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TMI Blog1979 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1963-64, the relevant previous year for the assessee being the calendar year 1962. The point to be determined by us in this reference is the assessment of the said bank for super profits tax. A sum of Rs. 2,18,802 was included in the total income of the assessee for the previous year January 1, 1962, to December 31, 1962, relevant to the assessment year 1963-64, computed under the I.T. Act, 1961, under the head " Interest on securities ". The question then was of computation of super profits tax, if any, payable by the assessee. In terms of s. 2(5) of the S.P.T. Act, 1963, " chargeable profits " for super profits tax purposes mean the total income as taken for income-tax purposes subject to adjustments in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n securities which were declared to be income-tax free and, therefore, interest on securities cannot be considered to be within the purview of interest contemplated by cl. (x) of r. 1. This contention was not accepted by the Tribunal. It held that the two sub-rules provided for different matters and whereas the benefit of sub-r. (iv) was to be available to all assessees, that of sub-r. (x) was available only to non-resident companies and that too if such companies had not made the prescribed arrangements for declaration and payment of dividends within India. In addition to interest on securities, the assessee had also received sum of Rs. 12,93,828 by way of interest on advances given to Indian concerns. It claimed before the SPT Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppearing on its behalf that this was because under the calculations made there was no liability for super profits, tax. The department, however, felt aggrieved and contended that the AAC was wrong on several different counts. The principal grievances of the department were that interest on Govt. securities was not eligible for deduction under Cl. (x) of r. 1. It was further contended that the entire interest paid by the assessee to its depositors and creditors was required to be deducted from the interest earned by the assessee from Indian concerns for the purposes of arriving at the net figure of interest which was deductible under cl. (x) of r. 1 and the AAC was in error in considering only the proportionate interest in the manner he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) 'Chargeable profits' means the total income of an assessee computed under the Income-tax Act, 1961 (XLIII of 1961), for any previous year or years, as the case may be, and adjusted in accordance with the provisions of the First Schedule." Then we are referred to the First Schedule which is to be found at page 757 of the volume. The said Schedule provides for certain adjustments as provided in the rules, and cls. (vi) and (x) of r. 1 read as follows : " 1. Income, profits and gains and other sums falling within the following clauses shall be excluded from such total income, namely: ...... (vi) income chargeable under the Income-tax Act under the head 'Interest on securities.' derived from any security of the Central Government issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocal authority or Indian concerns is to be excluded for the purposes of computing chargeable profits under the S.P.T. Act and similarly fees for rendering technical services received from the very three parties, viz., Government, local authority or any Indian concerns, are to be excluded. Considering cl. (x) it is not possible to accept the contention that cl. (x) makes a general provision for interest, whereas cl. (vi) makes a special provision for " interest on securities ", and, hence, the word " interest occurring in cl. (x) is to be read excluding "interest on securities Clause (x) appears to us also to be a specific or a special provision for the purposes of dealing with a special type of case based principally upon the type of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cl. (x). Reading cl. (x) by itself the two questions referred to us present little difficulty. Interest received by the French bank from the Govt. securities is certainly interest received from the Government. If that is so, and the French bank is accepted to be as it admittedly is a non-resident company which has not made the prescribed arrangements for the declaration and payment of dividends within India, it will be entitled to the benefit of cl. (x) of r. 1. As far as question No. 2 is concerned, the Tribunal appears to be aware of the submission that cl. (x) provides for deduction of the entire interest earned without any reduction either for interest paid by the assessee or by some notional amounts of expenses which might have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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