9911796707
TMI Blog1985 (4) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee as computed under the Income-tax Act, 1961 ('the 1961 Act'). The assessee had claimed that the transfer of the amount was under section 17(1) of the Banking Companies Act, 1949. The claim was rejected by the ITO on the ground that the transfer of the amount by the assessee was not from the total income of the assessee for the previous year. The Commissioner (Appeals) held that the amount transferred should be excluded from the total income even if the transferred amount did not come from out of the income of the previous year. Aggrieved by the same, the department has come up in appeal. 2. The grounds taken by the department are to the effect that the Commissioner (Appeals) erred in holding that the amount transferred to the reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year, the total income computed for that year under the Income-tax Act shall be adjusted as follows : 1. Income, profits and gains and other sums falling within the following clauses shall be excluded from such total income, namely :--- (i) to (x) . . . (xi) in the case of a banking company --- (a) . . . (b) any sum transferred by it during the previous year to any reserves in India including reserves not shown as such in its published balance sheet in so far as the sums transferred to such reserves are attributable to income chargeable to tax under the Income-tax Act and have not been allowed as a deduction in computing its total income under that Act, and in so far as . . .whichever is higher ;" In view of the admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm part of the income of the previous year. In reply, it was contended by the department that rule 1 relates only to exclusion, that the question of exclusion arises only if the amount had been included in the income, that with regard to deductions, it is governed by rule 2 and that rule 1 of the First Schedule exclusively relates to exclusion of what was included in the income of the previous year. 7. On a careful consideration of the matter, we are inclined to accept the contention of the department. As already stated, the charge of surtax is on the chargeable profits and this is to be computed as per the rules in the First Schedule. The opening portion of the First Schedule provides that in computing the chargeable profits of a previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions that the exclusion under rule 1 is from the total income computed for the previous year. This is clear from the use of the expression 'shall be excluded from such total income'. 'Such total income' can only mean the total income computed for the previous year. This is confirmed by the fact that in the earlier portion, the expression used is 'total income computed for that year'. 'That year' clearly refers to the 'previous year' occurring earlier. 8. In the light of what is stated above, we are not inclined to give the term 'other sums' in rule 1, the scope or importance which the learned counsel for the assessee wanted to give. It has been found that what is excluded by the rule is what has been included in the total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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