SUBRAMANIAN K Vs. SIEMENS INDIA LIMITED

JUDGEMENT

(1.) THIS is an appeal preferred by the Revenue against the judgment dated July 30, 1982, delivered by Mr. Justice Madon (as he then was) in Miscellaneous Petition No. 218 of 1975 [Siemens India Ltd. vs. K. Subramanian, ITO (1983) 34 CTR (Bom) 25 : (1983) 143 ITR 120]. The question which came up for consideration before the learned single judge was the ambit and the scope of the powers of the ITO under S. 7 of the Companies (Profits) Surtax Act, 1964 (" the 1964 Act "). The facts which gave rise to the filing of the petition are as follows :

(2.) SIEMENS India Ltd. is a public limited company incorporated under the Companies Act, 1956, and is assessed to income tax. The previous year of the company is the period of 12 months ending on September 30 in each calendar year. The controversy in the petition was in respect of the provisional assessment for the asst. year 1974 75 in respect of which the previous year would be the year ending on September 30, 1973. The company submitted their return of chargeable profits for the said previous year on September 30, 1974. In the said return, the company showed their chargeable profits at Rs. 1,53,41,602 and their capital at Rs. 12,64,19,560 and the statutory deduction at Rs. 1,26,41,956. According to the return, the excess of the chargeable profits over the statutory deduction was, therefore, Rs. 26,99,646 and the surtax on such excess chargeable profits at the applicable rate of 25 per cent. would be Rs. 6,74,912.

(3.) AFTER the return was filed by the company under the 1964 Act, the ITO served a notice dated December 20, 1974, under S. 7(2) declaring his intention to make a provisional assessment. The statement attached to the notice sets out that the ITO proposed to take the chargeable profits of the company at Rs. 1,53,41,602 as per the figure of chargeable profits shown by the company in the said return. The computation of capital was proposed to be taken by the ITO at Rs. 10,38,22,259 and the statutory deduction at Rs. 1,03,82,226 as against the capital of Rs. 12,64,19,560 and the statutory deduction at Rs. 1,26,41,956 computed by the company. The company submitted objections to the proposed provisional assessment on December 27, 1974, which was a Friday, and on the next Monday, i.e., December 30, 1974, the ITO rejected the contention raised by the company and made an order of provisional assessment in accordance with the statement annexed to the notice. The company filed a writ petition under Art. 226 of the Constitution of India to challenge the legality of the order and the notice of demand which followed and the petition was presented on February 14, 1975. It is required to be stated at this juncture that the statement annexed to the notice issued by the ITO does not disclose why the ITO desired to reduce the capital computation made by the company in the return.