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Rule 1(viii) Schedule I of the Companies (Profits) Surtax Act, 1964 - Chargeable profits, computation of - Assessment years 1972-73 to 1975-76 - Whether in view of decision of this Court in CIT v. Pure Drinks (New Delhi) P. Ltd. [1989] (1989) 179 ITR 142, Tribunal was right in holding that under rule 1(viii), gross dividend and not net dividend which actually formed part of total income of assessee was to be excluded from total income of assessee computed for purpose of income-tax assessments - Held, yes Rule 4 Schedule II of the Companies (Profits) Surtax Act, 1964 - Computation of capital employed - Assessment years 1974-75 and 1975-76 - Whether in view of decisions in CIT v. Sundaram Industries (P.) Ltd. [1985] 151 ITR 769 (Mad.) and in CIT v. Travancore Electro Chemicals Industries Ltd. [1987] 167 ITR 359 (Ker.). Tribunal was correct in holding that deductions allowed under sections 80K and 80M of the Income-tax Act, 1961 could not be considered as sums not includible in total income for income-tax assessments and, therefore, would not fall for deduction under rule 4 for computing capital employed - Held, yes FACTS The Tribunal held that under rule 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 the income-tax assessments; and that deductions under sections 80 K and 80M allowed under Chapter VI-A of the Income-tax Act could not be considered as sums not includible in the total income for income-tax assessments and, therefore, would not fall for deduction under rule 4 of the Second Schedule to the Act, for computing the capital employed. HELD With regard to exclusion of dividend income, in view of of this court in CIT v. Pure Drinks (New Delhi) P. Ltd. [1989] (1989) 179 ITR 142 Tribunal was correct in holding that in computing the chargeable profits under rule 1(viii) of the First Schedule, 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…

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