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Showing 381 to 389 of 389 Records
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1999 (5) TMI 9
The High Court dismissed two petitions related to income tax deductions under sections 80G and 80HH for assessment years 1984-85 and 1985-86. The court found that the Assessing Officer wrongly withdrew the deductions already allowed, as the appellate orders did not dispute them. The Tribunal upheld the appellate orders, stating no valid reason existed to withdraw the deductions.
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1999 (5) TMI 8
Issues Involved:
1. Applicability of Section 40A(8) of the Income-tax Act, 1961.
2. Definition and scope of the term "deposit" under Section 40A(8).
3. Nature of credit balances in current accounts.
4. Exclusions under Explanation (b) to Section 40A(8).
Issue-wise Detailed Analysis:
1. Applicability of Section 40A(8) of the Income-tax Act, 1961:
The primary issue was whether the interest paid on credit balances in current accounts of directors, shareholders, and others falls within the purview of Section 40A(8). The Assessing Officer had reduced the allowable expenditure by 15% under this section, which was contested by the assessee. The Tribunal and Commissioner of Income-tax (Appeals) held that Section 40A(8) did not apply to these credit balances, as they were not considered deposits or borrowings.
2. Definition and Scope of the Term "Deposit" under Section 40A(8):
Section 40A(8) disallows 15% of the expenditure incurred by way of interest on deposits received by a company, excluding banking and financial companies. The term "deposit" is defined broadly to include any deposit of money and any money borrowed by a company, except for specific exclusions listed in the Explanation. The court emphasized that the term "deposit" in this context is used in its widest possible meaning, encompassing all kinds of deposits of money, whether they are payable on demand, notice, or at a fixed future date.
3. Nature of Credit Balances in Current Accounts:
The Tribunal and Commissioner of Income-tax (Appeals) distinguished credit balances in current accounts from deposits. They noted that credit balances in current accounts are kept for being withdrawn at any time, unlike deposits, which are typically for a foreseeable period and generally in round figures. The court, however, disagreed with this distinction, stating that the nature of the account (current or otherwise) does not change the character of the money as a deposit under Section 40A(8).
4. Exclusions under Explanation (b) to Section 40A(8):
The court examined the specific exclusions listed in Explanation (b) to Section 40A(8), which include money received from the government, foreign entities, other companies, and certain secured loans. These exclusions are exhaustive, and any interest paid on money received by a company that does not fall within these exclusions is subject to the disallowance under Section 40A(8). The court found that the interest paid on the credit balances in question did not fall within any of these exclusions.
Conclusion:
The court concluded that the interest paid on credit balances in current accounts of directors, shareholders, and others falls within the purview of Section 40A(8). The Tribunal's decision to exclude these amounts from the disallowance was incorrect. The court answered the referred question in the negative, favoring the Revenue and against the assessee. The judgment emphasized that the broad definition of "deposit" under Section 40A(8) includes the credit balances in current accounts, and the exclusions listed are exhaustive and specific.
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1999 (5) TMI 7
Issues:
Interpretation of section 21(4) of the Wealth-tax Act, 1957 in relation to the taxation of a trust entity.
Analysis:
The judgment involves a question of law arising from the Wealth-tax Appeals regarding the application of section 21(4) of the Wealth-tax Act, 1957 to the assessment of a trust entity. The trust in question was created to provide financial assistance for various purposes to employees and their families. The Wealth-tax Officer assessed the trust as an association of persons and levied tax at 1.5 per cent under section 21(4). However, on appeal, it was directed to apply the appropriate rate under the Schedule, based on a decision of the Income-tax Appellate Tribunal. The Tribunal affirmed this decision, applying the same principle as in the Income-tax Act.
Under the Income-tax Act, it was established that the trust fell within section 164(1) as a discretionary trust with indeterminate individual shares, leading to the application of a specific tax rate. The decision under the Income-tax Act clarified that the maximum marginal rate of 65 per cent would not apply in cases where none of the beneficiaries had other taxable income. This distinction in the application of rates under the Income-tax Act and the Wealth-tax Act was crucial in determining the tax liability of the trust entity.
The Court noted a significant difference between the provisions of section 21(4) of the Wealth-tax Act and section 164(1) of the Income-tax Act, particularly in the absence of a corresponding provision in the Wealth-tax Act's proviso to mitigate the tax burden in certain scenarios. The Tribunal's error was highlighted in applying the decision under the Income-tax Act to the Wealth-tax Act without considering this disparity in provisions between the two statutes.
Ultimately, the Court held that the Tribunal should have applied the special rate of wealth-tax under section 21(4) as charged by the Wealth-tax Officer, emphasizing the unique application of tax rates under the Wealth-tax Act compared to the Income-tax Act. The Court directed the Tribunal to reconsider the appeal in light of this judgment, leaving certain issues raised by the assessee for the Tribunal to address in the subsequent proceedings. The reference was disposed of with no order as to costs.
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1999 (5) TMI 6
Whether, the Income-tax Appellate Tribunal was correct in law in allowing investment allowance under section 32A of the Income-tax Act, 1961, on the excavator, which was used for excavation of earth at site - Whether, the Appellate Tribunal is correct in holding that the Assessing Officer cannot verify which machinery was used for contract work in proceedings under section 154 - Tribunal to state the case and refer the abovee two questions of law to HC
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1999 (5) TMI 5
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee-company was entitled to export markets development allowance under section 35B(1)(b) in respect of expenditure incurred for foreign indenting business even though the services in this connection were rendered in India - High Court was not justified in holding that assessee-company was entitled to export markets development allowance under section 35B(1)(b)
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1999 (5) TMI 4
In view of the provision in s. 10(29A)(d) introduced in the Finance Act, 1999, the Tobacco Board's income becomes exempt for any assessment year w.e.f. April 1, 1975, or the previous year in which the Board was constituted. Hence, the assessments already made stand set aside by virtue of s. 10(29A)(d) with retrospective effect - appeal is allowed holding that there is no liability to income-tax as provided in s. 10(29A)(d) - appellant are entitled to refund consequent to retrospective amendment
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1999 (5) TMI 3
In view of this circular of October 9, 1984, which was then in force and which was binding on the assessing authorities, the interest on sticky advances in those years could not be taxed - hence Assessing Officer was right in not taxing the interest in suspense account for the assessment year 1981-82 in view of the Circular dated October 9, 1984.
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1999 (5) TMI 2
Appellant, a judge of the Allahabad High Court - He filed his income-tax return on the basis that the salary that he received as a judge was not liable to tax under the Income-tax Act, 1961 - held that judges' can be taxed by Act of Parliament - hence appeal is dismissed
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1999 (5) TMI 1
The Appellate Tribunal CEGAT, CALCUTTA held that the minimum penalty under Section 77 of the Finance Act, 1994 for late submission of S.T. 3 return is Rs. 100 and the maximum penalty is Rs. 200 per day. The Revenue requested the question to be referred to the High Court for interpretation of the legal provision. The question referred to the High Court is whether the minimum penalty under Section 77 is Rs. 100 only or Rs. 100 per day for failure to submit the requisite return in Form S.T.3. The Registry is directed to refer the question to the High Court.
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