TMI Blog1989 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the deduction allowed under section 80J of the Income-tax Act, 1961, in computing the total income of the assessee under the said Act was not permissible ?" The only question which calls for determination in this case is whether rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, was attracted in the facts and circumstances of the case. The Second Schedule lays down the rules for computing the capital of a company for the purpose of surtax and rule 4 thereof reads as follows : "Where a part of the income, profits and gains of a company is not includible in its total income as computed under the Income-tax Act, its capital shall be the sum ascertained in accordance with rules 1, 2 and 3, diminished by an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, are incomes not capable of being included in the total income of the assessee. The Division Bench rejected the contention of the Revenue that these incomes were not capable of being included in the total income. In our view, this decision will be applicable to the facts of this case and will govern the present reference. But Mr. Moitra, learned counsel appearing for the Revenue, has sought to contend that in view of the decision of the Supreme Court in the case of Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120, the above decision requires reconsideration. He has derived inspiration from the fact that the Division Bench in Schrader Scovill Duncan Ltd. [1981] 132 ITR 822 (Cal) has also relied on the decision of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a part of the income is not includible in the total income and not in any other case. If it is not includible at all, then only diminution of the amount in accordance with rule 4 has to be made. In Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC), which is also relied on by Mr. Moitra, the question was how the computation of the total income has to be made. There is no dispute that, for the purpose of income-tax assessment, the income has to be computed in accordance with the relevant provisions of the Act and, thereafter, deduction has to be allowed only from that part of the income included in the total income and eligible for deduction and/or reliefs. But, while considering the scope of rule 4 of the Surtax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed that relief from the dividend from a domestic company will be allowed after such dividend is computed in accordance with the provisions of the Act. But there is no dispute that the net dividend is includible in the total income and from such dividend relief will be allowed by way of deduction. For the reasons aforesaid, we answer this question in this reference in the affirmative and in favour of the assessee. There will be no order as to costs. It is stated by Miss. M. Seal that the name of the company has since been changed to Britannia Industries Ltd. Let this change be recorded and amendment be effected in the statement of case and in the paper book accordingly on a signed copy of the minutes of this order. Let the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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