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Issues: Whether, for computing chargeable profits under the Companies (Profits) Surtax Act, the entire dividend income could be excluded or only the amount remaining after the deduction under section 80M of the Income-tax Act, 1961.
Analysis: For the assessment years in question, dividend income formed part of the total income as computed under the Income-tax Act only after allowance of deductions under Chapter VI-A. The computation under the surtax law had to proceed on the basis of the income actually included in the assessment under the Income-tax Act. Therefore, only the dividend amount that had been included in the assessed income could be excluded for surtax purposes, and the portion already reduced by the section 80M deduction could not again be left out. The earlier decision on the same question was followed.
Conclusion: The assessee was not entitled to exclusion of the entirety of the dividend amount from the computation of chargeable profits; the question was answered in the negative, in favour of the Revenue.
Final Conclusion: The reference was answered by holding that surtax computation must be made with reference to the income as actually assessed under the Income-tax Act, and double exclusion of dividend income was impermissible.
Ratio Decidendi: In computing chargeable profits under the surtax provisions, only income actually included in the assessed total income under the Income-tax Act can be excluded, and deductions already allowed under Chapter VI-A cannot be ignored again for surtax computation.
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