1979 (5) TMI 33 - AT - Income Tax

Summary

Issues:
1. Interpretation of exclusion of dividend income for Surtax assessment.
2. Calculation of standard deduction for capital under Companies(Profits)Surtax Act, 1964.

Analysis:

Issue 1: Interpretation of exclusion of dividend income for Surtax assessment

The appeal by the Revenue challenged the order of the AAC regarding the exclusion of dividend income for Surtax assessment for the assessment year 1973-74. The Surtax Officer had included a certain amount of dividend income in the total income, but the assessee sought to exclude a larger sum of dividend income. The AAC agreed with the assessee that gross dividend income should be excluded for Surtax assessment. The Revenue contended that only the dividend income included in the total income should be excluded. The Tribunal, after considering previous judgments and legislative intent, held that income by way of dividends refers to gross dividend income and not the net amount. Thus, the first ground was decided against the Revenue.

Issue 2: Calculation of standard deduction for capital under Companies(Profits)Surtax Act, 1964

The Surtax Officer had reduced proportionate capital for standard deduction, which was challenged before the AAC. The AAC, following a Karnataka High Court judgment, allowed the appeal. The Revenue contended that the exclusion of proportionate capital should have been sustained with reference to the amount of dividend income excluded. The Tribunal rejected this argument, citing its decision in a previous case and case law cited by the assessee. Consequently, the second ground was also decided against the Revenue.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the AAC's order on both issues.