1992 (3) TMI 31

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.... the Income-tax Act, 1961, was deductible from the total income of the assessee in computing the chargeable profits in accordance with clause (viii) of rule 1 of the First Schedule to the Companies (Profits) Surtax Act, 1964 ? " The facts, as stated in the statement of the case, are that in respect of the assessment year 1971-72, the relevant previous year having ended on October 31, 1970, the assessee was liable to assessment under the Companies ( Profits ) Surtax Act, 1964. In respect of this year, the net chargeable profits were computed at Rs. 60,34,958. The assessee had claimed before the Surtax Officer that in computing the chargeable profits, dividend income of Rs. 2,51,350 was deductible. The Surtax Officer, however, allowed the ....

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.... from an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends within India . It may here be noticed that by the Finance Act, 1981, an Explanation to this rule 1(viii) was added with effect from April 1, 1981, which was in the following terms : " Explanation. - Notwithstanding anything contained in any clause of this rule, the amount of any income or profits and gains which is required to be excluded from the total income under that clause shall be only the amount of such income or profits and gains as computed in accordance with the provisions of the Income-tax Act (except Chapter VIA thereof), and in a case where any deduction is required to be allowed in respect of any s....

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....onclusion that, on a correct interpretation of the said rule 1(viii) of the First Schedule to the Surtax Act, it is only the net dividend which is included in the total income and, therefore, it is this amount which would be deductible while arriving at the figure of the chargeable profits. This conclusion has been arrived at by the Calcutta High Court in the case of CIT v. Hindustan Gum and Chemicals Ltd. [1990] 182 ITR 396; CIT v. Andhra Bank Ltd. [1990] 186 ITR 192 (AP); CIT v. R. B. Multanimal Modi and Sons [1991] 189 ITR 730 (All) and CIT v. Kil Kotagiri Tea and Coffee Estates Ltd. [1991] 191 ITR 283 (Ker). On a plain reading of the aforesaid rule it appears to us that the contention of the Revenue before the Tribunal was correct, n....