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Issues:
- Interpretation of additional corporation tax deduction for assessment year 1978-79 under Income-tax Act, 1961. Analysis: The High Court of Calcutta addressed a reference under section 256(1) of the Income-tax Act, 1961, regarding the deduction of additional corporation tax amounting to Rs. 6,22,718 for the assessment year 1978-79. The assessee claimed this amount as expenditure relating to earlier years due to a proposed enhancement of valuation by the corporation. The Income-tax Officer disallowed the claim, stating that the liability did not arise during the relevant previous year. The Commissioner of Income-tax (Appeals) and the Tribunal, however, allowed the deduction, emphasizing that the demand notice for tax was received during the previous year relevant to the assessment year. The Tribunal highlighted the importance of the year in which the revised assessment notice was received by the assessee in determining the allowance. The Court agreed with the Tribunal's finding, emphasizing that if the demand notice is received during the relevant year, it should be allowed in computing the total income of the assessee. The Court clarified that the confusion surrounding the assessment process and the nature of the notice, whether it was a show cause or a final assessment notice after hearing objections, did not affect the allowance of the deduction. The critical factor was the year in which the revised assessment notice, commonly known as the rate card, was received by the assessee. Since the demand notices for the revised assessment were received during the previous year, the Court held that the claim for additional corporation tax deduction was justified for the assessment year 1978-79. The judgment was delivered after recalling a previous judgment that was based on incorrect submissions. Justice Bhagabati Prasad Banerjee concurred with the decision, and no costs were awarded in the matter.
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