9911796707
TMI Blog1996 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the merits of the Income-tax Officer's rejection of the assessee's claim which falls within the scope of section 11(1) of the Act, the Commissioner (Appeals) should have disposed of the assessee's appeal dealing with the merits of the assessee's claim, and not with reference to the scope and applicability of section 13 of the Companies (Profits) Surtax Act, 1964 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that for purpose. of computing the chargeable profits under the Companies (Profits) Surtax Act, 1964, the sum of Rs. 24,437 should be excluded from the total income as arrived at in the income-tax assessment, as representing 'royalty' even though the said sum cannot be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified under section 13(1) of the Act. Accordingly, the appeal by the assessee was dismissed. On further appeal, the Appellate Tribunal following its earlier order in STA No. 13 (MDS) of 1977-78, C-Bench of the Tribunal, order dated May 6, 1978, accepted the assessee's contention and held that the royalty payment of Rs. 24,239 was deductible as a deduction while computing the chargeable profits of the company. Learned standing counsel appearing for the Department submitted before us that the Tribunal was not correct in permitting deduction of the royalty payment while computing the chargeable profits of the company. Accordingly, learned standing counsel submitted that without the approval from the Central Board of Direct Taxes of the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction as per the provisions contained in section 80MM of the Income-tax Act, 1961. Therefore, under the Companies (Profits) Surtax Act also such a deduction is not possible without the approval of the Board. However, the Tribunal considering the provisions contained in rule 1(ix) of the First Schedule to the Companies (Profits) Surtax Act, 1964, held that the approval of the Central Board of Direct Taxes is not necessary for allowing deduction of royalty payment while computing the chargeable profits of the company, because the embargo for allowing the royalty as a deduction as placed under section 80MM of the Income-tax Act, 1961, is absent in the provisions contained in rule 1(ix) of the First Schedule to the Companies (Profits) Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee before the Commissioner of Income-tax would fall under section 11(1) of the Act and, therefore, the appeal is competent even on the merits. In that view of the matter, the Tribunal following an earlier order of its own, on a similar point, allowed the claim made by the assessee. Inasmuch as the appeal preferred by the assessee was deemed to be under section 11(1) of the Act and inasmuch as the Tribunal dealt with the issue on the merits, even though the Commissioner has not dealt with the same on the merits we consider that there is no infirmity in the order passed by the Tribunal on this aspect. Accordingly, we answer question No. 1 referred to us in the affirmative and against the Department. No costs. X X X X Extracts X X X X X X X X Extracts X X X X
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