Commissioner of Income Tax vs Saraswati Industrial Syndicate Ltd. (No. 4)

S.S. Sodhi, J.—The matter here pertains to the framing of surtax assessment under the Companies (Profits) Surtax Act, 1964.

The questions of law referred for the opinion of this court being as under :

"(1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law, in holding that the amount of Rs. 9,99,245 constituted of the sums of Rs. 62,710 and Rs. 9,36,535, respectively, marked by the assessee as ''reserve for doubtful debts'' and ''reserve for bonus'' could be taken into consideration in the computation of the capital employed for the purpose of statutory deduction under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?

(2) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law in affirming the order of the Appellate Assistant Commissioner holding that deductions allowed under sections 80G and 80M, falling under Chapter VI-A of ,the Income Tax Act, 1961, could not be considered as sums ''not includible'' in the total income for Income Tax assessments and, therefore, would not fall for deduction under rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the purpose of computing the capital employed ?"

The answer to the first question is provided by the two judgments of the Supreme Court in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, and Commissioner of Income Tax, Kanpur Vs. Saran Engineering Co. Ltd, . In terms thereof, this question is answered in the negative, in favour of the assessee and against the Revenue.

The second question stands covered by the judgment of this court in ITR Nos. 137 and 138 of 1979 Commissioner of Income Tax Vs. Saraswati Industrial Syndicate Ltd. (No. 2), decided on November 17, 1988, which concerns the same assessee. In terms of this decision, this question too must be answered in the negative, in favour of the assessee and against the Revenue. There will, however, be no order as to costs.