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TMI Blog1996 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability is to be allowed as a deduction in computing the total income of the assessee for the assessment year 1976-77 ? " The claim for the said deduction was disallowed by the Income-tax Officer on the basis of and with reference to sub-clause (ii) of clause (a) of section 40 which read thus at the relevant time : "40. Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession',-- (a) in the case of any assessee--.... (ii) any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the total income of a company as reduced by certain types of income and certain sums and the income-tax and super tax payable by it exceeds a sum of ten per cent. of the capital reserves and certain borrowed moneys or a sum of Rs. 2 lakhs, whichever is higher ...." Section 4 is the charging section. It says "subject to the provisions contained in this Act, there shall be charged on every company for every assessment year commencing on and from the first day of April, 1964, a tax (in this Act referred to as 'the surtax') in respect of so much of its chargeable profits of the previous year or previous years, as the case may be, as exceed the statutory deduction, at the rate or rates specified in the Third Schedule." The expression "char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surtax Act reads as follows : "Notwithstanding anything contained in clause (i) of section 109 of the Income-tax Act, in computing the distributable income of a company for the purposes of Chapter XI-D of that Act, the surtax payable by the company for any assessment year shall be deductible from the total income of the company assessable for that assessment year." A reading of the above provision makes it evident that its operation is confined to the computation of the distributable income of a company for the purposes of Chapter XI-D of the Income-tax Act. It cannot be extended to any other chapter or provision in the Act. Learned counsel for the appellants placed strong reliance upon the decision of this court in Jaipuria Samla Amalgam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property at such rates as were to be determined in the manner prescribed. Similarly, the education cess was also levied under section 29 of the Bengal (Rural) Primary Education Act, 1930, on immovable property on which the road and public works cesses were assessed. The rate at which the education cess was to be levied depended upon the character of the property ; in respect of mines and quarries, it was leviable at the rate of three and a half paise on each rupee of annual net profits. It is thus abundantly clear that the levy of the aforesaid cesses was upon the immovable properties and not on profits. It is no doubt true that the tax was measured with reference to the net profits of business but it is well-settled by a series o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x or a cess or rate the assessment of which would follow the determination or assessment of profits or gains of any business, profession or vocation in accordance with the provisions of section 10 of the Act. . . . These profits arrived at according to the provisions of the two Cess Acts can by no stretch of reasoning be equated to the profits which are determined under section 10 of the Act. It is not possible to see, therefore, how section 10(4) could be applicable at all in the present case." Learned counsel pointed out that this court has in the said decision approved the decision of the Privy Council in CIT v. Gurupada Dutta [1946] 14 ITR 100 and has further observed that Parliament must be deemed to have accepted the view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court has taken a contrary view in the decisions in Makum Tea Co. (India) Ltd. v. CIT [1989] 178 ITR 453 and Doom Dooma Tea Co. Ltd. v. CIT [1989] 180 ITR 126. The decision of the Gauhati High Court in Makum Tea Co. (India) Ltd.'s case [1989] 178 ITR 453 is under appeal before us in Civil Appeals Nos. 3976-3977 of 1995. Similarly, Civil Appeal No. 3246 of 1995 is preferred against the decision of the Gauhati High Court following the decision in Doom Dooma Tea Co. Ltd.'s case [1989] 180 ITR 126. (On enquiry, the office has informed that no special leave petition/civil appeal has been filed against the decision in Doom Dooma Tea Co. Ltd.'s case [1989] 180 ITR 126). For the aforesaid reasons, we cannot agree with the view taken by the G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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