Surtax liability requires a full assessment of total income; a shipping-receipt summary assessment is insufficient.

A summary assessment under section 172(4) of the Income-tax Act, limited to shipping receipts of a non-resident ship owner or charterer, does not amount to an assessment of total income. Because chargeable profits for surtax under the Companies (Profits) Surtax Act are computed from total income assessed under the Income-tax Act, a surtax levy cannot rest only on the ad hoc assessment under section 172(4). The special shipping assessment scheme is distinct from a full assessment of total income, and section 172(7) preserves the ability to seek such assessment for the relevant previous year. In the absence of a total income assessment, surtax liability does not arise on section 172(4) alone.

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Issues: Whether an assessment made under section 172(4) of the Income-tax Act, 1961, without an assessment of total income under section 172(7) or under the normal assessment provisions, could be treated as the basis for levy of surtax under the Companies (Profits) Surtax Act, 1964.

Analysis: Chargeable profits under section 2(5) of the Companies (Profits) Surtax Act, 1964 are computed from the total income of the assessee as computed under the Income-tax Act, 1961. Section 172(4) of the Income-tax Act provides only a summary assessment of the income referred to in section 172(2) in respect of shipping receipts of a non-resident ship owner or charterer, whereas section 172(7) preserves the right to have the total income assessed for the previous year. The amount assessed under section 172(4) is therefore not the total income of the assessee. The special scheme of section 172 is distinct from section 44B, and the former does not substitute for a full assessment of total income. In the absence of an assessment of total income, surtax cannot be levied merely on the basis of the ad hoc assessment under section 172(4).

Conclusion: The assessment under section 172(4) alone was insufficient to attract liability to surtax, and the issue was decided in favour of the assessee and against the Revenue.

Ratio Decidendi: For surtax liability, the starting point must be a computed total income under the Income-tax Act; a provisional or ad hoc assessment limited to shipping receipts does not amount to an assessment of total income.

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