LexSMITH KLINE AND FRENCH (INDIA) LTD. ETC. versus COMMISSIONER OF INCOME TAX
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
SMITH KLINE AND FRENCH (INDIA) LTD. ETC.
v.
COMMISSIONER OF INCOME TAX
APRIL 16, 1996
(B.P. JEEVAN REDDY AND K.T. THOMAS, JJ.]
Colllpanies Profits (Swtax) Act, 1964:
Sections 4, 15, 4{}-Swtax is essentially levied on the business profits of
the company colllputed in accordance with the provisions of the Income-tax
Act-Merely because ce1tai11 ft.other deductions (adjustments) are provided by
the Surtax Act frolll the said profits, it cannot be said that swtax is not levied
upon the profits detennined or computed in accordance with the provisions
of the Income-tax Act.
A
B
c
Union of India v. Bombay Tyre Intemational, AIR (1984) S.C. 420 and D
Goodricke Tea Company v. State of West Bengal, [1995] I Suppl. S.C.C. 707,
relied on.
Jaipuria Samia Amalgamated Colliories Ltd. v. Commissioner of In-
come-Tax, West Bengal, 82 l.T.R. 580, distinguished.
Mo/ins (India) Limited v. Commissioner of Income Tax, West Bengal-
JII, 144 I.T.R. 317; Brooke Bond (India) Limited v. Commissioner of Income
Tax, 193 l.T.R. 390, Bombay (Lubrizon (India) Limited v. Commissioner of
Income Tax, 187 J.T.R. 25; Commissioner of Income Tax Kamataka v.
Intemational Instmments Ptivate Limited, 144 I.T.R. 936; Madras Swzdaram
Industries Litnited v. Commissioner of Income Tax, 159 J.T.R. 646; Andhra
Pradesh Vazir Sultan Tobacco Conipany Lin1ited v. Co111n1issioner of l11con1e
Tax, 169 I.T.R. 35; Rajasthan Associated Stone Indust1ies Company Limited
E
F
v. Commissioner of Income Tax, 170 I.T.R. 653; Gujarat S.O.M. Manikla/
Indust1ies Limited v. Commissioner of Income Tax, 172
I.T.R. 176; G
Himalyan Dmg Company Private Limited v. Commissioner of Income Tax,
218 I. T.R. 346 and Highway Cycle Industries Limited v. Commissioner of
Income Tax, 178 I.T.R. 601, approved.
Makum Tea Company (India) Limited & Anr. v. Commissioner of
lncmne Tax, 178 I.T.R. 453 and Doom Douma Tea Company Limited v. H
385
386
SUPREME COURT REPORTS [1996] SuPP. 1 S.C.R.
A
Commissioner of Income T<D;, 180 I.T.R. 126, disapproved.
Conunis.l'ioner of Income-t<D; v. Gu111pada Dutta, 14 I.T.R. 100,
referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1187-88
B of 1985 Etc. ETc.
c
D
E
F
G
H
From the .I udgment and Order dated 21.12.84 of the Karnataka High
Court in SCLAP. No. 34-35 of 1984 granted by the High Court against its
Judgment and Order dated 28.10.83 and 21.10.83 in ITRC Nos. 221 and
222 of 1978.
G.B. Pai, .I. Ramamurthy Mukul Mudgal, O.C. Mathur, Ms. A.K.
Verma for JBD & Co., A. Subba Rao, Anil Srivastava and S."1. Terdol for
the appearing parties.
The following Order of the Court was delivered :
A common question arises in this batch of appeals. For the sake of
convenience, we may refer to the question in Civil Appeal No. 455 of 1987
directed against a Full Bench judgment of the Kerala High Court (159
l.T.R. 431). The following question was stated by the Income-Tax Appel-
late Tribunal under Section 256(1) of the Income-Tax Act for the con-
sideration of the Kerala High Court :
(1) "Whether Rs. 76,777 being the surtax liability is to be allowed
as a deduction in computing the total income of the assessee for
the assessment year 1976-77?"
The claim for the said deduction was disallowed by the Income Tax Officer
on the basis of and with reference to sub- clause (ii) of clause (a) of Section
40 which read thus at the relevant time :
40. Notwithstanding anything to the contrary in Sections 30 to 39,
the following amounts shall not be deducted in computing the
income chargeable under the head 'profits and gains of business
or profession' -
(a) in the case of any assessee-
(i)
SMITH KLINE AND FRENCH (I) LTD. v. C.I.T.
387
(ii) any sum paid on account of any rate of tax levied on the A
profits or gains of any business or profession or assessed at
a proportion of, or otherwise on the basis of any such profits
or gains.
11
On appeal, the Appellate Assistant Commissioner allowed the
assessee's claim but on further appeal by the Revenue, the Tribunal upheld
the Revenue's contention and disallowed the claim for deduction on the
basis of Section 40(a)(ii). The High Court has affirmed the view taken by
the Tribunal. The only question before us is whether the tax levied under
the Companies Profits (Smtax) Act, 1964 is "a tax levied on the profits or
gains of any business or profession or assessed at a proportion of or
otherwise on the basis of any such profits or gains", as contemplated by
the said suExcerpt shown. Read the full judgment & AI analysis in Lexace.