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Case Laws
Showing 61 to 80 of 114 Records
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1971 (9) TMI 54
Whether a certain transaction of purchase and sale of land effected by the assessees was by way of realisation of investment or was an adventure in the nature of trade - When the assessee buys and sells non-agricultural land, whether they intend to re-sell is material to determine whether the transaction was adventure in the nature of Trade - whether there is distinction between purchase and sale by a person residing abroad and by person residing in India
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1971 (9) TMI 53
Assessee entered into an agreement with M/s. Prakash Talkies Distributors under which it was agreed that in consideration of the assessee's paying a sum of Rs. 600 per month for a period of 5 years to M/s. Prakash Talkies Distributors, the latter would not exhibit any film at Virendra Talkies - agreement enured for a period of 5 years. The benefit accruing to the assessee was a benefit which extended for the period of 5 years. It resulted in the elimination of competition. In our opinion, the payment made is of a capital nature
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1971 (9) TMI 52
Whether, on the facts and in the circumstances of the case, the business of brick-kilns is not a cottage industry and, hence, income therefrom is not exempt from tax - Whether, on the facts and in the circumstances of the case, the claim for depreciation,on the amount incurred for the purchase of land has been rightly rejected - We answer both the questions referred in the affirmative, in favour of the Commissioner of Income-tax and against the assessee
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1971 (9) TMI 51
Petitioner is the village munsif - partition of the family properties - family property was admittedly subject to agricultural income-tax - Notwithstanding the alleged partition as above, the assessee was filing applications for composition for the prior assessment years including the entire extent of the family properties without noticing the partition, or giving effect to it - Since in this case such enjoyment and possession was postponed to a future date, the partition deed though was called as such cannot be treated as a partition deed - refusal of the offer to permit composition of only the assessee's share in the joint family property was held to be justified
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1971 (9) TMI 50
Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the Inspecting Assistant Commissioner's order imposing penalty under section 274(2)/271(1)(c) was valid - In the instant case, as we are of opinion that there is no material to show that the assessee consciously concealed the particulars of its income or deliberately furnished inaccurate particulars of such income, we must hold that the Tribunal was not right in maintaining the penalty imposed by the Inspecting Assistant Commissioner. The question referred is answered in the negative
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1971 (9) TMI 49
Issues Involved:
1. Deduction of interest on Rs. 5,50,000 overdraft for assessment years 1957-58, 1958-59, and 1959-60.
2. Deduction of interest credited to the account of Ganga Sagar Jatia Engineering College on the sum of Rs. 4,50,000 for assessment years 1958-59 and 1959-60.
Issue-wise Detailed Analysis:
1. Deduction of Interest on Rs. 5,50,000 Overdraft for Assessment Years 1957-58, 1958-59, and 1959-60:
The assessee claimed deduction of interest paid to the bank on the overdraft account used to pay Rs. 5,50,000 to the engineering college. The Income-tax Officer disallowed the interest, stating the payment was not related to any business project. The Appellate Assistant Commissioner upheld this decision. The Income-tax Appellate Tribunal also confirmed the disallowance, holding that the payment was a donation and not for a business purpose, thus not allowable under section 10(2)(iii) of the Indian Income-tax Act, 1922.
The court examined whether the borrowing was made to preserve business assets. It concluded that there was no necessity to employ business assets for the payment, and borrowing for non-business purposes does not qualify for deduction. The court cited similar cases, like Bhai Buribhen Lallubhai v. Commissioner of Income-tax and Mannalal Ratanlal v. Commissioner of Income-tax, where interest on borrowings for personal expenses was disallowed. The court distinguished the case from Commissioner of Income-tax v. Gopikrishna Muralidhar, where borrowings were for business purposes, and Commissioner of Income-tax v. Tingri Tea Co. Ltd., where the payment of dividends was considered a business purpose.
The court held that no commercial expediency was involved in making the payment to the engineering college. The borrowing was unrelated to the business, and the interest was not allowable as a deduction under section 10(2)(iii) or 10(2)(xv) of the Act. Therefore, the questions referred in Income-tax Reference No. 775 of 1970 were answered in the negative.
2. Deduction of Interest Credited to the Account of Ganga Sagar Jatia Engineering College on the Sum of Rs. 4,50,000 for Assessment Years 1958-59 and 1959-60:
The assessee contended that she had promised a donation of Rs. 10 lakhs to the engineering college, out of which Rs. 5,50,000 was deposited, and Rs. 4,50,000 was left as a loan with interest accruing in favor of the college. The Tribunal disallowed the interest, stating no donation of Rs. 4,50,000 had been made, and it was merely a promise. The entry in the assessee's account books crediting the trust did not amount to a gift or trust for charitable purposes.
The court found no evidence of an actual donation of Rs. 10 lakhs. The certificate from the District Magistrate, issued three years later, only mentioned a promise and was not contemporaneous with the transaction. The Tribunal rightly disregarded this certificate. The amount credited remained under the assessee's control, and no trust had come into existence. Thus, the interest credited on Rs. 4,50,000 continued to belong to the assessee, and she was not entitled to the deduction.
Accordingly, the question referred in Income-tax Reference No. 342 of 1964 was answered in the negative. The Commissioner of Income-tax was entitled to costs of Rs. 200, as one consolidated set of costs in both cases.
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1971 (9) TMI 48
Issues Involved:
1. Whether penalty under Section 221(1) of the Income-tax Act, 1961, can be levied for default in payment of advance tax.
2. Whether 'advance tax' can be considered 'tax' for the purpose of Section 221 of the Income-tax Act, 1961.
3. Whether default in payment of advance tax can be treated as a continuing default after the expiry of the relevant financial year.
Issue-wise Detailed Analysis:
1. Penalty for Default in Payment of Advance Tax:
The primary issue revolves around the interpretation of Section 221(1) of the Income-tax Act, 1961, and whether it applies to defaults in the payment of advance tax. The court examined the language of Section 221(1), which states that "when an assessee is in default or is deemed to be in default in making a payment of tax," a penalty can be levied. The court noted that the term "tax" includes advance tax, as specified in Section 2(43) and Section 4(2) of the Act. The court concluded that failure to pay advance tax by the specified date constitutes a default in the payment of tax, thereby attracting the penalty provisions of Section 221(1).
2. Advance Tax as 'Tax':
The court delved into the definition and treatment of 'advance tax' within the Income-tax Act. Section 207 defines advance tax as "tax payable in advance in accordance with the provisions of sections 208 to 219." The court emphasized that advance tax retains its character as "tax," albeit payable in advance. Various sections, including Section 190 and Section 219, reinforce that advance tax is indeed considered tax under the Act. The court also highlighted that the legislative intent, as reflected in the words "other than a penalty" in Section 219, indicates that penalties can be levied for defaults in advance tax payments, further affirming that advance tax is treated as tax for the purposes of penalty under Section 221(1).
3. Continuing Default Beyond Financial Year:
The court addressed whether the default in payment of advance tax continues beyond the close of the financial year. The assessee argued that such defaults should end with the financial year, but the court rejected this argument. The court clarified that the liability to pay advance tax persists until it is discharged, irrespective of the financial year's end. The court stated, "If the assessee is liable to pay instalment of advance tax on the specified date and he fails to make such payment, he would be in default and so long as this liability is not discharged, the default would continue to subsist even beyond the close of the financial year." The court concluded that the default in payment of advance tax is a continuing default until the liability is settled through self-assessment, provisional assessment, or regular assessment.
Conclusion:
The court answered all the questions in the affirmative, affirming that:
1. Penalty under Section 221(1) can be levied for default in payment of advance tax.
2. Advance tax is considered 'tax' for the purpose of Section 221.
3. Default in payment of advance tax is a continuing default beyond the financial year.
The assessee was ordered to pay the costs of both references to the Commissioner.
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1971 (9) TMI 47
Whether Tribunal was right in holding that the assessee had no obligation to file an estimate of its income under section 18A(3) of the Act of 1922 - Tribunal is right in the view taken by it that the assessee (who has been provisionally assessed to tax )had no obligation to file an estimate of its income under section 18A(3).
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1971 (9) TMI 46
Petitioner applies under article 226 of the Constitution for relief against proceedings initiated by a notice under section 148 – revenue had failed to prove that the conditions required for s. 147(a) were satisfied - to invoke section 10(2A), it appears necessary that the business in which the loss, expenditure or trading liability was incurred, should be in existence during the previous year in which the subsequent receipt is sought to be added as the assessee's profits – petition is allowed - notice issued under section 148 and the proceedings consequent thereto taken against the petitioner are quashed
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1971 (9) TMI 45
It is clear that the allocation reports received from the Income-tax Officers having jurisdiction over the three firms conveyed information to the Income-tax Officer assessing the assessee that the correct share of the assessee in the profits of the three firms to the extent to which it was in excess of that declared in the return had escaped assessment at the time of the original assessment and it must, therefore, be held that the conditions for the applicability of section 147(b) were satisfied and the Income-tax Officer was entitled to reopen the assessment of the assessee under that section.
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1971 (9) TMI 44
We are unable to hold that the company carried on any business or vocation, and it seems to us that the Tribunal is right in holding that the case is not governed by section 28 but falls to be considered under section 56. The income from the fixed deposits has to be considered as income from "other sources", and only that expenditure can be deducted from it which under section 57 can be considered as incurred for earning that income. The Tribunal has found that the expenses claimed are not related to that income, and this finding has not been shown to be erroneous in law.
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1971 (9) TMI 43
"Whether, on the facts and in the circumstances of the case, the sum of Rs. 44,000 gifted by the deceased to his minor sons on April 15, 1954, was correctly included in the estate of the deceased as property deemed to pass on his death under section 10 of the Estate Duty Act, 1953?" - held that - In the case before us, the property gifted was brought in as the capital of the firm in which the donor was also a partner. The moment the money was brought into the firm as capital, the deceased, as a partner, had similar possession and control over that money as any partner has over any other asset of the firm.
In view of the aforesaid discussion, we answer the question in the affirmative and in favour of the revenue. The accountable person shall pay a sum of Rs. 200 as costs of this reference to the Controller of Estate Duty. Counsel's fee is assessed at the same figure.
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1971 (9) TMI 42
Assessee is the Truck Operators Union in the status of association of persons - commission paid on gross bookings received from members – whether such payment is capital or revenue in nature – held that payment was of a capital nature because, it was paid to avoid competition and it was paid to only such members whose trucks were not booked
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1971 (9) TMI 41
Issues Involved:
1. Validity of reassessment proceedings under section 147(a) of the Income-tax Act, 1961.
2. Omission or failure by the assessee to disclose material facts.
3. Escapement of income from assessment.
Issue-wise Detailed Analysis:
1. Validity of reassessment proceedings under section 147(a) of the Income-tax Act, 1961:
The primary question was whether the reassessment proceedings initiated by the revenue for the assessment year 1957-58 were valid under section 147(a). The court noted that for the Income-tax Officer to have jurisdiction to issue a notice for reassessment beyond four years from the end of the relevant year, two conditions must be satisfied:
- The Income-tax Officer must have reason to believe that income chargeable to tax has escaped assessment.
- Such escapement must be due to the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
2. Omission or failure by the assessee to disclose material facts:
The court examined whether the assessee had failed to disclose material facts necessary for its assessment. The assessee did not show the capital gain from the sale of a rotary machine in its return for the assessment year 1957-58. The return specified various heads of income, including capital gains, but the assessee made no entry under this head. Additionally, the machinery account submitted by the assessee did not show the date of the sale of the rotary machine, which was crucial to determine the taxability of the capital gain under section 12B. The court emphasized that the "material facts" required to be disclosed are primary facts necessary for the assessment. The assessee disclosed the cost price, written down value, and sale price of the rotary machine but failed to disclose the actual date of sale, which was a primary fact necessary to determine the taxability of the capital gain.
3. Escapement of income from assessment:
The court considered whether the capital gain of Rs. 25,450 escaped assessment due to the assessee's omission or failure to disclose the actual date of sale. The court rejected the argument that the escapement was due to inadvertence on the part of the Income-tax Officer. The court found it reasonable to assume that the Income-tax Officer might have concluded that the sale occurred before 31st March, 1956, based on the blank entry under capital gains in the return and the "nil" entry in Part VII of the return. The court concluded that the capital gain escaped assessment due to the assessee's failure to disclose the actual date of sale.
Conclusion:
The court held that the conditions for initiating proceedings under section 147(a) were satisfied, and the reopening of the assessment for the assessment year 1957-58 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.
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1971 (9) TMI 40
Whether the writ petitions can be entertained against the orders of the Commissioner. The point is whether the assessee can be allowed to bypass the scheme of remedies against the assessment orders provided by the Act and be allowed to move this court straightaway under article 226 of the Constitution against the orders of assessment themselves – Held, no
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1971 (9) TMI 39
Issues:
Interpretation of whether the value of raw materials received as a gift from collaborators should be treated as income or stock-in-trade.
Analysis:
The case involved an Indian company with German collaborators setting up a factory for hosiery needles manufacturing. The controversy arose regarding the treatment of raw materials received as a gift from collaborators. The company claimed the materials should not be considered stock-in-trade but rather as a gift and not part of revenue. The Income-tax Officer and the Appellate Assistant Commissioner treated the value of the materials as income of the assessee. The Appellate Tribunal upheld this decision, emphasizing that the materials were raw materials and semi-finished products related to the revenue account. The Tribunal highlighted the principle that trading stocks' expenditure goes to the revenue account, and the sale proceeds are part of trading profits. The Tribunal rejected the company's claim that the materials were capital receipts. The Tribunal also noted that the company had commenced business earlier, contradicting the claim that the materials were received before the business started.
The High Court analyzed the case in detail, focusing on the nature of the receipt of raw materials as a gift. The Court referred to the Income-tax Act, particularly Section 10(3), which excludes casual and non-recurring receipts from the definition of income. The Court highlighted that the value of the raw materials did not fall under any exception mentioned in Section 10(3) and, therefore, could not be considered income. The Court also emphasized that the treatment of the materials as stock-in-trade for bookkeeping purposes did not make them income. The Court questioned the Tribunal's decision to include the value of the materials as income, especially considering that the collaborators' gift was a one-time event to support the company's functioning.
The High Court disagreed with the Tribunal's classification of the gift as income, stating that the mere fact that the materials were treated as stock-in-trade did not make them income. The Court highlighted that stock-in-trade becomes profit or loss only upon disposal, and in this case, the materials were received as a gift and later used in production. The Court concluded that the value of the gifts should not be treated as income and ruled in favor of the assessee on both questions referred. The Court did not award costs due to the complexity of the issue.
In conclusion, the High Court held that the raw materials received as a gift should not be considered income but rather as stock-in-trade, emphasizing that the treatment of such gifts as income was incorrect. The Court's analysis focused on the specific provisions of the Income-tax Act and the nature of the receipt in question, ultimately ruling in favor of the assessee.
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1971 (9) TMI 38
Assessee having contingent interest in the corpus of the trust funds under the four trust deeds – trustees of the four trust deeds were assessed to wealth-tax in respect of the trust properties and it was, therefore, not competent to the revenue to include the value of the interest of the assessee in the trust properties in the computation of her net wealth
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1971 (9) TMI 37
Whether the distribution of the assets of the partnership on dissolution between the partners is a transfer or sale as contemplated by the proviso to section 10(2) (vib) of the Indian Income-tax Act, 1922 – held that such distribution does not amount to a transfer or sale - as such the development rebate already granted could not be withdrawn
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1971 (9) TMI 36
Mysore Agricultural Income-tax Act, 1957 - agricultural income –
notice issued to the petitioner to amend the status of the assessee as Hindu undivided family in the assessment – held that assessee's status in the assessment order can not be subsequently rectified
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1971 (9) TMI 35
Reopening of assessment – bar of limitation - applicability of provision of section 153(3)(ii) - When the Appellate Assistant Commissioner clearly holds that certain investments in properties are not by the firm but by its partners, whether their assessments could be reopened even after the time-limits prescribed
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