Surtax rectification can follow a changed income-tax assessment, and limitation runs from the amended order being corrected.

A surtax assessment dependent on the corresponding income-tax assessment may be rectified when the income-tax order is later set aside or reduced, because the altered tax position removes the basis on which the surtax computation was made. The income-tax assessment forms part of the record for surtax purposes, so correcting the surtax order to reflect the revised income-tax liability is a valid rectification and not an impermissible reopening without a mistake apparent from the record. The four-year limitation under section 13 is measured with reference to the order actually amended, so a later rectification of the amended surtax order is not time-barred when it corrects the earlier rectified order.

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Issues: (i) whether the reopening and cancellation of the income-tax assessment created a mistake apparent from the record warranting rectification of the surtax assessment under section 13 of the Companies (Profits) Surtax Act; (ii) whether the second rectification was barred by the four-year limitation under section 13.

Issue (i): whether the reopening and cancellation of the income-tax assessment created a mistake apparent from the record warranting rectification of the surtax assessment under section 13 of the Companies (Profits) Surtax Act

Analysis: The surtax assessment was founded on the income-tax assessment, because chargeable profits under the Surtax Act are computed from total income as determined under the Income-tax Act. When the earlier income-tax order under section 147 was set aside, the basis on which the surtax deduction had been allowed disappeared. The income-tax assessment, therefore, formed part of the record for surtax purposes, and the subsequent correction was only a restoration of the proper surtax position after the foundational income-tax liability changed.

Conclusion: The rectification was valid and was not vitiated by want of a mistake apparent from the record.

Issue (ii): whether the second rectification was barred by the four-year limitation under section 13

Analysis: The four-year period had to be viewed with reference to the order that was actually being amended. The second order did not seek to reopen the original assessment of 30 March 1965, but corrected the earlier rectified order of 16 September 1968 after the income-tax liability had been reduced on appeal. The later rectification was thus directed at removing an error in the amended surtax order and not at time-barring a fresh attack on the original assessment.

Conclusion: The second rectification was within jurisdiction and was not barred by limitation.

Final Conclusion: The challenge to the surtax rectification failed because the changed income-tax position justified recomputation of chargeable profits and the later corrective order was within the statutory time limit.

Ratio Decidendi: Where a surtax assessment is dependent on the outcome of the corresponding income-tax assessment, a later change in the income-tax liability can be rectified in the surtax records within the statutory period by correcting the amended order that incorporated the earlier income-tax result.

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