TaxTMI 
TaxTMI 
1997 (2) TMI 55
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.... holding that though the interest on long-term borrowings of the assessee-company is included in the chargeable profits, the income-tax relatable to the said amount of interest is not liable to be reduced in the computation of chargeable profits?" For the assessment years 1975-76 and 1976-77 relating to the surtax proceedings before the Assessing Officer, the claim of the assessee was that since interest payable in respect of debentures is to be disallowed, the income-tax payable relatable to such disallowance must be calculated and allowed to the assessee as a deduction under rule 2 because under that rule the amount of income-tax payable by the company in respect of its total income must be deducted. The Income-tax Officer negatived th....
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....income-tax payable on such disallowance must be allowed to the assessee-company as a deduction under rule 2 because the rule provided that the amount of income-tax payable by the company in respect of its total income must be deducted from the total income arrived at. Learned counsel further submitted that the deduction of the tax payable on interest on long-term borrowals is to be deducted following what is stated under clause (ii) of Schedule I. According to learned counsel if the tax payable on interest is not deducted that would increase the total income and the tax payable thereon. According to learned counsel in order to bring the true meaning of the provisions contained in the First Schedule, the court can interpret the provisions....
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....he Companies (Profits) Surtax Act lays down the rules for computing the chargeable profits. It says that in computing the chargeable profits of a previous year, the total income computed for that year under the Income-tax Act shall be adjusted in the manner provided in rules 1 to 3. Rule 1 provided for exclusion of certain incomes from the total income computed for the purpose of income-tax. Rule 2 provided that from the income so adjusted the amount of income-tax payable by the company in respect of its total income under the provisions of the Income-tax Act, after making allowance for any relief, rebate or deduction in respect of income-tax to which the company may be entitled under the provisions of the said Act or the annual Finance Act....
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....ved at. A plain reading of the First Schedule and rules 1 to 3 thereof would go to show that there is no provision for including the tax payable on the interest on long-term borrowals. When the tax payable on the long-term borrowals was not included for the purpose of determining the chargeable profits it is also not possible for giving deduction of the tax payable on interest which was not actually paid. Rule 2 specifically says exclusion of income-tax payment on certain income. There also income-tax payable on interest on long-term borrowals was not mentioned. What items of income have to be included and excluded are mentioned in clause (i) of the First Schedule. What kind of income-tax is to be paid or to be deducted is also stated in....