Commissioner of Income Tax vs Patiala Flour Mills Co. Ltd.

S.S. Sodhi, J.—The two questions of law referred for the opinion of this court are :

"(1) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law in holding that under Rule 1 (viii) of the First Schedule to the Companies (Profits) Surtax Act, 1964, the gross dividend and not the net dividend which actually formed part of the total income of the assessee was to be excluded from the total income of the assessee computed for the purposes of Income Tax assessment ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in law in affirming the order of the Appellate Assistant Commissioner of Income Tax holding that deductions under Sections 80K and 80M allowable under Chapter VI-A of the Income Tax Act, 1961, could not be considered as sums not includible in the total income for Income Tax assessments and, therefore, would not fall for deduction under Rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for computing the capital employed ?"

Keeping in view the judgment in Commissioner of Income Tax Vs. Patiala Flour Mills Co. P. Ltd., which was between the same parties, as also our recent judgment in ITR No. 70 of 1980 ( Commissioner of Income Tax Vs. Pure Drinks (New Delhi) Pvt. Ltd., ), decided on December 1, 1988, question No. 1 is hereby answered in the negative, against the Revenue and in favour of the assessee.

As regards the second question, this is covered by our decision in ITR Nos. 71 to 74 of 1980 Commissioner of Income Tax Vs. Pure Drinks (Bombay) Pvt. Ltd., decided on December 1, 1988, and it is accordingly answered in the negative, against the Revenue and in favour of the assessee. This reference is disposed of accordingly. There will be no order as to costs.