1982 PLP (Trib (PTD)

In these three departmental appeals, the solitary objection relates to the method of working out the levy of surcharge by the learned Appellate Assis tant Commissioner. In view of common objections arising out of the similar facts, the three appeals are being disposed of by a combined order. In the assessment year 1977‑78 the Income‑tax Officer proceeded from the total income (amount before charging Workers' Participation Fund) amounting to Rs.7,791,

994. From this income the Income‑tax Officer deducted the following amounts Considering theca to be retained income: Rs Rs Total Income 7,791,994 (i) Amounts transferred to machinery replacement reserve . 2,000,000 (ii) Exchange fluctuation reserve 122.453 (iii) Un-appropriated profit and loss account balance Total 174,800 2,297,253 Income liable to surcharge 5,494,741 The appellant preferred an appeal before the learned Appellate Assistant Commissioner who proceeded on the basis of a Chart submitted to her by the assessee by adopting the income before tax shown as per books at Rupees 7,342,

148. For working out the retained income she has reproduced the statement given by the learned Authorised Representative of the respon dent and appears to have thus, proceeded on the basis of book profit before tax, instead of income assessed as Rs. 7,791,994 as correctly adopted by the Income‑tax Officer. Further working of the learned Appellate Assistant Commissioner, is not available indicating the manner in which the actual retained income is to be worked out and surcharge calculated on the balance of income (un-retained). In the charge year 1977‑78 she appears to have inter alia, treated tax provision of Rs. 32 lacs as retained income which appears to be wrong because according to the balance‑sheet the provision for income tax appears to have been evolved as under: Rs. (i) Opening balance 2,639,739 (ii) Provision made during the year 1977‑78 3,200,000 Less : Payment of tax made 5,839,739 3,414,736 Balance shown as provision for Income‑tax 2,425,000 As a matter of fact, for calculating the surcharge we have only to consider the total income of the year under consideration and then deduct therefrom the amounts retained for meeting working capital requirements and or for capitalisation. On the balance income‑tax is calculated at the appropriate rate and then 10% of this amount of such tax represents the surcharge pay able. We may also mention that the learned Appellate Assistant Commis sioner has not properly appreciated the ratio of decision laid down in the Tribunal's order, reported as (1979) 40 Taxation 47 (Trib.). In this decision the amount of tax paid is not considered as retained income because once the payment is made there remains no income retained in the hands of the assessee. On the other hand, if from the total income of the relevant year a provision is made for taxes, then such an amount remaining available with assessee could be treated as retained income. This provision normally appears in the balance‑sheet as liability for payment of taxes. Any other amounts brought forward from proceeding years or appropriations made therefrom are not taken into consideration for purposes of working out the surcharge. In all the three years under appeal, the learned Appellate Assistant Com missioner has not given any definite finding with reference to the amounts of surcharge calculated by the Income‑tax Officer. The order has to be definite and a speaking are, inasmuch as 'it should indicate clearly the total income the amount or amounts considered as retained income, the balance income (not retained) and thereafter, the calculation of surcharge. In the assessee at year 1978‑79 the learned Appellate Assistant Commissioner has simply observed that surcharge, should be levied on the basis of computation statement and in 1979‑80, by keeping in view the Tribunal's decision. Before making these observations she had also reproduced the statement submitted by the assessee, a portion of which has also been considered by us, as discussed. The aforesaid statement is confusing and does not indicate the actual amounts of surcharge and the manner in which the surcharge should actually be calculated as against that of the Income‑tax Officer, in respect of any of the years under consideration. We are, thus, of the opinion, that the case should go back to the learned Appellate Assistant Commissioner with the directions that the amounts of surcharge should be calculated as provided in law and keeping in view the decision of the Tribunal for each year separately. The order of the learned Appellate Assistant Commissioner on this issue, therefore, stands vacated for making the computations afresh as indicated above. In the result, the three departmental appeals are disposed of as indicated above. Case remanded.