1974 (7) TMI 2 - HC - Income Tax

Super Profits Tax Act 1963 - Whether income computed under the Income-tax Act 1961 can be recomputed for the purposes of Super Profits Tax Act - Tribunal considers this question in proceedings under section 19 of the Super Profits Tax Act 1963 read with section 260 of the Income-tax Act 1961. Though normally the income computed under Income-tax Act should be the chargeable profits for the purposes of Super Profits Tax Act its recomputation is necessary due to a mistake in the assessment under Income-tax Act or any other justifiable reason the income can be recomputed. The question referred to us is therefore answered technically in favour of the assessee leaving the question of deduction for consideration by the Tribunal on merits

Summary

Issues: Assessment under Income-tax Act and Super Profits Tax Act, Claim for deduction in both assessments, Interpretation of "chargeable profits" under Super Profits Tax Act, Authority to recompute total income for Super Profits Tax assessment, Entitlement to deduction in Super Profits Tax assessment.

Analysis:
For the assessment year 1963-64, the assessee was assessed under the Income-tax Act and the Super Profits Tax Act. The total income determined in the income-tax assessment was also taken as chargeable profits for the super profits tax assessment. The assessee claimed a deduction of Rs. 15,550 for expenses incurred in fitting diesel engines, which was rejected in the income-tax assessment and subsequently in the super profits tax assessment by the Tribunal. The Tribunal held that the total income as determined under the Income-tax Act should be considered as chargeable profits for the Super Profits Tax Act assessment, thus disallowing further deductions.

The main issue revolved around the interpretation of "chargeable profits" under the Super Profits Tax Act. The Tribunal equated chargeable profits to the total income assessed under the Income-tax Act, making it final and not subject to further deductions. However, the High Court disagreed with this interpretation. It held that the assessing authority under the Super Profits Tax Act could recomputed the total income under the Income-tax Act if necessary, even if the income-tax assessment had become final. The definition of "chargeable profits" did not restrict the authority from making a fresh computation for justifiable reasons.

The Court also addressed the contention that the legislature should have used clearer language if a separate computation was intended, similar to the Excess Profits Tax Act. However, the Court rejected this argument, emphasizing that the assessing authority under the Super Profits Tax Act could recompute the total income under the Income-tax Act if needed, even if the income-tax assessment had concluded. This interpretation aimed to prevent erroneous assessments under the Income-tax Act from impacting the Super Profits Tax Act assessment.

Regarding the specific deduction claimed by the assessee, the Court directed the Tribunal to consider the merits of the claim under relevant provisions of the Super Profits Tax Act and the Income-tax Act. The Court answered the technical question in favor of the assessee, leaving the deduction issue for the Tribunal to decide on its merits. No costs were awarded in this matter.