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Case Laws
Showing 61 to 80 of 95 Records
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1966 (10) TMI 35 - SUPREME COURT
Whether the estimate of the income of the assessee confirmed by the Income-tax Appellate Tribunal rests upon irrelevant considerations and the estimate is not made in accordance with law ?
Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in sustaining both the additions of ₹ 41,142 as income from business and ₹ 7,000 as cash credits, and whether such addition does not result in double taxation ?
Held that:- Once the books of account of the assessees were rejected and the rate of gross profit earned by them was found unreliable, it was open to the Income-tax Officer to estimate the gross profit at a rate at which profit was earned in similar business by other merchants. We are unable to hold that the reasons recorded by the Tribunal in support of its order levying tax on profits computed on estimated turnover of ₹ 12 lakhs at the rate of 6.5 % were " irrelevant ".
The criticism made by the High Court that the Tribunal had " failed to perform its duty in merely affirming the conclusion of the Appellate Assistant Commissioner " is apparently unmerited. On the merits of the claim for exclusion of the amount of ₹ 7,000, there is no question of law which could be said to arise out of the order of the Tribunal. The assessees had credited Sampangappa with two sums of ₹ 6,000 and ₹ 1,000 in the months of November and December, 1950, respectively. It was clear that Sampangappa had not advanced at the material time any amount to the assessees. The explanation of the assessees was, therefore, untrue.
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1966 (10) TMI 34 - SUPREME COURT
Whether the assessee is entitled to both parts of the relief contemplated under section 25(3) of the 1922 Act in respect of the foreign business at Penang, Ipoh and Kambar?
Whether the assessee was entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from house properties owned by the foreign firm which was discontinued in the year of account?
Held that:- The High Court was in error in holding that the foreign business of the assessee was not charged under the provisions of the 1918 Act. The first question must, therefore, be answered in favour of the assessee and it must be held that the assessee is entitled to both parts of the relief contemplated under section 25(3) of the 1922 Act in respect of the foreign businesses at Penang, Ipoh and Kambar.
The assessee is entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from the house properties owned by the foreign firm which was discontinued in the year of account. Appeal allowed.
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1966 (10) TMI 33 - SUPREME COURT
Whether the profit of the bank on account of fluctuation of exchange arose in the course of trading operations of the bank or whether it was incidental to any such trading operation?
Held that:- The money changed its character of " stock-in-trade ". when it was " blocked " and " sterilised " and the increment in its value owing to the exchange fluctuation must be treated as a capital receipt. It has also been found by the Appellate Tribunal that the said amount of ₹ 3,97,221 was not utilised for internal banking operations within Pakistan and it is hence not possible to draw an inference that the bank realised any profit in the carrying out of its business. We accordingly hold that Mr. Hazarnavis is unable to make good his argument on this aspect of the case and the High Court was right in reaching the conclusion that the exchange difference of ₹ 1,70,746 was not assessable to income-tax. Appeal dismissed.
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1966 (10) TMI 32 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the Deputy Commissioner of Agricultural Income-tax was right in holding that the applicants were liable to be assessed to agricultural income-tax on the entire income from the Dubarry Group of Estates for the agricultural season 1950-51?
Held that:- With regard to the crops, which had already been harvested, the High Court has held that they do not constitute the agricultural income of the assessee. In returning this answer, the High Court was perfectly correct. From those crops, the income accrued to the respondent because he had purchased the ready harvested crops. Income in respect of those crops was not, therefore, derived by the respondent by any agricultural operations carried on by the respondent, or by performance by the respondent of any process ordinarily employed by a cultivator to render the produce raised or received by him fit to be taken to the market, or by the sale by the respondent of produce raised or received by it. The crops, which had already been harvested, were raised and removed from the land by the vendor from whom the respondent purchased these crops. The sale price received by the vendor might have been treated as agricultural income of the vendor who had raised the crops and sold these harvested crops to the respondent. In no case, could this income received by the respondent by sale of harvested crops purchased by it in that condition be treated as agricultural income received by the respondent. The appeal dismissed.
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1966 (10) TMI 31 - SUPREME COURT
Whether on a true interpretation of the various provisions of the Indian Income-tax Act, 1922, the Tribunal was correct in holding that speculation losses of the respondent-firm (assessee-firm) for the assessment years 1958-59 and 1959-60 should be set off against its speculation profit of ₹ 6,19,784 in its assessment for the assessment year 1960-61?
Held that:- Losses in speculative business are not to be taken into account when computing the total income, except to the extent to which they can be set off against profits from other speculative business. The first proviso, thus, clearly limits the applicability of the principal clause of section 24(1) ; and, when applied, it governs the manner in which the total income of the assessee is to be computed. In the case before us, the Income-tax Officer was clearly right in the assessment years 1958-59 and 1959-60 in not setting off the losses in the speculative business against the income earned in those years either from property or from ready business in kappas.
The only interpretation that can be placed on the words " any such loss " in this part of the second proviso is that this expression refers to the loss as determined for purposes of the principal clause of section 24(1) read with the first proviso, and, thus, does not comprise within it loss incurred in speculative business referred to in the first proviso. The fact that proviso (c) to section 24(2) envisages the existence of loss which has not been apportioned between the partners clearly strengthens our view that the second proviso to section 24(1) does not cover loss in speculative business, and, consequently, does not permit that loss to be apportioned between the partners. Thus, section 24(2) also leads to the same conclusion which we have arrived at above on the interpretation of the language of section 24(1).Appeal dismissed.
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1966 (10) TMI 30 - SUPREME COURT
Whether, on the facts of this case, an order under section 23A for the assessment year 1949-50 was validly made in the case of this company to which the provisions of the Public Companies (Limitation of Dividends) Ordinance, 1948, applied on the date of the annual general meeting but to which the Act replacing the Ordinance ceased to apply within the period of 6 months referred to in section 23A(1) ?
Held that:- In the first place, the repeal of the Ordinance under section 13 of the 1949 Act is immaterial, for, as we have already stated, section 23A has created a fiction of distribution of the undistributed income as dividend and the section further states that it would be deemed as if it was distributed on the date of the annual general meeting. Since the notional distribution contemplated by section 23A of the Act is as if the notional distribution took place at the date of the annual general meeting, it is the law which prevailed as on the date of the annual general meeting which has to be taken into account in considering the issue as to the legal validity of the order made by the Income-tax Officer. In the second place, Mr. S. T. Desai is not right in his contention that the effect of section 13 of the 1949 Act is to obliterate the Ordinance completely from the statute book. Appeal dismissed.
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1966 (10) TMI 29 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the sum of ₹ 75,000 or any part thereof could be treated as dividend under section 2(6A)(c) of the Indian Income-tax Act, 1922 ?
Held that:- We discharge the answer recorded by the High Court, and record the answer that "that part of ₹ 75,000 which bears the same ratio to ₹ 75,000 which the accumulated profits at the date of liquidation bore to the total assets of the company immediately before liquidation is dividend ". In the present case the Tribunal has not determined what part of ₹ 75,000 represents accumulated profits. But on the view we have taken of the true meaning of section 2(6A)(c) of the Act, the Tribunal was bound to do so. Appeal allowed in part
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1966 (10) TMI 28 - SUPREME COURT
Whether, on the facts and circumstances of this case, the non-registration of the relinquishment deed can invalidate the transfer of the business assets to the new partnership ?
Can the registration application be rejected merely on the ground that the business assets were not legally transferred to the new partnership ?
Held that:- The deed of relinquishment, in this case, was in respect of the individual interest of the three Singhania Brothers in the assets of the partnership firm in favour of the Kamla Town Trust, and, consequently, did not require registration, even though the assets of the partnership firm included immovable property, and was valid without registration. As a result of this deed, all the assets of the partnership vested in the new partners of the firm.
A deed of relinquishment, or a deed of gift, differs from a deed of partition in which it is not possible to hold that the partition is valid in respect of some properties and not in respect of others, because rights of persons being partitioned are adjusted with reference to the properties subject to partition as a whole. In the case before us, therefore, the deed of relinquishment was valid at least in respect of movable properties, and the partnership seeking registration, thus, became owner of all the movable assets of the partnership in addition to having contributed a sum of ₹ 50,000 as capital investment in it. The Kamla Town Trust and Jhabbarmal Saraf constituted the partnership under a deed of partnership, which was properly executed, and, in these circumstances, the partnership that came into existence was clearly valid in law. There is, therefore, no force in this appeal
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1966 (10) TMI 27 - SUPREME COURT
Whether, on the facts and circumstances of this case, the amount of ₹ 46,582 was a permissible deduction under section 10(2)(xv) of the Act was a mixed question of fact and law and the High Court was in error in not directing the Tribunal to state a case under section 66(2) of the Act?
Held that:- As submitted by learned counsel that the High Court was not right in holding that no question of law arose out of the order of the Tribunal and that the finding of the Tribunal that the payment was made for commercial considerations and not ex gratia was a pure finding of fact which could not be interfered with is to be accepted. The judgment of the High Court dated April 4, 1962, should be set aside. The High Court is directed to ask the Income-tax Appellate Tribunal to state a case on the following question of law and refer it under section 66(2) of the Act :
" Whether, on the facts and circumstances of the case, the sum of ₹ 46,582 was a permissible deduction under section 10(2)(xv) of the Income-tax Act in the assessment year 1954-55 ?"
After receipt of the reference the High Court should deal with it in accordance with law. Appeal allowed.
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1966 (10) TMI 26 - SUPREME COURT
Whether the notice dated 23rd February, 1950, was validly issued under section 34 or not?
Whether the order of assessment dated 2nd May, 1956, made by the P.I.T.O. was barred by time?
Held that:- Since the case of the assessee was transferred to the P.I.T.O. at the stage when no proceeding was pending before the A.I.T.O., the P.I.T.O. became seized of the jurisdiction to take any proceedings against the assessee which the law permitted. It was clearly in exercise of this jurisdiction that the P.I.T.O. issued the subsequent notice dated 11th February, 1956. That notice was, therefore, competently issued by him and was also valid, because it was issued before the expiry of eight years from the end of the relevant assessment year 1947-48. The notice having been issued validly within the period of limitation permitted by section 34(3), the actual order of assessment could be made validly before the expiry of the period of one year from the date of the notice. The order of assessment dated 2nd May, 1956, was, Consequently, a valid order and was not barred by time.
In the circumstances, the answer returned by the High Court to the two questions referred to it has to be held to be incorrect. Both the questions have to be answered against the assessee and in favour of the Commissioner of Income-tax, so that the answer returned by the High Court to the two questions is set aside, the first question is answered in the affirmative, and the second in the negative. Appeal allowed.
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1966 (10) TMI 25 - SUPREME COURT
Whether interest credited by the firm to the assessee's wife and minor children attributable to past profit accumulations only is includible in the assessment of the assessee under section 16(3)(a)(i) and (ii)?
Held that:- The facts show that the use of these moneys was allowed to the firm without asking for any interest, and it was only at a later stage that the three partners of the firm decided to give interest on these amounts. When the decision was taken to give interest, the nature of the funds did not change. They did not get converted into deposits or loans. They still remained accumulations belonging to a partner or persons admitted to the benefits of the partnership and allowed to be used by the firm. The interest also appears to have been allowed by the firm simply because these funds belonged either to a partner or to the minors who had been admitted to the benefits of the partnership. It is thus clear that the interest at least indirectly arose and accrued to the wife and the minor sons because of their capacity mentioned in section 16(3)(a)(i) and (ii) in the Income-tax Act. Appeal dismissed.
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1966 (10) TMI 24 - CALCUTTA HIGH COURT
ITO made a reassessment to the best of his judgment u/s 23(4) of the IT Act, 1922, estimating the income of the assessee from the undisclosed business - tribunal is not justified in holding that ITO has made addition without any basis and arbitrarily
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1966 (10) TMI 23 - ALLAHABAD HIGH COURT
Assessee encashed 28 high denomination notes of Rs. 1,000 each - Whether there was material before the Tribunal to hold that whereas 22 high denomination notes out of a total of 28 high denomination notes could form part of the assessee`s cash balance, the remaining 6 high denomination notes could not form part of such balance - Held, no
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1966 (10) TMI 22 - ALLAHABAD HIGH COURT
Source of investment - assessee`s explanation was that he purchased the house benami for his wife and that the consideration of Rs. 14,500 was received by his wife from her widowed mother - this explanation was not found acceptable to the department - provisions of section 28(1)(c) were attracted
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1966 (10) TMI 21 - MYSORE HIGH COURT
Whether having regard to cl. (e) of the proviso to s. 24(2), the assessee, an unregistered firm, was entitled to carry forward the whole of the loss including the share of the loss of the two retiring partners - Held, no
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1966 (10) TMI 20 - CALCUTTA HIGH COURT
Assessee filed a appeal against order of reassessment proceeding to AAC, which was pending. Assessee also filed writ petition in High Court - since applicant has appealed to the AAC, which appeal is not only pending, but the proceedings are being actively pursued and the petitioner says that he will continue to pursue it, he should not be allowed to pursue this application in the writ jurisdiction
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1966 (10) TMI 19 - ANDHRA PRADESH HIGH COURT
Penal proceedings u/s 28(1)(c) - validity - assessee had manipulated the accounts - assessee himself admitted that if the loans were not entered in the books on the dates on which they were taken, there would be deficit cash balance which would fasify the book results - proceedings are valid
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1966 (10) TMI 18 - ANDHRA PRADESH HIGH COURT
Commission earned by the non-resident was liable to tax under s. 4(1)(a)of Indian Income Tax Act, 1922
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1966 (10) TMI 17 - MYSORE HIGH COURT
Appellant paid a certain sum to a company for providing `know now` - sum was properly disallowed as a capital expenditure
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1966 (10) TMI 16 - ANDHRA PRADESH HIGH COURT
Mining lease - dead rent paid in respect of the coal fields - deductibility of the expenditure cannot depend upon whether it is incurred for a certain number of years or throughout
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