Section 80J deductions not excluded under rule 4 for surtax capital computation, following settled precedent.

Amounts admissible as deduction under section 80J are not treated as sums not includible in income for purposes of exclusion under rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The Punjab and Haryana High Court followed its earlier decisions, which had also been approved by the Supreme Court, and held that such deductions could not be excluded while computing capital for surtax purposes. The issue was answered in favour of the assessee and against the Revenue.

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Issues: Whether amounts deductible under section 80J for the relevant assessment years could be treated as sums not includible in income for income-tax assessment and excluded from deduction under rule 4 while computing capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964.

Analysis: The question stood covered by earlier decisions of the same court, and that view had also been approved by the Supreme Court. On that basis, the amounts allowed as deductions under section 80J were held not to fall within the category of sums not includible in income so as to be excluded under rule 4 for surtax capital computation.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Amounts admissible as deduction under section 80J are not to be treated as sums not includible in income for the purpose of exclusion under rule 4 in computing capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964.

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