9911796707
TMI Blog1992 (3) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. Since the assessee is a banking company, under the Interest-tax Act, 1974, interest-tax was exigible on the chargeable interest of the assessee. Further, by virtue of the provisions of section 18 of the Interest-tax Act, 1974, the tax payable under the said Act was deductible in computing the total income of the assessee under the Income-tax Act. It is common ground that while making the assessments under the Income-tax Act, the assessee was allowed the benefit of deduction in respect of the interest-tax payable under the Interest-tax Act, 1974. 3. In the assessee's case, surtax under the Companies (Profits) Surtax Act, 1964, was also exigible. The surtax assessment for the three assessment years under consideration was complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the deduction is provided for under section 18 of the Interest-tax Act, 1974, the deduction allowed by virtue of the said section must be ignored for purposes of the Surtax Act. In other words, the total income of the assessee as determined under the Income-tax Act should be enhanced pro tanto and surtax levied on that basis. He, therefore, put the assessee on notice of his intention to pass suitable orders under section 16(1) of the Surtax Act. 5. The assessee responded by making the following points : (a) The Surtax Act does not contain any provision enabling the Department to meddle with the total income determined under the Income-tax Act. (b) Under the specific provisions of section 18 of the Interest-tax Act, interest-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Income-tax Act. Interest-tax payable by a bank has been allowed as a deduction from the total income, only by virtue of section 18 of the Interest-tax Act. Thus, the deduction of Interest-tax payable is not a deduction contemplated by the Income-tax Act, but, provided for by the Legislature by overriding section in the Interest-tax Act. A harmonious construction of these provisions reveals that Interest-tax payable by a bank, even though deducted from the total income by virtue of section 18 of the Interest-tax Act, cannot be allowed as a deduction from total income for the purpose of computing the ' chargeable profits ' under the Surtax Act. In other words, only the total income arrived at under the Income-tax Act before deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act cannot avail it. 10. The question that then arises for consideration is whether for purposes of surtax, the interest-tax deducted for the purpose of computing the assessee's total income under the Income-tax Act needs to be withdrawn, as has been held by the Commissioner of Income-tax. As we see it, there is no warrant in law for the conclusion reached by the Commissioner of Income-tax. 11. The Income-tax Act levies tax on Individuals, Hindu undivided families, companies, firms, Association of persons and Body of Individuals on the income earned by them under the six heads enumerated under section 14 of the Income-tax Act. Interest-tax Act on the other hand, deals with taxation of chargeable interest of scheduled banks only. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under the head " Profits and gains of business or profession ", the interest-tax payable by the scheduled bank for any assessment year shall be deductible from the profits and gains of the bank assessable for that assessment year." It is exfacie clear from the said section, first, that it starts with a non obstante clause, and secondly that it specifically provides that in computing the business income of a scheduled bank under the Income-tax Act, the interest-tax payable by the bank is deductible. 13. Now, non obstante clause is a legislative device designed to achieve such diverse purposes as resolving conflicts between two Acts ; to confer a benefit which, but for the non obstante clause, would not have been available ; or even to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be clear from the Statement of Objects and Reasons appended to the Interest-tax Bill, 1974. The relevant portion of the Statement of Objects and Reasons [96 ITR (Statutes) 31] reads as follows : " The object of this Bill is to impose a special tax on the total amount of interest received by scheduled banks on loans and advances made in India. However, interest on Government securities as also debentures and other securities issued by local authorities, companies and statutory corporations will not be included in the tax base. Interest received on loans and advances made to other scheduled banks will likewise be exempted from the proposed levy. The tax will be levied at the rate of seven per cent on the chargeable amount of interest. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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