COMMISSIONER OF INCOME TAX Vs. DHANALAKSHMI MILLS LIMITED

JUDGEMENT

(1.) IN compliance with the directions of this Court in T.C.P. No. 259 of 1985, dt. 25th February, 1985, the Tribunal has stated a case and referred the following questions of law under s. 18 of the Companies (Profits) Surtax Act, 1964 (hereinafter referred to as 'Surtax Act'), r/w s. 256 of the IT Act, 1961) :

(2.) THE assessee is a company and in computing the liability of the assessee for the asst. yr. 1974-75, the ITO deducted three amounts. We are not actually concerned in the present reference with reference to the correctness of the view of granting deduction of the three amounts made by the Surtax Officer in the computation of capital under the provisions of the Surtax Act. However, it is necessary to state certain facts with reference to one of the items, which we deducted by the Surtax Officer, viz., a sum of Rs. 4,86,000 being the dividend declared in the year 1972 under Expln. to r. 1 of the Second Schedule to the Surtax Act from the capital base for the purpose of arriving at the standard deduction from chargeable profits for surtax purposes. THE Surtax Officer deducted the sum of Rs. 4,86,000 in the computation of capital from the general reserve of the assessee-company on the ground it represented dividends declared in 1972. THE assessee contended before the first Appellate Authority that this sum was already deducted in arriving at the balance as on 1st January, 1973, and, therefore, there cannot be any double deduction. THE first appellate authority viz., the CIT(A) accepted the contention of the assessee and ordered the deletion of the addition to the capital base. THE Revenue preferred an appeal before the Tribunal, against the order of the CIT(A). THEre was no dispute also before the Tribunal that there was a double deduction with reference to the sum of Rs. 4,86,000 which related to the dividend paid in 1972, but, it was urged on behalf of the Department before the Tribunal was that the Surtax Officer in the order of assessment meant to disallow an amount of Rs. 6,99,841 which was divided for the year 1972 and paid during the accounting year 1973.

(3.) THEREFORE, the view of the Tribunal that it has no power to entertain the new ground urged before it by the Revenue, which was not the subject-matter of appeal before the CIT(A) is erroneous in the light of the decision of the Supreme Court in National Thermal Power Company Ltd. (supra). THEREFORE, we are of the view that the matter should be remitted to the Tribunal and the Tribunal is directed to consider the question, in the light of the decision of the Supreme Court on merits, whether the additional grounds should be entertained or not.