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1979 (1) TMI 20 - BOMBAY HIGH COURT
Investment Company, Substantially Interested ... ... ... ... ..... m the loans advanced by it being an unearned income, the company could be classified as an investment company. It is not possible for us to read the observations of the Supreme Court as meaning that the Supreme Court adopted the definition cf investment company given by Jowitt. We have gone through the definition from Jowitt s Dictionary and we find that the definition makes reference to ss. 257 to 264 of the Income-tax Act, 1952 (U.K.). It is obvious that the definition is based on the provisions of the relevant Income-tax Act, 1952 (U.K.) and the provisions thereof cannot be imported into the provisions of our Act. We are, therefore, unable to accept the contention advanced by Mr. Joshi that the Tribunal was in error in holding that the company was not an investment company within the meaning of the expression in s. 109(ii) of the Act. Consequently, the question referred to us must be answered in the negative and in favour of the assessee to get the costs of this reference.
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1979 (1) TMI 19 - ALLAHABAD HIGH COURT
Amounts Deductible ... ... ... ... ..... ty, with the risk of liability to pay damages, should at times be committed. Hence it was held that payment of such damages as a result of breach of warranty was incidental to the carrying on of the assessee s business and the claim was an admissible deduction in computing the profits under s. 10(1) of the Act. There is another decision of that very High Court on almost similar facts in Govind Choudhury and Sons v. CIT 1971 79 ITR 493 (Orissa). In this behalf reference may also be made to a decision of the Madras High Court in Hind Mercantile Corporation Ltd. v. CIT 1963 49 ITR 23 (Mad) and of the Delhi High Court in R. C. Jain v. CIT 1973 91 ITR 557. We are in respectful agreement with the aforesaid decisions and on the facts found by the Appellate Tribunal we agree with the view taken by it. Hence, for both these years the questions referred are answered in the affirmative, against the department and in favour of the assessee. There shall, however, be no order as to costs.
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1979 (1) TMI 18 - BOMBAY HIGH COURT
Manufacture Or Produce, New Industrial Undertaking, Tax Holiday ... ... ... ... ..... o certain customers, undertake to produce and supply it at the site itself, and, therefore, the site where the manufacturing process is carried on would be immaterial or irrelevant for the purpose of determining whether the product of the manufacturing process can be described as an article. In our view, since the end-product of the piling process is something which has an independent existence and is an independent entity and is normally described as a pile, it is an article for the purpose of s. 84(2)(iii) of the Act. It is brought into being by a special process of production. Therefore, in our view, the learned third Member and the learned Accountant Member had taken a correct view when they held that the assessee-company had qualified for earning the benefit of the provisions of s. 84(1) of the Act. The question referred to us must, therefore, be answered in the affirmative in both the parts and in favour of the assessee. The assessee to get the costs of this reference.
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1979 (1) TMI 17 - MADHYA PRADESH HIGH COURT
Net Wealth, Wealth Tax ... ... ... ... ..... ng the net wealth of an individual, there shall be included, as belonging to that individual This case is not reported as it merely follows the decision in 91 ITR 135 (MP). (a) the value of assets which on the valuation date are held-... (v) by the son s wife, or the son s minor child, of such individual, to whom such assets have been transferred by the individual, directly or indirectly on or after the 1st day of June, 1973, otherwise than for adequate consideration ......... This sub-cl. (v) was inserted by the Taxation Laws (Amend.) Act, 1975, and has come into effect from 1st April, 1976. The gifts in question are gifts made in 1958. Apparently, this clause is not attracted and, therefore, it could not be said that this amount standing in the name of the grandsons could be added to the wealth of the assessee. Consequently, our answer to both the questions referred to us is in the affirmative. In the circumstances of the case, parties are directed to bear their own costs.
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1979 (1) TMI 16 - CALCUTTA HIGH COURT
Certificate Proceedings ... ... ... ... ..... ice of certificate proceedings as substantially correct. Defendant No. 3 must have been put to this difficulty by defendants Nos. 1 and 2 by not disclosing the correct facts at the time of sale of the said property and for that I have all the sympathy for them. Be that as it may, the plaintiff s right cannot in any way be affected by the said sale. As such I am of the opinion that the plaintiff is entitled to enforce the charge as prayed for in the plaint. I answer the issues in the manner following I answer issue No. 1 in the affirmative. In view of the fact that defendants Nos. 3 and 4 have led no evidence, so far as issue No. 2 is concerned, I answer the same in the negative. Even assuming I answered question No. 2 in the positive that would not have made any difference in this case in view of the law and facts as discussed above. I pass a decree in favour of the plaintiff in terms of prayers (c), (d) and (h). There will be a stay of the operation of the order for a week.
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1979 (1) TMI 15 - MADRAS HIGH COURT
Business Expenditure, Urban Land Tax ... ... ... ... ..... that the assessee can be proceeded against for the arrears of land revenue. Thus, having regard to the scheme of the relevant Act which levies urban land tax, it is clear that there is no question of any accrual of the liability every year by itself. The amount becomes payable only as and when it is demanded. In the light of this decision it would follow that the amounts accrued as liability only in the year under consideration. The Tribunal is wrong in proceeding as if the amounts could have been claimed as deduction even earlier if provision had been made. Such a provision could not have been made because there would be no liability as such. The provision, if any, would only be in respect of a contingent liability. If no notice was issued then there would be no liability as such. Hence, in the light of this decision, the question referred has to be answered in the affirmative and in favour of the assessee. The assessee will be entitled to its costs. Counsel s fee Rs. 500.
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1979 (1) TMI 14 - BOMBAY HIGH COURT
Reserve, Super Profits Tax ... ... ... ... ..... the general reserve and the tax exempt dividend reserve. It is not necessary for us to deal with these questions separately in the view which we have taken in Income-tax Reference No. 69 of 1970 Parke Davis (India) Ltd. v. CIT Having regard to our decision in that case, we answer the questions as follows Question No. 1-Reserve for terminal pay of Rs. 85,859 is includible in the capital computation for surtax purposes. Question No. 2-Reserve for bad and doubtful debts of Rs. 1,08,099 is includible in the capital computation for surtax purposes. Question No. 3-Reserve for staff gratuity of Rs. 4,95,276 is includible in the capital computation for surtax purposes. Question No. 4-General reserve of Rs. 91,47,687 is properly includible in the capital computation for surtax purposes. Question No. 5-The tax exempt dividend reserve of Rs. 7,43,845 is properly includible in the capital computation for surtax purposes. The assessee to get the costs of this reference from the revenue.
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1979 (1) TMI 13 - BOMBAY HIGH COURT
... ... ... ... ..... ncerned, our view must be similar. There is no warrant for reducing the amount of interest earned by the French bank from Government or local authorities or Indian concerns by any amount by way of interest paid or by way of management expenses. If that be the correct interpretation to be put on the clause, then the Tribunal was right in upholding the calculations made by the AAC, but this would be so in view of the fact that the assessee had accepted these calculations and not carried the matter in further appeal. It is on that footing that the Tribunal s decision would be required to be upheld. The matter is not capable of any further elaboration. Accordingly, the two questions referred to us are answered as follows Question No. 1 In the affirmative and in favour of the assessee. Question No. 2 In the affirmative and in favour of the assessee, but on the footing we have earlier indicated in this judgment. The Commissioner will pay the costs of the reference to the assessee.
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1979 (1) TMI 12 - BOMBAY HIGH COURT
... ... ... ... ..... st be decisively rejected and the view taken by the Tribunal approved. Perusing the two agreements, it is clear to us that the remuneration paid to the assessee by the managing agency company under cl. 4 of the agreement dated December 20, 1961, fell under the head Salaries . It is equally clear that the deduction claimed by the assessee was allowable since it satisfied all the requirements of s. 16(v) as it stood for the three relevant years. In this view of the matter, we will proceed to answer questions Nos. 1, 2 and 8 observing that it is unnecessary to answer questions Nos. 3 to 7. In the result, the three questions are answered as follows Question No. 1-In the affirmative. Question No. 2-In the affirmative and in favour of the assessee. Question No. 8-In the affirmative and in favour of the assessee. Questions Nos. 3 to 7 need not be answered in view of the answers given to questions Nos. 1, 2 and 8. The Commissioner will pay the costs of the reference to the assessee.
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1979 (1) TMI 11 - MADHYA PRADESH HIGH COURT
Property Deemed To Pass, Supplementary Statement ... ... ... ... ..... eferred to above make it clear that if the statement of case is not complete on the basis of which an answer to the legal questions raised could be given, this court also, exercising powers under s. 64(5) of the Act, could direct the Tribunal to send an additional statement of case. As discussed earlier, the statement of case submitted by. the Appellate Tribunal does not indicate the determination of the question of fact about the acquisition of property which according to us is necessary to determine. the question of law raised in this reference. We, therefore, feel that a further statement of case from the Tribunal is necessary. It is, therefore, directed that the Appellate Tribunal will submit an additional statement of case indicating their determination of the question about the acquisition of property in the light of the discussion given above. In the circumstances of the case, parties are directed to bear their own costs so far as the present proceedings are concerned.
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1979 (1) TMI 10 - BOMBAY HIGH COURT
... ... ... ... ..... f the assessed profits for the purposes of the I.T. Act which he was not entitled to do. As found by the Tribunal, the value of the assets of the company entered in the balance-sheet was Rs. 13,50,000 and the company was, therefore, entitled for the purposes of determining its own commercial profits to take into account adequate amount of depreciation with reference to this value in its books. As the Tribunal has found, neither the board of directors nor the auditors had found any fault with the depreciation in the books. The Tribunal had also found that as to what was the proper value of the assets was the question which was not free from doubt. In these circumstances, the Tribunal was entitled to take the view that the ITO was not justified in making the order under s. 23A(1) of the Act. Having regard to the facts and what we have observed above, the question referred must be answered in the negative and against the revenue. The assessee to get the costs of this reference.
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1979 (1) TMI 9 - MADRAS HIGH COURT
Search And Seizure ... ... ... ... ..... 19 of 1978 have been filed by Devarajan and the Federation, respectively, for permitting them to raise the additional grounds in W.P. Nos. 828 of 1977 and 2120 of 1977. We have considered all the grounds. They are ordered. W.M.P. No. 5991 of 1978 has been filed to fix an early date for the hearing of W.P. No. 828 of 1977. No order is necessary on this as the matter is disposed of now. W.M.P. No. 5992 of 1978 has been filed by the department for, an injunction against respondent No. 1 and the writ petitioner in W.P. No. 828 of 1977, from interfering with the enquiries and investigations in connection with the assessment proceedings of the Federation pending W.P. No. 828 of 1977. No order is necessary on this, as W.P. No. 828 of 1977 has been dispose of. W.M.P. No., 5407 of 1978 has been filed to clarify the order dated June 24, 1977, made in W.P. No. 828 of 1977, which has already been ordered by his Lordship, the Chief justice and Ramanujam J. on December 13, 1978. No costs.
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1979 (1) TMI 8 - BOMBAY HIGH COURT
Company, Reserves, Super Profits Tax, Surtax ... ... ... ... ..... estion referred to us for the assessment year 1963-64 as also to the question No. 1 for the two later assessment years, the answers must be in favour of the assessee. In this view of the matter, the questions referred to us are answered as follows For the assessment year 1963-64, the question is answered in the affirmative and in favour of the assessee. For the assessment years 1964-65 and 1965-66 Question No. 1 is answered in the affirmative and in favour of the assessee. Question No. 2.-The Tribunal was not right in holding that the addition to earned surplus was not a reserve as on the first day of the previous year in our view, such addition would be required to be related back and added to the amount on the first day of the previous year. The answer is in favour of the assessee and against the view expressed by the Tribunal. The assessee has fully succeeded in this reference and, accordingly, the Commissioner is directed to pay the costs of the reference to the assessee.
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1979 (1) TMI 7 - MADRAS HIGH COURT
Business Expenditure ... ... ... ... ..... The result is that the first two questions have to be answered and are answered in the affirmative and against the assessee. As regards the third question it questions the direction for allocation as made in by the Tribunal in para. 39 of its order. The learned counsel for the assessee was not in a position to show as to how the direction given by the Tribunal was in any manner wrong. The Tribunal has only followed the same method in regard to the managing agency commission, as the assessee itself had followed in respect of the managing agency commission and the head office expenses in the earlier years and the head office expenses other than the managing agency commission in these years. The Tribunal cannot be said to have committed any error in giving the direction in para. 39 of its order. The third question is also answered in the affirmative and against the assessee. As the assessee has failed in the reference, the revenue is entitled to its costs. Counsel s fee Rs. 500.
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1979 (1) TMI 6 - CALCUTTA HIGH COURT
Business Expenditure, Legal Expenses ... ... ... ... ..... not at all appear in the said proceedings. It does not appear to us that the business exigencies required the assessee to fight the suit on all issues and perfect the title of Ramapada Gupta in the disputed shares. For the above reasons, this reference has to be decided in favour of the revenue. We answer the questions referred as follows Assessment year 1958-59. Question No. 1 is answered in the affirmative and in favour of the revenue. Question No. 2 is also answered in the affirmative and in favour of the revenue. Assessment year 1959-60. Question No. 1 is answered in the negative and in favour of the revenue. Questions Nos. 2 and 3 are both answered in the affirmative and in favour of the revenue. Assessment year, 1962-63. Question No. 1 is answered in the affirmative and in favour of the revenue. Question No. 2 is answered in the negative and in favour of the revenue. The reference is disposed of accordingly. There will be no order as to costs. C. K. BANERJI J.-I agree.
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1979 (1) TMI 5 - BOMBAY HIGH COURT
... ... ... ... ..... er by way of entrance fee is liable to be dissected and out of this amount Rs. 150 must be treated as a capital receipt and the balance of Rs. 350 must be treated as the income of the assessee. Accordingly, the question referred to us is answered as follows In respect of the assessment years 1963-64 and 1964-65, out of the amounts received on account of entrance fee from life members, Rs. 500 should be treated as a capital receipt and the balance of Rs. 2,000 should be treated as the income of the assessee. In case an ordinary member becomes a life member on payment of Rs. 2,000, the entire amount of Rs. 2,000 should be treated as the income of the assessee. In case the widow of life member becomes a life member on payment of Rs. 500, a sum of Rs. 150 out of this amount of Rs. 500 shall be treated as a capital receipt and the balance of Rs. 350 as the income of the assessee. The fair order in respect of costs in this case would be that the parties should bear their own costs.
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1979 (1) TMI 4 - MADRAS HIGH COURT
Developement Rebate ... ... ... ... ..... hinery, etc. It was observed at p. 599 It seems to us to be unarguable having regard to the meaning of manufacture that the process employed in converting boulders into small chips of stones with the aid of labour and machinery is not a manufacturing process. Surely labour is employed and something is converted into something else, a product which is of value and is used, and in that sense the chips are a new production as a result of a manufacturing process. Applying the same reasoning, after the rough castings are polished, the product is a new product which is utilised as component in internal combustion engines. The Tribunal has found that component parts are essential parts for internal combustion engines. We do not have any evidence to show that this conclusion of the Tribunal is in any manner unwarranted. We have, therefore, to answer the reference in the affirmative and in favour of the assessee. As the assessee is not represented, there will be no order as to costs.
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1979 (1) TMI 3 - MADRAS HIGH COURT
Charitable Trust, Exemptions ... ... ... ... ..... ions contemplated therein are cumulative or alternative ? 3. Whether the Appellate Tribunal was right in law in holding that paragraphs 2 and 4 in Form -No. 10 of the Income-tax Rules, 1962, prescribing the time-limit were beyond the powers of the rule making authority ? As far as questions Nos. 1 and 3 are concerned, the matter is covered by a decision of this court in Second ITO v. M. C. T. Trust 1976 102 ITR 138. Following the said decision, the questions have to be answered in the affirmative and in favour of the assessees. As far as question No. 2 is concerned, that was not the subject of consideration by the Tribunal and had not been raised at any stage. As the matter had not been considered by the Tribunal itself, we do not think that this question can be said to arise out of the Tribunal s order. Therefore, we return the reference as far as this question is concerned unanswered. The same are the answers in the other reference also. There will be no order as to costs.
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1979 (1) TMI 2 - SUPREME COURT
Interest paid by the respondent to creditors from whom it claimed to have borrowed monies on hundis - ITO merely stated his belief but did not set out any material on the basis of which he had arrived at such belief so that the court could decide for itself whether there was any material on the basis of which the ITO could reasonably entertain such belief - notice under s. 147(a) of the I.T. Act for reopening the assessment must in the circumstances be held to be void.
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1979 (1) TMI 1 - SC ORDER
Whether deduction under section 80M of the I.T. Act, 1961, is allowable on gross dividend or it is allowable only on net dividend arrived at after deducting the interest payable on moneys borrowed for the purpose of earning such dividend - Tribunal as a fact and which finding has become final, has held that no part of the borrowings was made for the purpose of earning dividend and hence there was no question of deduction - question of law not arise
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