1974 (9) TMI 25 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued u/s 8 of the Companies (Profits) Surtax Act, 1964.
2. Validity of notices issued u/s 16 of the Companies (Profits) Surtax Act, 1964.
3. Preliminary objection regarding the maintainability of the writ petitions.

Summary:

1. Validity of Notices Issued u/s 8 of the Companies (Profits) Surtax Act, 1964:
The petitioners questioned the notices issued by the Income-tax Officer u/s 8 of the Companies (Profits) Surtax Act, 1964, for the assessment years 1969-70, 1970-71, and 1971-72. The Income-tax Officer believed there had been under-assessment due to excessive statutory deductions, as the deductions allowed u/s 80-I and 80J of the Income-tax Act were not considered while determining the statutory deduction. The court held that the expression "income, profits, and gains of a company not includible in its total income as computed under the Income-tax Act" refers only to sums not includible by the provisions of Chapter III of the Income-tax Act and does not refer to deductions claimable under Chapter VI-A. Therefore, the notices issued u/s 8 were patently contrary to law.

2. Validity of Notices Issued u/s 16 of the Companies (Profits) Surtax Act, 1964:
The petitioners also challenged the notices issued by the Commissioner of Income-tax u/s 16 of the Act for the assessment years 1969-70 and 1971-72. The Commissioner believed the orders passed by the Income-tax Officer were prejudicial to the interests of the revenue due to excessive statutory deductions. The court reiterated that the deductions allowed u/s 80-I and 80J of the Income-tax Act are not to be considered as amounts not includible in the total income of the petitioners. Consequently, the notices issued u/s 16 were also deemed contrary to law.

3. Preliminary Objection Regarding the Maintainability of the Writ Petitions:
The revenue's counsel raised a preliminary objection regarding the maintainability of the writ petitions, arguing that the petitioners had alternative remedies available, such as filing objections to the notices and appealing against the orders. The court overruled this objection, stating that the existence of an alternative remedy does not affect the jurisdiction of the court under Article 226 of the Constitution. Given that the Commissioner had already taken a contrary decision in a similar case and the department's claim of under-assessment was patently contrary to law, the court decided to exercise its jurisdiction.

Conclusion:
The petitions succeeded, and the impugned notices issued either u/s 8 or u/s 16 of the Companies (Profits) Surtax Act, 1964, were quashed. There was no order as to costs.