CARBORANDUM UNIVERSAL LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a combined reference for the asst. yr. 1974 -75 both at the instance of the assessee as well as at the instance of the Revenue. The Tribunal at the instance of both the assessee and the Revenue has stated a case and referred the following questions of law for our opinion under s. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act'), for the asst. yr. 1974 -75. '1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was not entitled to the deduction of the surtax payable for the year in computing its total income for the asst. yr. 1974 -75.

(2.) IN so far as the first question of law referred to at the instance of the assessee is concerned, the point that arises is whether the assessee would be entitled to deduction of surtax paid by the assessee in the computing the total income for the asst. yr. 1974 -75. A similar question whether the surtax paid by a company is deductible in the computation of the company's business income came up for consideration before the Supreme Court in the case of Smith Kline and French (1) Ltd. vs. CIT : [1996]219ITR581(SC) and the apex Court in that case held that the surtax levied on the company's profit, cannot be allowed as deduction while computing the business income of the assessee as per the provisions of the IT Act, 1961. Following the said decision of the apex Court, we answer the question of law -referred to us at the instance of the assessee in the affirmative and against the assessee.