1995 (1) TMI 66 - SC - Income Tax

Supreme Court affirms ruling on Companies Surtax Act proviso construction. Loan inclusion in capital allowed.

The Supreme Court upheld the High Court's decision regarding the construction of the proviso to rule 1(v) of the Companies (Profits) Surtax Act, 1964. The ... Companies Profits Surtax, Computation Of Capital, Period Of Not Less Than Seven Years Issues: Construction of proviso to rule 1(v) of the Second Schedule to the Companies (Profits) Surtax Act, 1964.Summary:The Supreme Court addressed the question of the construction of the proviso to rule 1(v) of the Companies (Profits) Surtax Act, 1964, which was omitted from April 1, 1977, making the issue of practical significance irrelevant. The High Court had found that there was a modification of the agreement between the parties, resulting in the loan falling outside the purview of the proviso to rule 1(v). The High Court's decision was based on the repayment terms specified in the agreement, where the repayment period extended beyond seven years from the first advance made under the agreement. The Supreme Court upheld the High Court's decision, stating that the modification of the agreement through subsequent correspondence was valid, and the loan in question qualified for inclusion in the company's capital for surtax purposes. As a result, the appeals were dismissed with no costs incurred.