SMITH KLINE & FRENCH [INDIA] LTD.ETC. vs COMMISSIONER OF INCOME TAX.

The Supreme Court addressed the question of whether surtax liability under the Companies Profits (Surtax) Act, 1964 is deductible in computing total income under Section 40(a)(ii) of the Income-tax Act. The Court held that the surtax is indeed a tax levied on the profits of a business, thus falling within the disallowance provisions of Section 40(a)(ii). Consequently, the Court upheld the decisions of the Income Tax Appellate Tribunal and the Kerala High Court, affirming the disallowance of the deduction for the assessment year 1976-77.