Law:

Section:

Income-tax-----Co-operative society - Income from business exempt from tax-Levy of additional surcharge on tax-Whether valid-Income-tax Act, 1961, Ss. 4 & 81. Merely because the business income of a co-operative society is exempt from tax- under section 81 of the Income-tax Act, 1961, it does not follow that such income was never part of or had ceased to be part of the total income of the previous year because, before exemption of tax is claimed, the income with reference to which the claim is made must necessarily be part of the total income of the previous year. Where part of the income is not chargeable to tax at all, it may be inappropriate to increase the tax which did not exist by the additional levy of surcharge. As the income from a business carried on as a co-operative society is part of the total income chargeable to tax under section 4 but for the exemption granted under sec tion 81, it will not be inappropriate to regard the additional surcharge levied as an increase to the tax, which, though chargeable, is not actually levied and collected because of the exemption.                                                                                                                         JUDGMENT VEERASWAMI, J,------This is a petition to quash an order of the Third Income-tax Officer, Madurai-2. The order related to the assessment year 1903-64. The petitioner, The Madurai District Central Co-operative Bank Limited, was assessed to income-tax and super tax which amounted to Rs. 23,845.47. The tax was computed on a total taxable income of Rs. 51,763, while actually,…