1968 (10) TMI 27

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..... rposes of rate amounted to Rs. 9,48,335. Applying the Finance Act, 1963, the residual income was determined at Rs. 5,39,386. There is no dispute that the computation of the residual income was strictly in terms of section 2(8) of the Act. The additional surcharge leviable on the residual income was fixed at Rs. 52,828.60, the total tax payable by the petitioner thus amounting to Rs. 76,674.07. The contention for the petitioner is that the provision relating to the additional surcharge levied on the residual income is not valid, inasmuch as it goes beyond the taxable income computed for purposes of income-tax. The point is also put slightly in a different way, viz., the Finance Act cannot validly subject to additional surcharge an income, w .....

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..... ction of the business income from the total income. Chapter VII itself is captioned " income forming part of total income on which no income-tax is payable ". Quite apart from this, it seems to us to be obvious that, before exemption of tax is claimed, the income with reference to which the claim is made must necessarily be part of the total income of the previous year. It is only then that the question of exemption from tax can arise. Unlike deduction of income, which by that process ceases to be part of the income, income that is exempt from tax but has once been computed does not cease to be part of the total income of the previous year. The petitioner relies on Commissioner of Income-tax v. Khatau Makanji Spinning and Weaving Company, .....

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..... t actually disputed by counsel for the petitioner--the income which was exempt from tax under section 81 had formed part of the total income of the previous year. There was no need, therefore, for the Finance Act to make any deeming provision making what was not the income of the previous year as such income by a fiction. It is next contended that the language of section 2(1)(a) (ii) of the Finance Act is not appropriate for levy of additional surcharge on income exempted from tax under the Income-tax Act. It is said that it is only where a tax can be levied that any question of its further increase by an additional surcharge for purposes of the Union can arise, and that, if there was no tax at all levied under the statutory exemption, the .....

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