This appeal arises against the order of the Income Tax Appellate Tribunal passed in December, 1998, in I.T.A. No. 4 (All) of 1991 in relation to
the assessment year 1986-87. The proceedings were taken against the assessee on the return being filed declaring the chargeable profits under the
Companies (Profits) Surtax Act, 1964, at Rs. 1,03,950 filed on 18-3-1989. It was in response to the notice issued u/s 8(a) of the Companies
(Profits) Surtax Act, 1964.
2. The Deputy Commissioner of Income Tax calculated the surtax at Rs. 32,41,000. Against the decision of the Deputy Commissioner of Income
Tax, the department preferred three appeals u/s 6(2) of the Surtax Act. The appeals for the assessment years 1984-85 and 1985-86 were
dismissed and for the assessment year 1986-87 it was partly allowed. The department preferred a ST Appeal No. 4 of 1987, in respect of the
assessment year 1986-87 on the ground that the appellate authority was not justified in directing the assessment of the assessee as per the order of
the Commissioner (Appeals) and has worked out the charge of disputed amount at Rs. 84.44 lakhs only. The Tribunal had held that the interest on
the sticky loans is not includible for the purpose of computing Income Tax and it cannot be included for the purpose of said tax. This order of the
Tribunal has been challenged in the present appeal.
3. We have heard Sri Shambhu Chopra, learned standing counsel for the appellant, and Sri S.K. Garg, learned counsel for the respondent.
4. Learned counsel for the appellant has submitted that the view taken by the Tribunal that the interest on the sticky advance is not to be included
for the purpose of Income Tax assessment is erroneous. He has placed reliance upon the decision in State Bank of Travancore Vs. Commissioner
of Income Tax, Kerala, ; Banque Nationale De Paris Vs. Commissioner of Income Tax, and Kerala Financial Corporation Vs. Commissioner of
Income Tax, . The decision in Kerala Financial Corpn''s case (supra) has been specifically overruled in UCO Bank, Calcutta Vs. Commissioner of
Income Tax, West Bengal, .
5. The Companies (Profits) Surtax Act, 1964, defines chargeable profits as under :
(5) chargeable profits means the total income of an assessee computed under the Income Tax Act, 1961 (43 of 1961), for any previous year or
years, as the case may be, and adjusted in accordance with the provisions of the First Schedule;
In view of the aforesaid decision, the interest on the sticky loans cannot be included in the Income Tax and, accordingly, no surcharge can be
included for the purpose of surtax.
There is no merit in the appeal. It is hereby dismissed.
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