the Revenue.

---

---

Issues: Whether the surtax assessments made on the successor company for the relevant assessment years were valid when the corresponding income-tax assessments had been cancelled.

Analysis: The issue turned on the fact that the surtax assessments were founded on the underlying income-tax assessments for the same assessment years. The Tribunal had already found that the income-tax assessments for those years had been cancelled, and the court noted that the same controversy had been decided in the assessee's favour in the connected income-tax references. In that situation, the basis for sustaining the surtax assessments did not survive.

Conclusion: The surtax assessments were bad in law and the question was answered in the affirmative, in favour of the assessee and against the Revenue.

---