TMI Blog1995 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... harge ordinarily payable but not paid in view of the deposit made with the Industrial Development Bank of India as per the provisions of the Companies Deposits (Surcharge on Income-tax) Scheme, 1976, should be deducted while arriving at the chargeable profits for the levy of surtax ? " The assessee is assessed to surtax. While computing the chargeable profits for the levy of surtax for the assessment year 1977-78, the Income-tax Officer has not deducted the income-tax surcharge payable of Rs. 7,61,987 since the assessee was not liable to pay the same in view of the deposit made with the Industrial Development Bank of India. In so doing he rejected the assessee's contention that the surcharge was otherwise payable and, therefore, it shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the Tribunal submitted that the surtax payable by the assessee was Rs. 7,61,987 and the assessee had in fact deposited a sum of Rs. 8,25,000 with the Industrial Development Bank of India under the Companies Deposits Scheme. Since a larger amount was deposited than what was payable as surcharge, the assessee is entitled to deduction under rule 2(1) of the First Schedule to the Act. It was, therefore, stated that the Tribunal was correct in holding that the surcharge payable by the company though not actually paid, in view of the deposit made with the Industrial Development Bank of India, should be deducted while arriving at the chargeable profit under rule 2(1) of the First Schedule to the Act. As already seen the surtax payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Widia (India) Ltd. v. CIT [1992] 194 ITR 77. While answering this question, the Karnataka High Court held as under : " The Appellate Tribunal has taken the view that the deposit with the Industrial Development Bank of India is not the same as payment of the tax, which is one aspect. Another facet of interpretation is to understand the word 'payable' in rule 2 in the context of the second proviso to section 2(6) of the Finance Act. The said proviso states that, in lieu of payment of surcharge.... deposit may be made under the scheme. In other words, instead of the tax being paid, the amount could be deposited. The deposit results in removing the liability to make the payment. In other words, on the deposit being made, the tax ceases to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by following the earlier decision of the Karnataka High Court in Widia (India) Ltd. v. CIT [1992] 194 ITR 77, the Gujarat High Court has held as under : That the deposit made with the Industrial Development Bank of India could not be treated as tax paid. The payment of deposit essentially differs from payment of tax and though the liability to pay the surcharge was taken away by making the deposit with the Industrial Development Bank of India, it could not be treated as any deemed payment of surcharge. If it was intended to be treated as deemed payment of surcharge, there would have been no need to provide in section 2(8) of the Finance Act, 1976, that surcharge payable would be 'nil' in such cases of deposit of the entire amount with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
