Judgment

KULDIP SINGH, J.

( 1 ) - The respondent-company obtained a term loan of Rs. 50,00,000. 00 from the National Grindlays Bank Ltd. The agreement dated 1/08/1964 provided for repayment of the loan in five instalments. The last instalment was to be paid on 31/07/1971. Thus the loan was to be paid back within the period of seven years from the date of the agreement. The question for our consideration is whether the repayment under the agreement was "during a period of not less than seven years" within the proviso to Rule l (v) of the Second Schedule to the Companies (Profits) Surtax Act, 1964 (the Act ).

( 2 ) THE Act imposed a surtax on so much of the chargeable profits of every company as exceeded the statutory deductions. "chargeable profits" were defined by Section 2 (5 of the Act to mean the total income as computed under the Income Tax Act, 1961 and adjusted in accordance with the First Schedule to the Act. "statutory deduction" was defined by Section 2 (8 of the Act to mean an amount equal to ten per cent of the capital of the company as computed in accordance with the provisions of the Second Schedule to the Act or an amount of Rs. 2,00,000. 00 whichever was greater. Rule