TMI Blog1996 (11) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... y Sub-section (5) of Section 2 to mean the total income of an assessee computed under the Income Tax Act and adjusted in accordance with the provisions of the First Schedule. In other words, the Income Tax Act imposes a charge on the total income of an assessee. The Companies (Profits) Surtax Act provides for levy of additional tax on the total income as computed under the Income Tax Act, after certain adjustments by excluding certain types of income and some deductions from the total income as computed under the Income Tax Act. One of the deductions which had to be made for computing chargeable profits for the purpose of levy of Surtax is the amount of Income Tax, if any, payable by a company under Section 104 of the Income Tax Act. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax which had been held payable under the order passed under Section 147 of the Income Tax Act. The second order of rectification was passed on 21st April, 1971. Both the Appellate Assistant Commissioner and the Tribunal held that the Income Tax Officer's order was logical and justified in the facts and circumstances of this case. 4. On the assessee's application, the Tribunal referred the following question of law to the High Court: Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the Income Tax Officer's action in rectifying his order passed in September, 1968 under Section 13 of the Surtax Act was in order both in law and in equity? 5. The assessee's conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect of enhancing the assessment or reducing the refund already made, the Income Tax Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable. 14. Other amendments--Where as a result of any order made under Sections 154, 155, 250, 254, 260, 262, 263 or 264 of the Income Tax Act, it is necessary to recompute the chargeable profits determined in any assessment under this Act, the Income Tax Officer may proceed to recompute the chargeable profits, and determine the surtax payable or refundable on the basis of such recomputation and make the necessary amendment and the provisions of Section 13 shall, so far as may be, apply thereto, the period of four years specified in Sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 for any previous year or years, as the case may be, and adjusted in accordance with the provisions of the First Schedule'. Therefore, the starting point of the assessment under the Surtax Act has to be the total income computed under the Income Tax Act. That being so, the Income Tax assessment order must necessarily form part of the records of the Surtax assessment. Any change or variation of tax liability in the Income Tax assessment order will have to be given effect to in the Surtax assessment. There is no reason to hold that the Income Tax assessment order which is the very basis of the Surtax assessment is not a part of the records of the Surtax assessment proceedings. As has been stated earlier, if this contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat order under Section 147 was set aside on appeal. The assessee's income tax liability became smaller and consequently the chargeable profits could not be treated as validly computed when deduction had been made for Income Tax which was not actually payable. Therefore, the Income Tax Officer was justified in invoking the provisions of Section 13 and correcting the error in the order passed on 16th September, 1968. The Income Tax Officer by the second order of rectification was not trying to rectify the original order of assessment passed on 30th March, 1965. but was seeking to restore it by rectifying the error in the amended order passed on 16th September, 1968. 9. In that view of the matter, it is not necessary to go into the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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