Surtax notices quashed where prevailing judicial interpretation of the provisions favoured the assessee and no contrary reason existed.

Notices issued under sections 8 and 16 of the Companies (Profits) Surtax Act, 1964 were not sustained because the prevailing judicial interpretation supported the assessee's construction of the surtax provisions. The Supreme Court saw no reason to depart from the High Court's view quashing the notices, especially where several High Courts had taken the same position and the weight of judicial opinion was overwhelmingly in the assessee's favour. The Revenue's challenge therefore failed, and the notices remained quashed.

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Issues: Whether the notices issued under sections 8 and 16 of the Companies (Profits) Surtax Act, 1964 were liable to be quashed.

Analysis: The Court found no reason to interfere with the High Court's view quashing the notices. It noted that several High Courts had taken the same view on the construction and application of the relevant surtax provisions, and the judicial opinion overwhelmingly supported the assessee's position.

Conclusion: The notices were rightly quashed and the challenge by the Revenue failed.

Ratio Decidendi: Where the prevailing judicial interpretation of the relevant surtax provisions supports the assessee and no compelling reason exists to take a different view, the notices issued under those provisions are not to be sustained.

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