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1972 (6) TMI 36
Issues:
Interpretation of Section 630 of the Companies Act regarding wrongful withholding of property by an officer or employee of a company.
Analysis:
The judgment pertains to a petition filed seeking to quash proceedings in a case where the petitioner was accused of wrongfully obtaining and withholding possession of the company's property. The court examined the allegations in the complaint and the relevant provisions of the Companies Act. It was noted that the petitioner had been re-elected as a director and subsequently appointed as a managing director through resolutions passed at annual general meetings. The central issue revolved around whether the actions of the petitioner constituted wrongful withholding of company property as per Section 630 of the Companies Act.
The court analyzed the provisions of Section 630 of the Companies Act, which outline penalties for wrongful withholding of company property by an officer or employee. The key contention raised by the petitioner's counsel was that the ingredient of "wrongfully" was not satisfied based on the resolutions passed at the general body meetings appointing the petitioner as managing director. The court considered the circumstances under which the petitioner continued to serve as managing director despite not being re-elected as a director, emphasizing that his services were accepted and endorsed by the company.
The respondent's counsel argued that the petitioner's failure to get re-elected as a director invalidated his position as managing director under the Companies Act. However, the court found that the petitioner had operated openly as managing director based on resolutions passed at general body meetings, and there was no evidence of wrongful possession or withholding of company property. The court highlighted the positive feedback on the petitioner's services in the company's audit report, indicating a lack of wrongful intent or misconduct on his part.
Ultimately, the court concluded that the complaint against the petitioner was misconceived and ill-conceived, as it did not meet the requirements of Section 630(1)(a) or (b) regarding wrongful withholding of company property. Consequently, the court quashed the proceedings in the case, C.C. No. 1178 of 1971, on the grounds that the complaint lacked merit and failed to establish any wrongdoing on the part of the petitioner.
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1972 (6) TMI 27
Issues Involved:
1. Legality of the seizure of goods.
2. Applicability of Rule 9(2) of the Central Excise Rules, 1944.
3. Violation of Article 19(1)(f) and (g) of the Constitution.
4. Bona fide purchaser's protection against seizure.
Detailed Analysis:
1. Legality of the Seizure of Goods:
The petitioner, Shakti Textiles Corporation, filed a petition under Article 226 of the Constitution for the release of 306 bags of yarn seized by the respondent, the Collector of Central Excise, Madurai-2. The seizure was made under Rule 206(3) of the Central Excise Rules, 1944, based on an order dated October 30, 1971. The petitioner argued that the seizure was illegal, as there was no provision for the seizure of goods in the hands of a bona fide purchaser who had paid the excise duty. The Court, however, upheld the legality of the seizure, citing Section 110 of the Customs Act, 1962, as adapted under Section 12 of the Central Excises and Salt Act, 1944. The Court stated, "If the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize goods."
2. Applicability of Rule 9(2) of the Central Excise Rules, 1944:
The petitioner contended that Rule 9(2) should not apply as the goods were not in the possession, custody, or control of the manufacturer. The Court, however, found that "the goods, in question, as alleged by the respondent, being non-duty paid, their removal from the premises was in direct contravention of Sub-rule (1) of Rule 9, and such goods under-sub-rule (2) of the Rule shall, among other things, be liable to confiscation." The Court emphasized that the liability attaches to the non-duty paid excisable goods and runs with them, regardless of their subsequent possession or ownership.
3. Violation of Article 19(1)(f) and (g) of the Constitution:
The petitioner argued that the seizure violated their fundamental rights under Article 19(1)(f) and (g) of the Constitution. The Court dismissed this contention, stating, "The power of seizure in itself is justified by the fact that it is applied to the offending goods." The Court further noted that the power conferred upon the Excise Officers by Section 12 of the Excises and Salt Act, read with Section 110 of the Customs Act, is reasonable and in public interest, intended to safeguard the revenue legitimately due to the Union.
4. Bona Fide Purchaser's Protection Against Seizure:
The petitioner claimed to be a bona fide purchaser for value and argued that it took all necessary precautions by ensuring that the excise duty was accounted for in the invoices. The Court, however, held that "innocence or bona fides of such a third party does not appear to be relevant to the liability of such goods to confiscation." The Court ruled that the liability of the offending goods to confiscation is absolute and not dependent on the mens rea of any party. The Court reasoned that allowing otherwise would defeat the purpose of Rule 9, as goods could be removed without payment of duty and passed on to third parties to evade confiscation.
Conclusion:
The petition was dismissed with costs, affirming the legality of the seizure and the applicability of Rule 9(2) of the Central Excise Rules, 1944. The Court upheld that the seizure did not violate Article 19(1)(f) and (g) of the Constitution and that the liability of non-duty paid goods to confiscation is absolute, irrespective of the bona fides of the purchaser. The petitioner's claim as a bona fide purchaser did not exempt the goods from confiscation.
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1972 (6) TMI 26
Issues Involved:
1. Whether the assessee-companies satisfy the requirements of section 2(18) of the Income-tax Act, 1961, and hence are companies in which the public are substantially interested.
Detailed Analysis:
1. Interpretation of Section 2(18) of the Income-tax Act, 1961:
The primary issue was whether the assessee-companies qualify as companies in which the public are substantially interested under section 2(18) of the Income-tax Act, 1961. The relevant period for assessment was from December 31, 1960, to December 31, 1961, for I.T.R. No. 31 of 1970, and from December 31, 1962, to December 31, 1963, for I.T.R. No. 32 of 1970. During these periods, Messrs. J. H. Vavasseur & Co. Ltd. held more than 50% of the equity shares in the assessee-companies.
2. Status Determination by Income-tax Authorities:
The Income-tax Officer initially treated the assessee-companies as private limited companies. However, the Appellate Assistant Commissioner, while agreeing that the companies were not private limited companies, concluded that they were not companies in which the public were substantially interested. The Tribunal, on the other hand, held that the companies were indeed companies in which the public were substantially interested, leading to the present references.
3. Legislative History and Interpretation:
The court reviewed the legislative history of section 2(18) and its predecessors under the Indian Income-tax Act, 1922. The provision was designed to prevent tax avoidance through accumulation of profits in private companies. The court noted that the definition of a company in which the public are substantially interested has evolved but retained a core principle that such companies must have a significant portion of their shares held by the public or public entities.
4. Definition and Scope of "The Public":
The term "the public" in section 2(18)(b)(i) was crucial. The court emphasized that this term, though not explicitly defined, includes a wide range of entities and individuals, excluding directors or companies to which the clause does not apply. The court interpreted the exclusion of certain categories (directors and specific companies) as indicative that other entities, including companies in which the public are substantially interested, fall within "the public".
5. Judicial Precedents and Interpretations:
The court referred to the Supreme Court decision in Shree Changdeo Sugar Mills Ltd. v. Commissioner of Income-tax, which supported the inclusion of companies in which the public are substantially interested within the definition of "the public". This precedent reinforced the interpretation that such companies are part of the public for the purposes of section 2(18).
6. Clarification by 1965 Amendment:
The 1965 amendment to section 2(18) was argued by the department as a change in the law. However, the court concluded that this amendment merely clarified the existing position rather than altering it. The amendment expanded the definition to explicitly include companies in which the public are substantially interested, confirming the court's interpretation of the pre-amendment law.
7. Tribunal's Decision Affirmed:
Based on the legislative history, judicial precedents, and the interpretation of "the public", the court upheld the Tribunal's decision that the assessee-companies were companies in which the public are substantially interested. The court answered the references in the affirmative, against the department, and directed that a copy of the order be sent to the Income-tax Tribunal as required by section 260 of the Income-tax Act, 1961.
Conclusion:
The judgment affirmed that the assessee-companies met the criteria under section 2(18) of the Income-tax Act, 1961, to be considered companies in which the public are substantially interested. The court's detailed analysis of legislative history, judicial interpretations, and statutory provisions led to the conclusion that the Tribunal's decision was correct.
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1972 (6) TMI 25
Petitioners have filed this petition under articles 226 and 227 of the Constitution praying for a writ of mandamus against respondent No. 1 directing him to register under the provisions of the Indian Registration Act the Indenture of Contributory First Legal Mortgage dated, and to endorse thereon the certificate of registration as required by the said Act - It is alternatively prayed that a writ of mandamus be issued directing respondent No. 1 to register the said mortgage deed qua the mortgagor and to keep the registration of the said deed pending, until the tax clearance certificate is obtained by the confirming parties to the said mortgage deed - When tax clearance certificate is produced by only one of the executants and not by others, whether registration can be made in respect of the person producing the certificate
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1972 (6) TMI 24
Validity of assessment of HUF made without enquiry under section 25A and after intimation of complete partition - " (1) Whether, on the facts and in the circumstances of the case, the assessments made by the Income-tax Officer on the Hindu undivided family of Sri Kapoorchand Shrimal, for the years under reference, without passing an order under section 25A, were valid in law ? (2) Whether, on the facts and in the circumstances of the case, the sum of Rs. 42,009 was a trading loss deductible in the assessment for the year 1958-59 ?"
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1972 (6) TMI 23
Whether the revenue has a statutory obligation to communicate to the first and second respondents the approval granted by the Commissioner of Income-tax for detention of books of account and documents seized under a warrant issued under section 132(1) of the Income-tax Act, 1961, hereinafter referred to as the Act, and, secondly, whether an opportunity of being heard should have been given to the persons interested in the return of the books and documents before an order of approval is made by the Commissioner of Income-tax under section 132(8)
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1972 (6) TMI 22
Assam Agricultural Income Tax Act, 1939 - It is specifically averred by the petitioner in petition that "no notice under section 19(2) of the Act was served upon the petitioner and the order of assessment was passed without service of such notice upon the petitioner." - When the assessee does not file return of income and no notice under s. 19(2) was served whether assessment could be completed also whether question of service of notice can be looked into a writ petition against assessment order without issue of notice
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1972 (6) TMI 21
Issues Involved:
1. Legality of the notice under Section 148 of the Income-tax Act, 1961.
2. Conditions precedent for exercising jurisdiction under Section 147(a).
3. Validity of the subsequent inquiries and reports.
4. Change of opinion by the Income-tax Officer.
5. Satisfaction of the Commissioner under Section 151(2).
Detailed Analysis:
1. Legality of the Notice under Section 148 of the Income-tax Act, 1961:
The petitioner, a partnership firm, challenged the notice issued under Section 148 on the grounds that it was without jurisdiction. The notice was issued by the Income-tax Officer on 17/18th October 1961, on the belief that income chargeable to tax for the assessment year 1959-60 had escaped assessment. The petitioner's case was that all material facts were fully disclosed during the original assessment proceedings, and hence, the conditions for invoking Section 147(a) were not met.
2. Conditions Precedent for Exercising Jurisdiction under Section 147(a):
The petitioner argued that the conditions precedent for exercising jurisdiction under Section 147(a) were non-existent. The Income-tax Officer had initially completed the assessment on 23rd December 1959, which was later rectified on 10th March 1960. The petitioner submitted that all material facts were disclosed, and the assessment was based on these disclosures. Therefore, the reopening of the assessment under Section 147(a) was not justified as it was merely a change of opinion by the succeeding Income-tax Officer.
3. Validity of the Subsequent Inquiries and Reports:
The notice under Section 148 was based on the report of an income-tax inspector dated 4th March 1961, which mentioned that some of the cash depositors were not traceable and lacked the capacity to make the deposits. The petitioner's counsel argued that these subsequent inquiries and the inspector's report were invalid as they were conducted after the original assessment was completed. The court noted that the original Income-tax Officer had already enquired into the genuineness of the deposits and accepted the statements of the depositors.
4. Change of Opinion by the Income-tax Officer:
The court observed that the succeeding Income-tax Officer took a different view from that of the original officer based on the inspector's report. The court held that this constituted a mere change of opinion and did not justify the initiation of proceedings under Section 147(a). The court emphasized that the provisions of Section 147(a) are not attracted in cases of mere change of opinion, as supported by the Supreme Court decision in Commissioner of Income-tax v. Bhanji Lavji.
5. Satisfaction of the Commissioner under Section 151(2):
The petitioner's counsel also argued that the satisfaction of the Commissioner, as required under Section 151(2), was lacking. However, the court did not find it necessary to decide on this submission due to the absence of the Commissioner before the court and the decision on other grounds.
Conclusion:
The court allowed the application, quashing the impugned notices under Section 148. The court held that the notice was without jurisdiction as it was based on a mere change of opinion by the succeeding Income-tax Officer and not on any failure by the assessee to disclose material facts. The rule nisi was made absolute, with no orders as to costs.
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1972 (6) TMI 20
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee, as a member of the Hindu undivided family, was entitled to throw her separate property into the common hotchpot of the Hindu undivided family
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1972 (6) TMI 19
Whether, on the facts and in the circumstances of the case, the donation of cloth of the value of Rs. 6,834 given by the assessee-company was eligible for exemption under section 88 of the Income-tax Act, 1961 - one has to look to the substance of the transaction and the purpose underlying section 88(1) of the Act and if that is done, we have no doubt that the assessee is entitled to the deduction of the sum of Rs. 6,834 which represents the value of the cloth donated to various charitable institutions
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1972 (6) TMI 18
Expenditures - commission and bonus paid to the managing director – reasonableness of the expenditure claimed under various sub-clauses (i) to (xv) of section 10 should be decided with reference to section 10(4A) - totality of the allowance claimed towards remuneration etc. to a director has to be considered under section 10(4A) - since there is a specific provision in section 10(2)(x) dealing with commission, it cannot be treated as part of the salary and section 10(2)(xv) can be applied - Bonus paid to a managing director will attract section 10(4A) besides section 10(2)(x) and it must satisfy the conditions laid therein
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1972 (6) TMI 17
Issues:
1. Interpretation of "regular assessment" under section 273(b) of the Income-tax Act, 1961 in the context of reassessment under section 147(a).
Analysis:
The case involved a registered firm that had undergone reassessment under section 147(a) of the Income-tax Act, 1961. The primary question before the court was whether the provisions of section 273(b) could be applied to such reassessment, considering the term "regular assessment" as defined in section 2(40) of the Act. The firm had initially filed a return disclosing a total income of Rs. 34,480 for the assessment year 1966-67. The assessment was later revised through reassessment, fixing the total income at Rs. 65,130. The Income-tax Officer initiated penalty proceedings under section 273(b) due to the firm's failure to file an income estimate under section 212(3) and non-payment of advance tax.
The firm contended that section 273(b) applied only to "regular assessments" as defined under section 2(40), i.e., assessments made under section 143 or 144, and not to reassessments under section 147(a). Despite the firm's argument, both the Income-tax Officer and the Appellate Assistant Commissioner upheld the applicability of section 273(b) to the reassessment. The Tribunal also supported this view. The court delved into the definitions and provisions of various sections of the Act, including sections 147, 148, 153, 271, and 246, to determine the scope of "regular assessment" under section 273(b).
The court emphasized that assessments made under section 147, including reassessments, do not fall under the category of "regular assessments" as defined in the Act. The court referred to past decisions from the Madras High Court regarding similar provisions under the Indian Income-tax Act, 1922, to support its interpretation. The court concluded that the specific references to "assessment under section 147" in the Act, along with the definition in section 2(40), indicated that assessments under section 147 were distinct from "regular assessments" under section 143 or 144. Therefore, the court ruled in favor of the assessee, stating that section 273(b) could not be applied to reassessments under section 147(a).
The court answered the question referred to it in the negative, directing the parties to bear their respective costs. It clarified that this decision did not impact any proceedings initiated under section 273(b) based on the previous assessment made on November 18, 1966. The court's judgment would be communicated to the Income-tax Appellate Tribunal, Cochin Bench, for further action.
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1972 (6) TMI 16
Amount of ₹ 2,77,500 which the Income-tax Officer added back as the income of the assessee from undisclosed sources - assessee's case was that these are genuine transactions of borrowings on hundies from various parties. The Income-tax Officer has himself said that "complete details have been furnished by the assessee in respect of loans from these bankers" - assessee explained the sources for the hundi loans which was taken from people who were assessed to income-tax by crossed cheques. These lenders also confirmed the loans - Tribunal's decisions to reverse the Income-tax Officer's finding that the loans were assessees income from undisclosed sources does not gives rise to a question of law - Tribunal's finding was arrived at on the basis of association of the evidence. This is a question of fact
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1972 (6) TMI 15
"Whether Tribunal is justified in law in holding that the payment of a larger dividend would be unreasonable and in cancelling the Income-tax Officer's orders under section 104 of the Income-tax Act, 1961,?" - It is unreasonable to reckon available surplus for distribution as dividend ignoring bad and doubtful debts and advances made. If these are also taken into account, the dividend distributed satisfies even the percentage provided in section 109(4). In any view of the matter, it is impossible to hold that the Income-tax Officer was not in error in thinking that it was not unreasonable to insist that there should have been a higher percentage of dividend declared
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1972 (6) TMI 14
Whether, the deduction admissible is in respect of tax payable pursuant to the relevant return filed by the assessee or whether such deduction is admissible in respect of tax as finally determined on assessment - When one coparcener of Hindu joint family died, his share devolved on mother and wife under Hindu Succession Act, 1956, what is the extent of the interest of the surviving joint family in the family jewellery - Tribunal was right in taking the view that only two-thirds share in the jewellery was liable to be taken into account in computing the net wealth of the assessee Hindu undivided family and since it was of the value of less than Rs. 25,000, it was exempt u/s 5(1)(xiv).
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1972 (6) TMI 13
In this petition under article 226 of the Constitution the petitioner-company has challenged the legality and correctness of the order, dated March 30, 1967, whereby the first respondent, Income-tax Officer, in computing the income-tax liability computed the capital gains made by the petitioner-company for the assessment year 1962-63 at Rs. 47,97,735 - The year in which the ownership of the capital is transferred will be the previous year for the assessment of capital gains by the shareholder - It is also not possible for me to make a finding that this petition is not well-founded, in view of the fact that the vires of section 46 are challenged in this petition. I have not found it necessary to decide this question because I was in favour of the assessee-company on the main question
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1972 (6) TMI 12
Valuation for the purpose of wealth-tax of a mica mine, - assessee gave on lease mica mines for 20 years - Wealth-tax Officer should consider the figures in balance-sheet and also adjustments should be made in arriving at the true value - Tribunal's valuation by deducting 1/20th of the value given for every year after 1954 was proper
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1972 (6) TMI 11
Charitable Purpose - objects and functions of the institution - general public utility - trust for promotion of unity among members of community and for complete development of all aspects of life of members of a community - purpose beneficial to the public - therefore, this was a charitable trust
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1972 (6) TMI 10
While enquiring into the purchase and sale of flats the Income-tax Officer found entries pertaining to a sum of Rs.95,000 in the books of the assessee. A sum of Rs. 95,000 was alleged to have been borrowed by her(assessee) on hundi loans – held that once the assessee indicated reasonably a source to which the amount of Rs. 95,000 could well be attributed the assessee has discharged the burden of proof on her - finding of the Tribunal that the transactions of loans were fictitious was based on evidence - issue being one of fact, it cannot be taken up in reference
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1972 (6) TMI 9
Computing the net wealth of the assessee - claim of the assessee for deduction of the wealth-tax liability – What is the liability towards income-tax, gift-tax and wealth-tax that can be deducted - applicability of provisions of section 2(m)(iii)(a) – demand notice u/s 30 – valuation date
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