1989 (1) TMI 64

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....ts to a sum paid on account of tax levied on the profits and gains of the business of the assessee and hence not allowable as a deduction because of the prohibition contained in section 40(a)(ii) even if it were allowable as a deduction under section 37 of the Income-tax Act, 1961 ? The question as framed requires this court to decide as to whether there is any bar under section 40(a)(ii) of the Act in allowing deduction of the surtax paid under the Companies (Profits) Surtax Act, 1964 (hereinafter "the Surtax Act"), on the assumption that the surtax paid on the above count is allowable as a deduction under section 37 of the Act. We will, therefore, confine our attention and thought to the bar created by section 40(a)(ii) of the Act. We ....

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...., 1965, and any subsequent assessment year means, Income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date." Counsel submits that the tax of which mention has been made in section 40(a)(ii) of the Act would mean, when that provision is read along with section 2(43) of the Act, tax chargeable under the Income-tax Act, 1961, whereas the surtax in question is not chargeable under the provisions of the Act inasmuch as there is a separate enactment called, the Companies (Profits) Surtax Act, 1964, levying surtax. This being the position, we are inclined to accept the first submission of Shri Saraf. Co....

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....1] 82 ITR 580 (SC). That case was under the provisions of the Indian Income-tax Act, 1922, whose section 10(4) was parallel to section 40(a)(ii) of the 1961 Act. A reference to section 10 (4) of the old Act shows, that this had debarred deduction, inter alia, of any cess levied on the profits and gains of any business, profession or vocation. The point considered in the aforesaid case was whether the road cess and public works cess under the Bengal Cess Act, l880, and education cess under the Bengal (Rural) Primary Education Act, 1930, were deductible from chargeable income because of the bar created by section 10(4) of the old Act. While discussing this aspect, it was pointed out by the apex court that the cesses under the aforesaid two Ac....