Mela Ram Sharma, J. - (1.) THE IT Appl. Tribunal, Chandigarh Bench (hereinafter referred to as the Tribunal) has referred the following questions of law to this Court for its opinion : (i) Whether, on the facts and in the circumstances of the case, of the Appl. Tribunal was right in law in holding that u/r 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 IT assessments ? (ii) Whether, on the facts and in the circumstances of the case the Appl. Tribunal was right in law in affirming the order of the AAC of IT holding that deductions u/ss 80K and 80M allowed under Chapter VIA of the IT Act could not be considered as sums not includible in the total income for IT assessments and, therefore, would not be considered as sums not includible in the total income for IT assessments and, therefore, would not fall for deduction u/r 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for computing the capital employed ?
(2.) THE assessee is a limited company. For the asst. yrs. 1971 -72 and 1972 -73, the ITO also exercising the powers of a Surtax Officer took up the case of the assessee. During the assessment proceedings, he examined a claim made by the assessee that for computing the chargeable profits, the gross dividend income, i.e. the entire dividend received by it, should be excluded from the total income in each year as computed under the IT Act u/cl. (viii) of r. 1 of the First Schedule to the Surtax Act for the purposes of computation of the chargeable profits. The claim made by the assessee was dismissed by the Surtax Officer. The said Officer also rejected the claim of the assessee that the tax u/ss 80K and 80M for the asst. yr. 1971 -72 could not be considered as sums not includible in the total income for Income Tax assessment and, therefore, would not fall for deduction u/r 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for computing the capital. The assessee went up in appeal, which was allowed. The appeal filed by the Revenue against the order of the AAC of IT, Patiala Range, Patiala, was dismissed by the Tribunal. The Revenue, however, succeeded in getting the aforementioned questions of law referred to this Court for its opinion.
(3.) SO far as the first question is concerned, the opinion to be given stand concluded against the Revenue and in favour of the assessee by a Division Bench judgment of this Court reported as CIT, Patiala v/s. . We order accordingly.;