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TMI Blog1991 (3) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowance reserve should be included in the computation of the capital ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the entire dividend income was to be excluded from the income assessed under rule 1 (viii) of the First Schedule ?" The respondent is a public limited company owning tea and coffee estates. We are concerned with the assessment years 1977-78 and 1978-79. The accounting period ended by March 31, 1977 and March 31, 1978 respectively. Both the assessments relate to the surtax assessment for the two assessment years. The assessee-company was eligible for development rebate in its income-tax assessment. For the year 1977-78, the "development allowance reserve" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Regarding question No. 2, referred to this court, it concerns the computation of profits under the First Schedule to the Surtax Act. The assessee-company is having dividend income. The assessee claimed that the entire dividend income should be excluded from the computation of chargeable profits under rule 1(viii) of the First Schedule to the Act. The Income-tax Officer rejected this plea. He held that only 40% can be excluded. In appeal, the Commissioner of Income-tax (Appeals) followed the decision of this court in A. V. Thomas and Co. v. CIT [1977] 110 ITR 515 and directed the Income-tax-Officer to exclude the entire dividend income from the chargeable profits. The Revenue took up the matter in appeal before the Tribunal. Before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the Tribunal has failed to enter a finding that the facts in this case are exactly identical to Peermedu Tea Co. Ltd.'s case (S. T. A. Nos. 4 and 5/Coch of 1981). In the absence of a finding on that score, there is no basis or reason for the Tribunal to hold that the entire development reserve should be included in the computation of capital. In other words, the Tribunal has failed to adjudicate the issue properly. It simply stated that the matter is governed by the earlier decision in Peermedu Tea Co. Ltd.'s case (S. T. A. Nos. 4 and 5/Coch of 1981). As to whether the facts in these cases are identical with the facts of the Peermedu Tea Co. Ltd.'s case (S. T. A. Nos. 4 and 5/Coch of 1981), is anybody's guess. There has been no prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend included in the gross total income, deduction under Chapter VI-A is allowed for the purpose of arriving at the total income. Accordingly, the dividend included in the total income is liable to be excluded under the First Schedule. The Surtax Officer has to take into account the total income as computed under the provisions of the Income-tax Act for the purpose of adjustment under the Surtax Act. Therefore, whatever has not been included in the assessment cannot be excluded. In other words, only the amount which has been included can be excluded. Otherwise, although the net dividend is included in the total income, the assessee gets adjustment of a higher amount being the amount of dividend included in the gross total income. What Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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