Companies (Profits) Surtax Act, 1964

Elgin Mills Ltd., a textile manufacturer, claimed that its investment reserve, rehabilitation reserve and forfeited dividend reserve should be treated as reserves for computing capital under the Companies Profits (Surtax) Act, 1964 for the assessment year 1964-65. The Income‑Tax Officer excluded all three amounts, lead…

The Supreme Court considered whether Rs. 79 lakh set aside by National Rayon Corporation Ltd. as a Debenture Redemption Reserve for the assessment year 1967‑68 should be treated as a provision or a reserve for the purpose of computing the company's capital under the Companies (Profits) Surtax Act, 1964. The company arg…

The petitioners, industrial undertakings, challenged the validity of Rule 19A of the Income‑Tax Rules, 1962, which excluded borrowed capital and fixed the computation of "capital employed" on the first day of the previous year for the purpose of the tax exemption under Section 80J of the Income‑Tax Act. They also conte…

The UAE Exchange Centre, a UAE company, obtained RBI permission under the Foreign Exchange Regulation Act to operate liaison offices in India for limited functions such as receiving remittance data, printing cheques/drafts and couriering them to beneficiaries. The Authority for Advance Rulings held that income from the…

The Andhra Bank Ltd. appealed against the Income Tax Commissioner challenging the disallowance of deductions for amounts transferred to its reserve fund exceeding the statutory 20% of profit. The bank argued that a direction from the Reserve Bank of India under Section 35A compelled it to transfer a larger sum, which s…

Mis. George Williamson (Assam) Ltd. acquired the Indian undertakings of twelve UK‑registered tea companies under a scheme of arrangement approved by the High Courts and the RBI, which required that the net assets of the acquired business not be depleted. The consideration paid (Rs 490 lakhs) was lower than the net asse…

The assessees, Smith Kline and French (India) Ltd., claimed a deduction for a surtax liability of Rs. 76,777 under the Companies Profits (Surtax) Act, 1964 while computing their total income for AY 1976-77. The Income Tax Officer disallowed the deduction based on Section 40(a)(ii) of the Income‑Tax Act, which bars any …

Jyoti Ltd., a Baroda‑based company, claimed that its reserves for doubtful debts (Rs 85,000) and gratuity (Rs 5,60,000) should be treated as part of its capital base for computing statutory deduction under the Companies (Profits) Surtax Act, 1964. The Surtax Officer excluded the amounts; the Appellate Assistant Commiss…

The State Bank of Patiala had, in several assessment years, transferred sums to a "bad and doubtful debts" account and claimed that these amounts were "reserves" under the Companies (Profits) Surtax Act, 1964, thereby eligible for statutory deduction. The Income Tax Officer rejected the claim, but the Income Tax Appell…

The assessee, Duncan Brothers & Co. Ltd., claimed that provisions it made for income‑tax liability (Rs 16,48,888 for AY 1963‑64 and Rs 17,52,920 for AY 1964‑65) could either be treated as part of its capital or be deducted from the cost of excluded investments under the Super Profits Tax Act, 1963 and the Companies (Pr…

M/s Tranvancore Titanium Products Ltd obtained a loan of Rs. 491 lakhs from the Kerala Government and created a "Loan Redemption Reserve" of Rs. 1 crore to meet the loan liability. The assessing authority treated the amount as a provision and excluded it from capital for the purpose of surtax under the Companies (Profi…

The Supreme Court examined whether the Central Board of Direct Taxes' Circular No. 789, issued under Section 119 of the Income‑Tax Act, was ultra vires the Act and whether the Indo‑Mauritius Double Taxation Avoidance Convention (DTAC), notified under Section 90, could override inconsistent provisions of the Income‑Tax …

The respondent, Braithwaite & Co. Ltd., obtained a Rs 50 lakh term loan repayable in five instalments over a period of seven years and claimed the loan amount as part of its capital base to obtain the 10 % statutory deduction under Rule 1(v) of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The Income…

Sundaram Clayton Ltd. issued 20,40,000 worth of bonus shares by capitalising its general reserves in the assessment year 1971-72 and claimed that the bonus issue should be proportionately added to its share capital for the purpose of computing capital under Rule 3 of Schedule II of the Companies (Profits) Surtax Act, 1…

The Oil & Natural Gas Corporation Ltd (ONGC) challenged the assessment of surtax on its agreements with foreign companies, contending that the exemption notification GSR 307(E) dated 31‑03‑1983 under Section 24AA of the Companies (Profits) Surtax Act, 1964, covered both categories of foreign companies – those with dire…