Commissioner Of Income-Tax vs Sundram Industries (P) Ltd.

The High Court of Madras addressed three questions regarding the computation of capital base and chargeable profits under the Income-tax Act. It affirmed the Tribunal's decision that the Income-tax Officer was incorrect in diminishing the capital base concerning deductions under Chapter VI. The Court also held that Rule 4 of the Second Schedule applies only to wholly exempt income and not to Chapter VI deductions. However, it reversed the Tribunal's ruling on the computation of chargeable profits, stating that only net dividends should be considered for deductions under Rule 1(viii) of the First Schedule, aligning with the precedent set in Distributors (Baroda) P. Ltd. v. Union of India. The civil appeals were allowed in part, with no costs awarded.