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Showing 61 to 80 of 90 Records
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1972 (8) TMI 30
Transfer of individual property by the partner to the firm - difference between the written down value and the amount credited in partnership account – whether it should be treated as capital gain - whether the sum of Rs. 20,000 can be treated to be the income of the assessee under section 41(2)
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1972 (8) TMI 29
Companies (Profits) Surtax Act, 1964 - " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the amount standing to the credit of the 'retirement gratuity reserve' is to be treated as a 'reserve' and has to be taken into account for the purpose of calculating the capital under the provisions of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ? "
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1972 (8) TMI 28
Issues:
- Validity of notice issued under section 148 of the Income-tax Act, 1961 for reassessment.
- Requirement of full disclosure of material facts by the assessee for assessment.
- Jurisdiction of the Income-tax Officer to initiate reassessment proceedings under section 147.
Analysis:
The judgment pertains to a petition seeking a writ of prohibition against the respondent from pursuing reassessment proceedings under section 148 of the Income-tax Act, 1961. The petitioner, a dissolved partnership firm, had filed its return of income for the assessment year 1960-61, including details of imported art silk. The Income-tax Officer accepted the return and completed the assessment without further inquiry. However, a notice under section 148 was later issued, alleging an escapement of income. The petitioner challenged the validity of the notice, arguing that all necessary materials were disclosed during the original assessment, and there was no basis for reassessment.
The petitioner contended that the respondent failed to provide any material showing incomplete or false disclosure by the petitioner during the original assessment. The counter-affidavit only highlighted the absence of specific details related to import licenses and other particulars, without demonstrating any under-assessment due to these omissions. Citing relevant Supreme Court decisions, the petitioner emphasized that the duty of disclosure by the assessee extends only to providing material facts, not drawing inferences for the Income-tax Officer. The Supreme Court's stance on the obligation of the assessee to establish the truth of disclosed facts was reiterated.
The judgment emphasized that the Income-tax Officer must have a prima facie belief of income escapement before initiating reassessment proceedings. In this case, the Income-tax Officer's doubts regarding the imported art silk's utilization were not substantiated with clear evidence or reasoning in the counter-affidavit or assessment records. The court noted the lack of material demonstrating income escapement, leading to the conclusion that the initiation of proceedings under section 147 was without jurisdiction. Consequently, the writ petition was allowed, and the petitioner was granted costs. The judgment highlighted the necessity for the Income-tax Officer to establish a prima facie case of income escapement before issuing reassessment notices under the Income-tax Act.
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1972 (8) TMI 27
Whether the finding of the Tribunal refusing exemption to the assessee from business profits tax on the 25 annas share of the trustees of the Kamla Town Trust is correct in law ? Whether, under the provisions of section 10(2)(vi), proviso (b), of the Income-tax Act, the unabsorbed depreciation of the unregistered firm in 1949-50 can be allowed as a deduction in the assessments of the partners of the registered firm in the assessment year 1950-51? Whether the Tribunal was legally justified in disallowing interest to the Kamla Town Trust during the assessment year in question ? "
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1972 (8) TMI 26
Whether Tribunal was justified in law in sustaining the levy of the capital gains on the registered firm - Whether Tribunal was justified in law in disallowing the benefits under section 54(i) on the value of the house property purchased by one of the partners for the residence of the partner - Whether Tribunal was correct in law in disallowing the exemption in respect of Rs. 25,000 being the general exemption granted to a registered firm and whether the interpretation placed on the Finance (No. 2) Act of 1967 read along with section 114 of the Income-tax Act is in accordance with law
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1972 (8) TMI 25
Issues Involved:
1. Whether the Tribunal was justified in excluding the sum of Rs. 4,155 representing sales tax deposits from the assessment.
Issue-wise Detailed Analysis:
1. Justification of Excluding Sales Tax Deposits from Assessment:
The primary question of law is whether the Tribunal was justified in excluding the sum of Rs. 4,155, representing sales tax deposits, from the assessment. The facts presented indicate that the assessee-firm recovered Rs. 4,155 as sales tax from its customers before 1956 but did not pay this amount to the authorities because the Supreme Court ruled that no sales tax was payable on such transactions. The assessee-firm wrote back this amount in the profit and loss account for the year 1963-64.
The Income-tax Officer (ITO) assessed this amount as taxable income, a decision upheld by the Appellate Assistant Commissioner (AAC). The AAC noted that no evidence was provided to show that the amount was recovered as a deposit, and the assessee treated it as a revenue receipt by transferring it to the profit and loss account. The Tribunal, however, relying on a Delhi Tribunal judgment, held that the sales tax deposit remained a liability and allowed the assessee's appeal.
Nature of Sales Tax as a Trading Receipt:
The court examined whether sales tax is an integral component of the sale price. It was determined that the consideration for the transfer of goods includes the total amount paid by the purchaser, which encompasses the sales tax. The dealer is liable for the sales tax, and the amount charged as sales tax is part of the trading receipt, irrespective of whether it is shown separately or included in the price.
Relevant Case Law:
Several precedents were considered, including:
- Punjab Distilling Industries Ltd. v. Commissioner of Income-tax: The Supreme Court held that additional amounts described as security deposits were part of the consideration for the sale and thus trading receipts.
- Tata Iron and Steel Co. Ltd. v. State of Bihar: The Supreme Court stated that sales tax, even if shown separately, is part of the consideration for the sale.
- George Oakes (Private) Ltd. v. State of Madras: It was held that sales tax, when passed on to the buyer, becomes part of the entire consideration.
- Chhatrasinhji Kesarisinhji Thakore v. Commissioner of Income-tax: The Supreme Court ruled that amounts received under a contract are taxable income, even if the payer might claim a refund.
- Ikrahnandi Coal Co. v. Commissioner of Income-tax: The Calcutta High Court held that refunded sales tax is assessable as income.
- Badri Narayan Balakishan v. Commissioner of Income-tax: The Andhra Pradesh High Court held that amounts collected as sales tax are trading receipts if part of every transaction.
Conclusion:
The court concluded that the sales tax amount received by the assessee was an integral component of the sale price and thus a trading receipt subject to income-tax. The Tribunal's decision to exclude the amount from assessment was not justified. The reference was answered in the negative, indicating that the sum of Rs. 4,155 should be included in the assessment. The judgment emphasized that any refund to purchasers could be claimed as relief in the year of repayment, not the year of receipt. The answer to the question referred was thus in the negative, with no order as to costs.
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1972 (8) TMI 24
Issues:
Assessment of income for the year 1963-64, entitlement to tax exemption under section 84 of the Income-tax Act, interpretation of section 84 and section 110, applicability of previous court decisions on similar matters.
Analysis:
The judgment pertains to the assessment year 1963-64 of a Government of India undertaking engaged in manufacturing electric equipment. The assessee had four divisions, with three being newly established and entitled to tax exemption under section 84 of the Income-tax Act. The Income-tax Officer initially determined the total income at Rs. 2,07,466, considering the profit and losses from various divisions. The assessee claimed a carry-forward loss of Rs. 2,11,574, based on the exempted income and divisional profits. The Income-tax Officer rejected this claim, citing precedents like Commissioner of Income-tax v. National Electrical Industries Ltd. The Appellate Assistant Commissioner, however, allowed the claim, relying on Seth Jamnadas Daga v. Commissioner of Income-tax.
The matter escalated to the Income-tax Appellate Tribunal, which overturned the Appellate Assistant Commissioner's decision, following the precedent set by the National Electrical Industries case. The Tribunal held that the assessee was not entitled to the claimed carry-forward loss. The Tribunal referred the question of entitlement to relief under section 84 to the High Court, emphasizing the interpretation of section 84 and section 110 of the Income-tax Act, 1961.
Section 84 of the Act, which was later deleted by the Finance Act of 1967, provided for tax exemption for profits from newly established industrial undertakings. The court analyzed the scope of section 84 in comparison to section 15C of the Indian Income-tax Act, 1922, as interpreted in previous court decisions like National Electrical Industries Ltd.'s case and Orissa Cement Ltd. v. Commissioner of Income-tax. The court highlighted the distinction between deductions from income and exemptions from taxation, emphasizing that the benefit of exemption under section 84 falls under the category of income included in the total income.
The court discussed the provisions of sections 70 to 80 for loss set-off and carry-forward, along with section 110 for computing tax when exempted income is included in the total income. The judgment underscored the legislative intent behind the deletion of section 84 and its replacement with section 80J by the Finance Act of 1967. The court concluded that the assessee's claim mirrored the concessions under section 80J, which were not applicable for the assessment year 1963-64. Therefore, the court upheld the Tribunal's decision, denying the assessee's entitlement to carry forward the claimed shortfall of Rs. 2,11,574.
In conclusion, the High Court answered the referred question in the affirmative, ruling against the assessee and directing them to pay the costs of the reference.
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1972 (8) TMI 23
Mysore Agricultural Income Tax Act - For the assessment year 1967-68, the respondent made an order of assessment on the petitioner on March 11, 1968. While determining the taxable income for the assessment year, certain depreciation allowances on the assets of the petitioner were allowed. The said order of assessment was rectified by the respondent in exercise of the powers vested under section 37 of the Act by his order dated May 28, 1971 The said order has been challenged in this writ petition on several grounds. One of the grounds was that the petitioner was not afforded an opportunity of being heard before making an order of rectification. The second ground was that the view of the law taken by the respondent with regard to the allowance of initial depreciation is patently erroneous
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1972 (8) TMI 22
Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 - assessee involved is a firm which showed payment of commission to another firm - transaction was found to be bogus and the assessee agreed to include the commission in its total income
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1972 (8) TMI 21
Issues Involved:
1. Validity of the penalty levied under section 221(1) of the Income-tax Act, 1961.
2. Interpretation of relevant provisions related to the imposition of penalty under the Income-tax Act.
3. Applicability of section 218 in determining default in payment of advance tax.
4. Obligation of the assessee to file an estimate under section 212.
Detailed Analysis:
1. Validity of the Penalty Levied under Section 221(1) of the Income-tax Act, 1961:
The primary issue in this case revolves around the validity of the penalty imposed on the assessee under section 221(1) read with section 218 of the Income-tax Act, 1961. The Income-tax Officer levied a penalty of Rs. 1,712 on the assessee for default in payment of advance tax for the financial year 1965-66. The assessee challenged this penalty, but both the Appellate Assistant Commissioner and the Tribunal upheld the penalty. The Tribunal then referred the question of law regarding the validity of the penalty to the High Court.
2. Interpretation of Relevant Provisions Related to the Imposition of Penalty:
The court examined the scheme of the Income-tax Act, particularly the provisions related to the collection and recovery of tax under Chapter XVII. The court noted that income-tax is payable at two stages: by way of deduction at source and advance payment. The relevant sections for advance payment of tax include sections 207 to 219. Section 208 specifies the conditions under which advance tax is payable, while section 209 outlines the computation method. Section 210 allows the Income-tax Officer to require advance tax payment, and section 212 provides the assessee the right to file an estimate of their income and pay advance tax accordingly.
3. Applicability of Section 218 in Determining Default in Payment of Advance Tax:
Section 218 specifies when an assessee is deemed to be in default for non-payment of advance tax. The court pointed out that if an assessee fails to pay the instalment of advance tax as required under section 210 and does not file an estimate or revised estimate under section 212, they are deemed to be in default. The court highlighted that section 218(1) applies when no estimate is filed, and section 218(2) applies when an estimate is filed but the instalment is not paid according to it. In this case, the assessee did not file an estimate or revised estimate and failed to pay the instalments, thus falling under section 218(1).
4. Obligation of the Assessee to File an Estimate under Section 212:
The assessee argued that they were not required to file an estimate under section 212 because they anticipated a loss for the financial year. The court rejected this argument, stating that the scheme of advance tax requires the assessee to file an estimate if they wish to avoid the obligation imposed by the order under section 210. The court emphasized that even if the assessee estimates a loss or income below the taxable limit, they must file an estimate to displace the obligation to pay advance tax as determined by the Income-tax Officer. Failure to do so results in being deemed in default under section 218, attracting penalty under section 221(1).
Conclusion:
The court concluded that the assessee was rightly deemed to be in default for failing to pay the instalments of advance tax and not filing an estimate under section 212. Consequently, the penalty levied under section 221(1) was valid. The court answered the referred question in the affirmative and directed the assessee to pay the costs of the reference to the Commissioner.
Question answered in the affirmative.
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1972 (8) TMI 20
Kartas of two families formed a company and were appointed as joint managing director and technical director - whether the remuneration received by them would be their individual income - The burden is on the revenue to show that what is apparent on the face of the resolution is not real and that the remuneration was paid to Prafulkumar by reason of utilisation of his joint family property in the shape of share in the business. This burden the revenue has failed to discharge and in the absence of any material to the contrary brought forward on behalf of the revenue, we must reach the conculsion that there was no direct or substantial connection between the remuneration earned Prafulkumar and the joint family property invested in the company. Prafulkumar was not appointed an engineer and technical director as a result of any outlay or expenditure of or detriment to the joint family property. We, therefore, agree with the Tribunal that the income received by Prafulkumar was his individual income and not that of his Hindu undivided family
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1972 (8) TMI 19
Whether the expenditure, depreciation and development rebate in respect of extraction of limestone from mines could be allowed as business expenditure – bold that the assessee commenced its business when it started the activity of extraction of limestone by quarrying the leased area of land. Since extraction of limestone commenced from April, 1958, it must be held that the assessee was carrying on business during the relevant years of account and the Tribunal was right in taking the view that the expenditure incurred by the assessee in carrying on the activity of extraction of limestone as also depreciation allowance and development rebate in respect of the machinery employed in extracting limestone were deductible in computing the trading profits of the assessee
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1972 (8) TMI 18
Net wealth - In respect of the valuation date, March 31, 1957, he filed a return under the Wealth-tax Act showing a net wealth of Rs. 2,42,692. The assessee had claimed, among other things, a deduction of Rs. 1,67,279 as representing the liability for payment of income-tax in respect of the assessment years 1955-56 to 1957-58. The Wealth-tax Officer held that this amount did not represent a final ascertained liability as on March 31, 1957, and as such it was not an allowable deduction - When the assessee challenges the income-tax assessment after the valuation date whether the tax liability can be treated as a debt owed
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1972 (8) TMI 17
Whether, on the facts and in the circumstances of the case, it was open to the Income-tax officer under section 34(1)(a) of the Indian Income-tax Act, 1922, to reconsider the assessee's claim in respect of the losses from the Thatchanallur Sugar Mill business for the assessment years 1953-54 and 1954-55 - When a notice issue under section 34(1)(a) of Indian Income-tax Act, 1922 is for one item whether other items can be taken up
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1972 (8) TMI 16
First case is with reference to an assessment made under the Wealth-tax Act while the other is with reference to an assessment made under the Estate Duty Act – held that property constructed out of the joint family funds which was used by the pilgrims and not by the members of the family is the trust property, It cannot be subjected to Estate Duty or wealth-tax - building " Nataraja Nilayam " is a trust property and that neither the deceased nor the assessee has any proprietary interest therein. Therefore, the inclusion of the half share of the value of " Nataraja Nilayam " in the net wealth of the assessee for the years 1961-62 and 1962-63 cannot be justified.
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1972 (8) TMI 15
Issues Involved:
1. Validity of penalty imposed under section 28(1)(c) of the Indian Income-tax Act, 1922, on a Hindu undivided family (HUF) after its partition.
2. Applicability of section 25A(3) of the Indian Income-tax Act, 1922, in penalty proceedings.
Issue-wise Detailed Analysis:
1. Validity of Penalty Imposed Under Section 28(1)(c) on HUF After Partition:
The core issue revolves around whether a penalty imposed on a Hindu undivided family (HUF) under section 28(1)(c) of the Indian Income-tax Act, 1922, remains valid if the family had already been partitioned before the penalty order was passed. The Tribunal had upheld the assessee's contention that no penalty could be imposed on a non-existent entity, as the HUF had been partitioned on May 6, 1958, and the penalty order was passed on August 22, 1963. The Tribunal's decision was challenged by the Commissioner of Income-tax, who argued that since no order under section 25A(1) had been passed at the time of the penalty order, the penalty was justified.
2. Applicability of Section 25A(3) in Penalty Proceedings:
The department's argument hinged on the legal fiction created by section 25A(3), which states that if no order under section 25A(1) has been passed, the family shall be deemed to continue as a Hindu undivided family for tax purposes. The department contended that this fiction allowed the penalty to be imposed as the appellate order recognizing the partition was passed after the penalty order.
The court examined various precedents from other High Courts, including the Patna High Court in Commissioner of Income-tax v. Sannichar Sah Bhim Sah, which held that penalty proceedings could not be sustained if the HUF did not exist at the time of the penalty order. Similar views were expressed by the Madras High Court in S. A. Raju Chettiar v. Collector of Madras and the Andhra Pradesh High Court in Mahankali Subba Rao v. Commissioner of Income-tax, among others.
The lone contrary view was from the Allahabad High Court in Commissioner of Income-tax v. Gauri Shanker Chandra Bhan, which upheld the penalty based on the fiction created by section 25A(3). However, the court found this decision unpersuasive, noting that it relied on a Supreme Court case (A. Thimmayya) that dealt with assessment proceedings, not penalty proceedings.
The court emphasized that the fiction in section 25A(3) should not be extended to penalty proceedings, as it would result in injustice. The court also noted that an appellate order recognizing partition retroactively nullifies the basis for the penalty. The court concluded that the fiction in section 25A(3) does not apply once an order under section 25A(1) has been passed, even if it is at the appellate stage.
Conclusion:
The court held that the penalty imposed on the HUF was invalid as the family had already been partitioned before the penalty order was passed. The fiction created by section 25A(3) does not apply to penalty proceedings once an order under section 25A(1) has been passed, even if it is at the appellate stage. The decision in Commissioner of Income-tax v. Gauri Shanker Chandra Bhan was not correctly decided. The question was answered in the affirmative and in favor of the assessee, with costs assessed at Rs. 200.
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1972 (8) TMI 14
Issues:
Assessment of income in the status of an individual versus a Hindu undivided family, validity of the Tribunal's cancellation of the assessment order, interpretation of whether the return filed in the status of a Hindu undivided family was virtually disposed of, application of the rule of implication in assessing income.
Analysis:
The case involved a dispute regarding the assessment of income by the Income-tax Officer in the status of an individual versus a Hindu undivided family. The assessee, Shri B. P. Tandon, initially filed returns for two assessment years, one as an individual and the other as the karta of a Hindu undivided family. The Income-tax Officer assessed the entire income in the status of an individual, leading to appeals and subsequent decisions by the Appellate Assistant Commissioner and the Tribunal.
The Tribunal held that certain income belonged to the Hindu undivided family and not the individual. Subsequently, the Income-tax Officer passed an order on the return filed in the status of a Hindu undivided family. The Tribunal, following a previous decision, determined that the return was virtually disposed of and not pending, hence the Income-tax Officer could not make any assessment based on it.
The court analyzed the facts and previous decisions, emphasizing that in this case, it was not necessary for the Income-tax Officer to refer to the return filed in the status of a Hindu undivided family as the entire income was disclosed in the individual return initially filed. The court rejected the argument that the return in the status of a Hindu undivided family was impliedly disposed of by the Income-tax Officer.
The court distinguished this case from a previous judgment where two separate returns were filed, leading to a different outcome. The court declined to delve into the broader question of applying the rule of implication in such cases, focusing solely on the specific circumstances of this case.
Ultimately, the court answered the referred question in the negative, stating that the Tribunal was not justified in canceling the assessment order. The department was awarded costs, and the counsel's fee was also assessed accordingly.
In conclusion, the judgment clarified the assessment of income in different statuses, the implications of filing separate returns, and the application of the rule of implication in tax assessments, providing a detailed analysis of the specific facts and legal principles involved in the case.
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1972 (8) TMI 13
Issues:
Interpretation of Section 221 of the Income-tax Act, 1961 regarding the power of the Income-tax Officer to impose penalty on defaulting taxpayers.
Analysis:
The petitioner defaulted in paying income tax, leading to a penalty imposed by the Income-tax Officer under Section 221. The petitioner challenged this penalty through a revision before the Commissioner of Income-tax, which was rejected. The petitioner contended that Section 221 does not explicitly grant the power to impose penalties to the Income-tax Officer, citing a previous Division Bench decision supporting this argument. Due to doubts regarding the previous decision, the case was referred to a larger Bench for clarification.
Upon examination of Section 221 and related provisions, it was found that while Section 221 does not specifically mention the authority to impose penalties, it should be interpreted in connection with other sections of the Income-tax Act. Section 246(o) explicitly mentions that an order imposing a penalty under Section 221 may be made by an Income-tax Officer. Additionally, Section 201(1) and the proviso to sub-section (1) of Section 201 further support the authority of the Income-tax Officer to impose penalties under Section 221.
The judgment emphasized that the context of Section 221, within the broader framework of the Income-tax Act, indicates Parliament's intention to authorize the Income-tax Officer to impose penalties for defaulting taxpayers. The rule of strict interpretation was deemed inapplicable in this case, as the relevant context and interconnections with other sections clarified the authority of the Income-tax Officer.
The petitioner's reliance on a subsequent amendment to Section 221, expressly granting the Income-tax Officer the power to impose penalties, was deemed irrelevant to the interpretation of the unamended section. Ultimately, the petition challenging the penalty imposed under Section 221 was dismissed by the Court, affirming the authority of the Income-tax Officer to levy penalties on defaulting taxpayers.
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1972 (8) TMI 12
Managing agency agreement - right to receive share income - basis adopted for the valuation of the goodwill - hold that the deceased's share in the two managing agency firms had rightly been included in his estate - Deputy Controller valued the goodwill by estimating the profits which would have been earned for the period of seven years. But the Board, on appeal, re-valued the goodwill on the basis of actual profits – hold that valuation of goodwill on the basis of the actual profits would be proper
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1972 (8) TMI 11
Rental receipts – income from property vis-s-vis income from business - company closes down its business and after sale of machinery lets out the building - rent received by the assessee could only be traced to the ownership of the building - It could not be said to be income from the business of film production especially when assessee had sold all the machinery required for the film production - income should be assessed under the head "income from property
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