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1965 (10) TMI 49 - GUJARAT HIGH COURT
... ... ... ... ..... ore fully and effectively than the construction canvassed on behalf of the Revenue. We are, therefore, of the view that the exemption granted under entry 14 of Schedule A is available not only where cooked food and non-alcoholic drinks are served by an eating establishment (other than that falling within the excepted category) for consumption in or immediately outside the eating establishment but also where cooked food and non-alcoholic drinks are served by the eating establishment at any other place outside the eating establishment for consumption or are served at the eating establishment for consumption at any other place outside the eating establishment. Our answers to the questions referred to us, therefore, are Question (a) in the affirmative and question (b) in the negative. In view of our answer to question (b), the two subsidiary questions under question (c) do not arise. The State will pay the costs of the reference to the applicants. Reference answered accordingly.
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1965 (10) TMI 48 - SUPREME COURT
Sales tax liability - Held that:- Appeal dismissed. We cannot discern any intention in Act 12 of 1957 to destroy the rights and liabilities acquired or incurred under the Madras General Sales Tax Act. The Second Schedule reproduced above shows that the intention was to preserve old rights such as registration and licences issued under the old Act. In our opinion, if the Legislature had the intention to override the right attached to the liability under section 3(5) of the Madras General Sales Tax Act, it would have used more clear and precise words.
In the result we agree with the High Court that the turnover of Rs. 7,757.54 is not liable to taxation.
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1965 (10) TMI 40 - SUPREME COURT
Whether the appellant-company is liable to pay sales tax assessed under the Hyderabad General Sales Tax Act, 1950, on the price of coal supplied to allottees outside the taxing State pursuant to directions of the Coal Commissioner issued under the Colliery Control Order, 1945?
Held that:- The appeals are allowed and the order passed by the High Court is set aside. It is declared that the turnover of the Company amounting to Rs. 1,75,67,286-1-2 for the year 1954-55, Rs. 1,17,39,636-11-8 for the year 1955-56 and Rs. 1,55,18,957-6-5 for the year 1956-57 was exempt from liability to sales tax under the Hyderabad General Sales Tax Act, 1950.
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1965 (10) TMI 33 - BOMBAY HIGH COURT
Affidavit verifying petitions ... ... ... ... ..... much as it was of the opinion that the plea of waiver was raised by the counsel on the basis of the records in the petition. In our opinion, Mr. Mody is right in his contention that the plea of waiver must be expressly raised in the pleadings, and in absence of a plea, it should not be allowed to be raised in arguments. However, it is not necessary to go further in this matter inasmuch as the Tribunal has not decided this point, nor ha raquo the application been disposed of on this ground. On the other hand, the Tribunal has dismissed respondent No. 2 s application on merits. For the reasons already stated, in our opinion, the Tribunal was right in dismissing respondent No. 2 s aforesaid application No. 37 of 1965. In the result, for the reasons stated above, the appeal is liable to be dismissed, and is hereby dismissed with costs in favour of respondent No. 1. No order as to costs of the other respondents. Interim stay orders are hereby vacated. No order as to costs thereon.
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1965 (10) TMI 24 - SUPREME COURT
Whether Tribunal was right in holding that the sum of $ 117,000,000 appearing in the balance-sheet of the assessee-company under the head ' Capital paid in Surplus ' and constituting the excess of the book value of the assets over the face value of the shares represented premium realised from the issue of the shares as contemplated by rule 3 of Schedule II of the Business Profits Tax Act, 1947 ?
Whether the Tribunal was right in holding that the fact that the amount in question had been built up out of capital and not out of taxed profits would not prevent it from being reserve as contemplated by sub-rule (1) of rule 2 of Schedule II of the Business Profits Tax Act?
Whether the Tribunal was right in holding that the sum of $ 29,000,000 odd, $ 43,000,000 odd, $ 56,000,000 odd and $ 73,000,000 and odd for the respective years appearing in the balance-sheets of the assessee as " earned surplus " would be treated as a reserve within the meaning of sub-rule (1) of rule 2 of Schedule II of the Business Profits Tax Act ?
Held that:- The assets received by the assessee-company are real and tangible assets. It is only for accountancy purposes that a part of the value of the assets is allocated to the par value of the shares and the balance to the " Capital Surplus brought in " account. The High Court was, therefore, right in holding that the account " Capital Surplus brought in " in the balance-sheet represents premium realised from the issue of its shares within the meaning of rule 3, or in the alternative represents reserves not allowed in computing the profits of the company for the purpose of the Indian Income-tax Act, 1922.
The High Court was therefore right in holding that the " earned surplus " represented reserves. The method in which the accounts are maintained in the light of the accountancy practice clearly indicates that, at the end of each year, there have been specific appropriations in tne account, and the conditions which this court regarded as essential in Century Spinning & Manufacturing Company's case for constituting the fund into reserve are fulfilled. Appeal dismissed.
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1965 (10) TMI 23 - SUPREME COURT
Whether under international law the assessee is immune from taxation in respect of the assessment year 1950-51?
Whether, having regard to the said covenant dated January 25, 1950, he, was not liable to tax under the Indian Income-tax Act, 1922?
Whether the interest received by the assessee in respect of 3 per cent. Nizam Government income-tax free loan 1360-70 Fasli of the face value of ₹ 1,45,200, the 2 1/2 per cent. Nizam Government Income-tax free development loan 1364-69 Fasli of the face value of ₹ 1.05 crores, the 2 1/2 per cent. Nizam Government loan 1363-73 Fasli of the face value of ₹ 200, and the 2-3/4 per cent. Hyderabad Government loan 1384 Fasli of the face value of ₹ 8 crores was exempt from tax?
Whether, on the facts of the case, the interest in respect of securities of the Government of India or of the Government of Hyderabad (including Nizam Government Promissory Note), which became payable to the assessee under the trust created by him known as ' the family trust ' was exempt from payment of tax in his bands ?
Whether the interest in respect of securities of the Government of India or of the Government of Hyderabad (including Nizam Government Promissory Note), which became payable to the assessee under the trust created by him known as ' the miscellaneous trust ', was exempt from payment of tax in his hands ? "
Whether, on the facts of the case, the interest at ₹ 1,97,180 on the Government of India securities should be regarded as having accrued in the Hyderabad State and therefore chargeable at the rate obtaining under the Hyderabad Income-tax Act?
Held that:- Hyderabad State did not acquire international personality under the international law and so its Ruler could not rely upon international law for claiming immunity from taxation of his personal properties
The High Court went wrong in holding that the income received by the assessee up to January 26, 1950, was not liable to tax under the Act.
If the assessee was not liable to pay tax under the State law, his non-liability related only to the domain of exemption. It would be incongruous to say that a person exempted from taxation was paying a nil rate. This would be an obvious attempt to subvert the scheme of the Order to reach a desired result. We, therefore, hold, agreeing with the High Court, that the assessee was not entitled to any exemptions under the said Order.
The said securities were held by the assessee as his private property and, therefore, he was clearly entitled to this exemption. We, therefore, hold, agreeing with the High Court, that the assessee was entitled to the exemption under the said item in respect of the said securities.
The income from the said two trusts did not earn the exemption under item 8 of the said notification, thus in regard to the interest receivable by the assessee from the said securities and loans, he was not liable to pay income-tax, but he was not exempt from payment of super-tax under item 8 of the said notification.
The said interest accrued only in British India. Though the assessee raised the question of the correctness of the view expressed by the High Court in the special leave petition, at the time of arguments, the learned counsel for the assessee did not press this point. Therefore, the opinion expressed by the High Court in this regard stands.
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1965 (10) TMI 22 - SUPREME COURT
Whether the income arising from property settled upon trust under the deed of settlement, dated September 14, 1950, or any part thereof is exempt from tax under section 4(3)(i) of the Indian Income-tax Act, 1922 ?
Held that:- Clause 3(d)(v) of the trust deed on which reliance is placed is only an expression of desire on the part of the settlor that the income of the trust should be spent equally on the four religious and charitable purposes mentioned in the deed. The said desire does not amount to setting apart by the trustees of the whole or a part of the income from the trust for purposes within the taxable territories. Indeed, clause 3(d) of the trust deed indicates the trustees have no power to set apart or accumulate the income for any of the purposes mentioned in the trust deed till after the death of the settlor. We cannot, therefore, hold on the material placed before us that the trustees have set apart the accumulated income for purposes within the taxable territories. Appeal dismissed.
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1965 (10) TMI 21 - SUPREME COURT
Whether the sum of ₹ 27,06,593 was assessable as a profit of the assessee-company of the previous year relevant to the assessment year 1949-50 in accordance with the fourth proviso to section 10(2)(vii) of the Indian Income-tax Act ?
Held that:- Prima facie, the allowances, deductions and deemed profits shall be ascertained in terms of the statutory provisions, unless the statute itself accepts the principles of commercial accountancy in a particular case. In the present case, the compensation to the extent mentioned in the proviso received only in the accounting year was by fiction treated as profit. There is, therefore, no scope for holding that the expression " received " means " receivable ".
For the aforesaid reasons, we hold that, as the compensation for the loss of machinery and buildings by fire was not actually received by the company during the accounting year, the said amount could not be assessed during the assessment year. Appeal dismissed.
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1965 (10) TMI 20 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, in computing the net wealth of the assessee, the arrears of tax as determined as per notice under section 18A of the Indian Income-tax Act for the two assessment years under consideration constitute a debt owed by the assessee within the meaning of section 2(m) of the Wealth-tax Act as on the valuation date ?
Held that:- High Court was right in answering the question in favour of the assessee. A debt is owed when an order under section 18A(1) is passed and a notice of demand sent. The amount mentioned in the notice begins to be owed till a new figure is substituted by the action of the assessee. On the valuation dates in these appeals, the assessee had not taken any action under section 18A(2), and consequently, the amounts mentioned in the notices of demand were debts owed within section 2(m) of the Wealth-tax Act on the valuation dates. Appeal dismissed.
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1965 (10) TMI 19 - SUPREME COURT
Whether the sum of ₹ 16,309/Rs. 39,515 received by the assessee from the syndicate is 'income' for the purpose of the Indian Income-tax Act, 1922 ?
If the answer to the above question is in the affirmative, whether the income-receipt is exempt under section 4(3)(vii) of the Act by reason of its being of a casual and non-recurring nature ?
Held that:- The appellant has received certain amount under a contract with the syndicate, and if that amount was income, the fact that the person who paid it may claim refund will not deprive it of its character of income in the year in which it was received. The contention that this income was of a " casual and non-recurring nature " was abandoned before the Tribunal. It cannot be said that the receipt was produced by chance or was accidental, fortuitous or from unforeseen sources of income. Assuming that the amounts sought to be included as income were paid as a result of some mistake on the part of the syndicate, they have not the characteristic of casualness, nor is it suggested that they are non-recurring. Appeals dismissed
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1965 (10) TMI 18 - SUPREME COURT
Whether the two amounts were rightly excluded from the assessable agricultural income for the two assessment years?
Held that:- The High Court was thus right in holding that there was no sale in the years relevant to the assessment years for which the tax was demanded. The sale had taken place in the earlier years over which the Agricultural Income-tax Act did not operate. The appeals will therefore be dismissed with costs.
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1965 (10) TMI 17 - SUPREME COURT
Whether the scheme of annuity deposit incorporated in Chapter XXII-A is invalid?
Held that:- The argument that the scheme of annuity deposit makes an unlawful discrimination between taxpayers is also devoid of force. Article 14 of the Constitution guarantees equality before the law, and equal protection of the laws. But thereby the power of the legislature to make a reasonable classification of persons, objects or transactions for attaining certain objectives is not excluded.
The legislature is apparently of the view, having regard to the life span in our country, capacity to engage in gainful employment and other relevant circumstances, that the latter should be exempted from payment of additional tax. Every taxpayer who is otherwise required to make a deposit is permitted to declare his option under section 280X(1) and once he does so, he is not liable to make the annuity deposit. Such a taxpayer will be obliged to pay income-tax on his total income. Only a section out of this class of taxpayers are exempted from liability to pay additional income-tax.. It is difficult to regard the provision exempting this class of persons from liability to pay additional tax as depriving other taxpayers below the age of seventy who have exercised the option under section 280X(1) of the guarantee of equal protection of the laws. The classification is prima facie reasonable, and the petitioner has placed no materials before us to prove that it is not genuine or has no rational nexus to the object sought to be achieved by the Parliament. Appeal dismissed.
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1965 (10) TMI 16 - SUPREME COURT
Whether section 10(2)(vib) was not repugnant to article 14 of the Constitution, and that the transaction amounted to transfer within section 10(2)(vib)?
Held that:- The legislature perhaps presumes that if the machinery is offered to the Government for sale, the Government will only buy it at a price which will take into consideration the rebate taken by the assessee. In our opinion, therefore, it has not been established that section 10(2)(vib) violates article 14 of the Constitution.
This case has no relevance to the question of the interpretation of the words "sold or otherwise transferred" in the latter part of section 10(2)(vib). Appeal dismissed.
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1965 (10) TMI 15 - SUPREME COURT
Whether there is any evidence on record to justify the finding of the Tribunal that the assessee failed to prove that they had suffered speculation losses to the tune of ₹ 1,58,080 ?
Whether the loss suffered by the assessee in speculation, viz., ₹ 1,58,080, is an admissible deduction under the Indian Income-tax Act ?
Held that:- The Income-tax Appellate Tribunal passed its order in appeal under section 33 of the Act on July 2, 1951, and the application under section 66(1) was dismissed by the Tribunal on October 20, 1951. A petition under section 66(2) was moved in the High Court on April 15, 1952, and that petition was disposed of on December 11, 1957. This court was then approached for special leave on March 31, 1958, and the printed record which runs into no more than 81 pages was sent by the High Court to this court in 1964. The High Court, as we have already stated, called for a statement of the case in respect of one question, and we are informed at the Bar that the reference is still pending. These proceedings relate to assessment for the year 1945-46. More than twenty years have elapsed since the end of the year of account and more than fourteen years have gone by since the Tribunal disposed of the appeal. It is a matter of regret that the end of assessment proceedings is not yet in sight. It is hardly necessary to say that delays of this nature in the hearing of cases are apt to bring the administration of justice into contempt. Appeal dismissed.
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1965 (10) TMI 14 - SUPREME COURT
Whether on a true construction of the Raigarh Darbar Notification No. 89/44/D/Raigarh dated July 31, 1944, section 34 of the Indian Income-tax Act, 1922, as amended by the Income-tax and Business Profits Tax (Amendment) Act, 1948, was applicable to the proceedings taken in the present case ?
Held that:- . The question of construction now raised would not arise on the basis the judgment was given by the Tribunal. Furthermore, the Tribunal definitely refused to frame the question on the basis of merger of the State in India on January 1, 1948, and that order has become final as its correctness was not challenged by the revenue authorities in further proceedings. The question now raised by the learned Additional Solicitor-General is not a question that is involved in the question framed. It really turns on a question of fact as to which, of course, no reference could be made by the Tribunal to the High Court.
It is not contended that if the date of merger was January 1, 1948, the question framed can be answered to the advantage of the revenue authorities. In fact we were not asked to answer that question on the basis that the merger took place on January 1, 1948. The question must, therefore, be answered in the affirmative. Appeal dismissed.
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1965 (10) TMI 13 - SUPREME COURT
Whether in the facts and circumstances of the case the Tribunal is right in holding that the Hindu undivided family represented by Sri Shyam Sundar Patnaik in the instant case, is a Hindu undivided family consisting of brothers only ?
Held that:- For the purpose of interpreting clause B, we must incorporate the Explanation (i) in the expression "consisting of brothers only" and by so doing the conclusion is inevitable that an undivided family consisting of sons of the deceased brothers for the purpose of taxation under the Orissa Agricultral Income-tax Act would be regarded as one consisting of "brothers only." Appeal dismissed.
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1965 (10) TMI 12 - SUPREME COURT
Whether section 13 of of the Bombay Sales Tax Act, 1946 impliedly bars the suit?
Held that:- Section 13 of the Act does not create an implied bar and the High Court is right in holding that the suit was competent.
The only point that remains it regarding the date of the knowledge of the plaintiff. Both courts below have found that the plaintiff came to know of the mistake on December 22, 1952, the date of the promulgation of the Governor's Ordinance. This is a concurrent finding of fact and the learned Solicitor-General has not shown us any good ground for disturbing this concurrent finding of fact. Appeal dismissed.
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1965 (10) TMI 11 - SUPREME COURT
Whether a suit for the refund of sales tax assessed under a provision of the Madras General Sales Tax Act, 1939 (IX of 1939), declared to be ultra vires the powers of the State Legislature would lie?
Held that:- Article 96 of the Limitation Act prescribes a period of limitation of 3 years for relief on the ground of mistake when the mistake became known to the plaintiff. When did the plaintiffs come to know of the mistake in the present case ? In the plaint it is alleged that the plaintiffs came to know of the mistake when the decision in Gannon Dunkerley's case 2 was pronounced by the High Court of Madras on April 5, 1954. The respondent in the written statement did not deny that fact. The suit was filed on March 23, 1955, which was within 3 years from the date of the said knowledge and, therefore, it was clearly within time under article 96 of the Limitation Act.
In the result, the appeal is allowed
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1965 (10) TMI 10 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was actual delivery of the commodity within the meaning of Explanation 2 to section 24(1) of the Indian Income-tax Act, 1922 ?
Whether, on the facts and in the circumstances of the case, the term 'scrips' in Explanation 2 to section 24(1) of the Indian Income-tax Act, 1922, can refer to scrips pertaining to any commodity or to stocks and shares alone ?
Held that:- We need not express an opinion at this stage on the soundness of the view of the Appellate Tribunal in the present case and of are of the opinion that fairly arguable questions of law arise and the High Court should have directed the Appellate Tribunal to state the case and refer it to the High Court. Accordingly, the appeal is accepted and we direct the Appellate Tribunal to state the case and refer it to the High Court.
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1965 (10) TMI 9 - SUPREME COURT
What is the intent required in a case coming under Section 167(81) and whether such intent can be said to arise at all in a case where the import is complete and the prohibited goods are in the possession of a third person who had nothing to do with the import?
Held that:- In the view that we have taken of the meaning of Section 167(81) it follows that on facts found Sitaram Agarwala was concerned in dealing with prohibited or restricted goods. It also follows on facts found that he had the necessary knowledge and intent to evade the prohibition or the restriction even though he dealt with the goods after the smuggling was over and was not in any way concerned with actual smuggling. He would therefore be guilty under Section 167(81) of the Act. We therefore allow the appeal, set aside the order of acquittal made by the High Court, restore the order of the Presidency Magistrate and confirm the sentence passed on Sitaram Agarwala by the Magistrate.
It also follows on facts found that Wang Chit Khaw is guilty under Section 167(81) inasmuch as he was dealing with prohibited or restricted goods and had the necessary knowledge and intent as required under that section. We therefore allow the appeal, set aside the order of the High Court, restore that of the Presidency Magistrate and confirm the sentence passed on him by the Magistrate.
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