JUDGMENT
B.N. Kirpal, J.
1. In respect of the assessment years 1972-73 to 1974-75, the Income-tax Appellate Tribunal, under section 256(1) of the Act, has referred the following two questions to this court :
“1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally right in holding that the claim of the petitioner-company for allowance of surtax in the computation of the assessment of the company not be claimed under the provisions of section 154 of the Income-tax Act, 1961 ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in rejecting the claim of the petitioner-company for allowance of surtax liability in the computation of its assessable income ?”
2. Briefly stated, the facts of the case, as found by the Tribunal, are as follows :
The reference applications pertain to the assessment years 1972-73 to 1974-75. The facts briefly are that by application under section 154 dated November 1, 1970, the assessed had claimed deduction of the surtax paid, amounting to Rs. 74,791 for the assessment year 1972-73, Rs. 1,13,303 for the assessment year 1973-74 and Rs. 68,641 for the assessment year 1974-75 in the computation of the assessable income of the assessed-company. The Income-tax Officer rejected the claim of the assessed for two reasons. Firstly, it was held that no mistake apparent from the record had arisen since no claim had been made by the assessed for deduction of the surtax paid in the return of income. Secondly, it was held that section 40(a)(ii) of the Income-tax Act, 1961, specifically prohibited deduction of such an amount in the computation of income from business or profession. The Income-tax Officer also noticed that the assessed had claimed deduction on the basis of the judgment of the Income-tax Appellate Tribunal, Bombay, dated February 24, 1975, in ITA No. 3068 (Bom) of 1972-73, but the same had been reconsidered and reversed by the Special Bench of the Bombay Tribunal in the case of M/s. Amar Dye Chemical Ltd. v. ITO (order dated December 1, 1977 in ITA No. 3643 (Bom) of 1974-75 pertaining to the assessment year 1970-71).
3. The assessed appealed to the learned Commissioner of Income-tax (Appeals). He, however, upheld the action of the Income-tax Officer. Thereupon the assessed came up in second appeal to the Tribunal. The Tribunal upheld the order of the learned Commissioner of Income-tax (Appeals) for two reasons : in the first place it was held that the question of deduction of surtax liability in the computation of income from business or profession was a highly debatable issue and, therefore, it could not be the subject matter of rectification under section 154. Secondly, even on merits, the Tribunal held that the claim of the assessed was rightly rejected by the Income-tax Officer and by the learned Commissioner of Income-tax (Appeals) on the basis of the decision of the Special Bench, Income-tax Appellate Tribunal, in the case of M/s. Amar Dye Chemical Ltd. wherein it was held that surtax paid could not be deducted while computing the income from business.
4. It is not necessary for us to have an elaborate discussion on the points in issue for the simple reason that identical questions were referred to this court in the case of Motor and General Finance Ltd. v. CIT [1992] 198 ITR 698 (I.T.R. Nos. 48 to 54 of 1982 vide this court’s judgment dated August 5, 1992), it was held that a claim for allowance of surtax as deduction in computing the assessment of the company could not be made under the provisions of section 154 of the Act.
5. In view of this conclusion with regard to question No. 1, the second question, dealing with the merits of the allowance, would not arise for consideration.
6. Question No. 1 is, therefore, answered in favor of the Department and question No. 2 is returned unanswered.
7. There will be no order as to costs.