Net dividend exclusion under surtax computation must account for section 80M relief, limiting the deductible dividend amount.

In computing chargeable profits under rule 1(viii) of the First Schedule to the Companies (Profits) Surtax Act, 1964, only the net dividend remaining after reducing the gross dividend by section 80M relief is excludible. The issue was treated as settled by binding precedent on the same question, and that position was applied without fresh reconsideration of the merits. The question was answered in favour of that computation method and against the assessee.

---

---

Issues: Whether, in computing chargeable profits under rule 1(viii) of the First Schedule to the Companies (Profits) Surtax Act, 1964, the assessee was entitled to exclude only the net dividend received after reducing the gross dividend by the relief granted under section 80M of the Income-tax Act, 1961.

Analysis: The reference was treated as covered by an earlier decision of the Court on the same question. The parties agreed that the issue stood concluded by that decision, and the Court accordingly adopted that position without independent reconsideration of the merits.

Conclusion: The question was answered in the affirmative and against the assessee, meaning that only the net dividend amount, after reducing the section 80M relief from the gross dividend, was to be excluded.

Ratio Decidendi: Where the same question under rule 1(viii) of the First Schedule to the Companies (Profits) Surtax Act, 1964 has already been decided by binding precedent, the chargeable profits are to be computed by excluding only the net dividend after giving effect to the section 80M relief.

---