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Case Laws
Showing 421 to 440 of 465 Records
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1997 (2) TMI 45 - MADHYA PRADESH HIGH COURT
Business Expenditure, Purpose Of Business, Mixed Question, Transport, Bribes, Illegal ... ... ... ... ..... are entitled to conduct their business even contrary to law and claim deductions of payments as business expenditure, notwithstanding that such payments are illegal or opposed to public policy, or have pernicious consequences to the nation s life as a whole. Section 23 of the Contract Act equates an agreement or contract opposed to public policy, with an agreement or contract forbidden by law. In our considered opinion, therefore, firstly the payments are questions of fact. They could not be verified and the same has not been accepted by the income-tax authority including the Tribunal. Secondly, such payments amount to illegal gratification and are opposed to public policy cannot be treated to be allowable deduction. Thus, we find absolutely no ground for issuance of a direction for reference of the case to this High Court. In the result, the applications for reference are, therefore, rejected. In the facts and circumstances of the case the parties shall bear their own costs.
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1997 (2) TMI 44 - MADRAS HIGH COURT
Undisclosed Sources, Money Lending, Pronotes ... ... ... ... ..... ribunal was of the view that the principal amounts standing in the pronotes are benami in whose names the pronotes stand. Therefore, the principal amount was not included in the hands of the assessee. Interest follows the principal amount. If the principal amount does not belong to the assessee, on the same reasoning it should also be held that the interest also belongs to the persons in whose names the pronotes stand. There is no evidence on record to show that the assessee would have utilised a portion of the interest income for his own purpose. Under such circumstances, we consider that the Tribunal was not correct in sustaining a sum of Rs. 85,543 under the head Interest after deleting a sum of Rs. 62,000. In view of the foregoing discussion, we consider that the Tribunal ought to have deleted the entire interest amount from the hands of the assessee. In that view of the matter, we answer the question referred to us in the negative and in favour of the assessee. No costs.
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1997 (2) TMI 43 - MADRAS HIGH COURT
Depreciation, Actual Cost, Subsidy, Initial Depreciation ... ... ... ... ..... the First Schedule to the Industries (Development and Regulations) Act, 1951. The assessee is not manufacturing industrial machinery. Manufacturing a part of the machinery would not amount to manufacturing machinery. According to the Department, the assessee is not entitled to the initial depreciation. However, the Tribunal held that the assessee is entitled to initial depreciation even with regard to the accessories manufactured by it. A similar question came up for consideration before this court in the case of the same assessee in T. C. Nos. 765 of 1984, wherein by judgment dated February 4, 1997---CIT v. Indian Textile Paper Tube Co. Ltd. (No. 1) 1998 234 ITR 47, this court held that the assessee is not entitled to initial depreciation since the assessee was not manufacturing machinery, but only accessories of the machinery. In view of the foregoing decision of this court, we answer question No. 1 referred to us in the negative and in favour of the Department. No costs.
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1997 (2) TMI 42 - MADRAS HIGH COURT
Depreciation, Actual Cost, Subsidy, Machinery, Initial Depreciation ... ... ... ... ..... h one or more other mechanical contrivances, generate power or evoke, modify, apply or direct natural forces, even assuming that they are necessary or essential in running the textile machinery. We may also incidentally mention that the Tribunal has also noted that they have a short life and cost less (little less than Rs. 2 per unit). The decision relied on by learned counsel for the assessee in CIT v. Chitram and Co. Pvt. Ltd. 1991 191 ITR 96 (Mad) has no application at all to the present case. It is also relevant to notice that under entry 24 of the Fifth Schedule to the Act, an assessee manufacturing component parts of industrial machinery is eligible to claim development rebate under the provisions of section 53 of the Act. There is no corresponding entry in the Ninth Schedule covering the component parts of the industrial machinery in the Ninth Schedule of the Act. Therefore, we answer the abovesaid first question in the negative and in favour of the Revenue. No costs.
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1997 (2) TMI 41 - MADRAS HIGH COURT
Compensation, Agreement ... ... ... ... ..... competitive business will prima facie be in the nature of capital receipt in the present case. The assessee-company is not doing any rival business in rubber lining and rubber bonding. The agreement is not really for restraining carrying on a business as such or for the loss of goodwill. Inasmuch as the compensation received by the assessee does not affect or alter the capital structure of the assessee-company, it cannot be said that the receipt of compensation was for loss of capital structure. Since the compensation was received for loss of earning the commission for procuring orders for Hevea, the receipt of such compensation would be of revenue in nature. In view of the foregoing reasons, we consider that there is no infirmity in the order passed by the Tribunal in holding that the receipt of Rs. 20,000 by way of compensation is only revenue in nature. In that view of the matter, we answer the question referred to us in the affirmative and against the assessee. No costs.
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1997 (2) TMI 40 - MADRAS HIGH COURT
Offences And Prosecution, Deliberate Attempt To Evade Tax, False Verification ... ... ... ... ..... d draft amounts to any of the specific goods purchased by the first accused firm from Vinod Kumar Didwani and the complainant could not specifically point out the invoices of the first accused firm relating to these two demand draft amounts, and P. W. 5 Muthu could not say anything about the invoices correlating to these two demand drafts. In such circumstances I am to hold that the prosecution has not proved their case beyond all reasonable doubt and the order of acquittal passed by the lower court in C. C. Nos. 51 and 52 of 1985 is not erroneous and it is confirmed, and so both the Criminal Appeals Nos. 817 of 1987 and 818 of 1987 are dismissed, and consequently I answer this point against the appellant and in favour of the accused. In the result the Criminal Appeals Nos. 817 of 1987 and 818 of 1987 are dismissed. The orders of acquittal passed by the Additional Chief judicial Magistrate, Madurai, in C. C. Nos. 51 of 1985 and 52 of 1985 dated March 31, 1987, are confirmed.
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1997 (2) TMI 39 - MADRAS HIGH COURT
Business Expenditure, Perquisite ... ... ... ... ..... ed, it is conceded by learned counsel appearing on behalf of the assessee that the sum of Rs. 5,000 which was included under the head Sales promotion expenses was incurred for the supply of refreshments to customers. The other expenditure of Rs. 4,367 is also found to have been incurred for the benefit of customers and hence both the items are liable to be treated as entertainment expenditure and in view of the decision of the Supreme Court in CIT v. Patel Brothers and Co. Ltd. 1995 215 ITR 165 and Explanation 2 to section 37(2A) of the Act which was inserted by the Finance Act, 1983, with effect from April, 1976, we are of the view that the Tribunal was not correct in holding that the sum of Rs. 5,000 dis allowed under the head Sales promotion expenses and another sum of Rs. 4,367 under the head Miscellaneous expenses would not be regarded as entertainment expenditure. Accordingly, we answer the second question referred to us in the negative and in favour of the Department.
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1997 (2) TMI 38 - MADRAS HIGH COURT
Business Expenditure ... ... ... ... ..... assessee to the Tamil Nadu Soldiers and Sailors and Airmen s Board towards Flag Day Fund and a sum of Rs. 1 lakh to the Regional Transport Authority towards Chief Minister s Rehabilitation Fund for the physically handicapped. A similar question came up before this court in the case of CIT v. Cheran Transport Corporation Ltd. 1996 219 ITR 203, to which one of us was a party (Abdul Hadi J.), wherein it was held that the contribution to the Flag Day Fund and the Chief Minister s Rehabilitation Fund were not made in contravention of any law nor were they opposed to public policy and hence the payments had been made for business purpose and were deductible. The above view was reiterated by the Supreme Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. v. CIT 1997 223 ITR 101 where a payment was made to a public welfare fund by an assessee. Following the said decisions we answer the second question referred to us in the negative and in favour of the assessee.
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1997 (2) TMI 37 - MADRAS HIGH COURT
Other Sources, Lease ... ... ... ... ..... assessee-company cannot be assessed under the head business income . No doubt, the question of claiming the lease income to be assessed under the head business income did not arise in that case. But the fact remains that as per the decision of the Supreme Court, cited supra, lease hold income cannot be assessed under the head business when the assessee let out the machineries to a third party. When there is no claim that the lease income should be assessed under the head business income of the managing agency business and since the managing agency system is not prevailing in the assessment year under consideration, we are unable to accede to the contention made by learned counsel appearing for the assessee. Accordingly, we see no infirmity in the order passed by the Tribunal in holding that the lease income should be assessed under the head other sources . In that view of the matter, we answer the question referred to us in the affirmative and against the assessee. No costs.
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1997 (2) TMI 36 - PUNJAB AND HARYANA HIGH COURT
Depreciation, Extra Shift Allowance, Question Of Law, Rectification Of Mistakes ... ... ... ... ..... B. S. Gupta, learned senior counsel for the petitioner-Department, has, in support of his application, placed reliance upon the following decisions --- 1. CIT v. Usha Devi 1983 Tax LR 476 (MP). 2. CIT v. General Electric Co. of India Ltd. 1978 112 ITR 246 (Cal). 3. CIT v. Sundaram Textiles Ltd. 1984 149 ITR 525 (Mad). 4. CIT v. Purtabpore Co. Ltd. 1986 159 ITR 362 (Cal). 5. G. N. A. Enterprises Pvt. Ltd. v. CIT 1996 219 ITR 400 (P and H). Shri G. S. Sandhawalia, learned counsel for the assessee, has opposed the Revenue s application with the plea that the E. S. A was rightly allowed and that there was no justification to invoke section 154 so as to withdraw the E. S. A. Looking to the nature of the controversies, the questions sought to be answered do appear to be questions of law arising from the Tribunal s order. The Tribunal is, therefore, directed to state the case and refer to this court for opinion the questions of law, reproduced in the first paragraph of this order.
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1997 (2) TMI 35 - PUNJAB AND HARYANA HIGH COURT
Advance Tax, Interest, Waiver Of Interest ... ... ... ... ..... tion 139(8) was waived in the case of one petitioner but sustained in the case of the other. Similarly, interest under section 217 was charged for one year only in the case of one petitioner whereas, in the case of the other petitioner, interest was charged for the entire period. There appears no sufficient reason or any justification to adopt two different courses in the cases of the two petitioners. In the result, both the writ petitions are allowed. In the case of Mohd. Yousuf, interest charged under section 217 of the Act for the assessment year 1988-89 is sustained for the period of one year and the balance amount of interest is waived as was done by the Deputy Commissioner of Income-tax in the case of Mohd. Rehmat Ullah for the assessment year 1987-88. In the case of Mohd. Rehmat Ullah, interest charged under section 139(8) of the Act for the assessment year 1987-88 is waived as was done in the case of Mohd. Yousuf for the assessment year 1988-89. No order as to costs.
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1997 (2) TMI 34 - MADRAS HIGH COURT
Additional Wealth Tax, Agricultural Land, Powers Of High Court ... ... ... ... ..... ssessee who could have or should have given all the relevant materials before the Tribunal, to give such evidence after the case reached the reference stage. The burden is squarely on the assessee to establish that the agricultural lands are business premises and having failed to produce the necessary materials before the Appellate Tribunal, it is not open to the assessee to ask for a second chance to adduce new materials before the Tribunal in the reference stage. Hence, we are not inclined to accept the second course of action suggested by learned counsel for the assessee. Since the Appellate Tribunal has arrived at the finding that the lands of the assessee were business premises within the meaning of rule 1(i), Para B, Part I, of the Schedule to the Wealth-tax Act without any material, we hold that the finding of the Appellate Tribunal is not sustainable in law. Consequently, we answer the question referred to us in the negative and in favour of the Department. No costs.
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1997 (2) TMI 33 - MADRAS HIGH COURT
Actual Cost ... ... ... ... ..... of the Supreme Court, supra. 4. However, we find that the question as referred to us, does not reflect the controversy between the parties. Hence, we reframe the question as under Whether, on the facts and in the circumstances of the case, the assessee is entitled to additional depreciation consequent to the revision of actual cost under s. 43A of the IT Act, for the asst. yr. 1977-78 ? 5. We are of the view that the assessee is entitled to the additional depreciation on the basis of the principle laid down by the Supreme Court in Arvind Mills Ltd. s case. We also make it clear that the assessee cannot claim the total or consolidated extra depreciation that would have been admissible in the earlier years in the present assessment year and it is also impermissible for the assessee to reopen the earlier assessments for grant of depreciation in each of the earlier years. Hence, we answer the question as reframed by us in the affirmative and in favour of the assessee. No costs.
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1997 (2) TMI 32 - MADRAS HIGH COURT
Penalty, Concealment, Law Applicable ... ... ... ... ..... R 671 the Supreme Court while considering the question of similar nature held that once the Inspecting Assistant Commissioner was thus seized of the matter, he did not lose seizin thereof on account of the deletion of sub-section (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, and the Inspecting Assistant Commissioner did not lose the jurisdiction to continue with the proceedings pending before him on March 31, 1976. He was entitled to continue with those proceedings and pass appropriate orders according to law. In the present case, the Tribunal held that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under section 271(1)(c). In view of the decision of the Supreme Court referred to above, the orders passed by the Tribunal are not correct. Accordingly, the Tribunal is directed to dispose of the penalty appeal on the merits. We answer the question in the negative and in favour of the Department. No costs.
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1997 (2) TMI 31 - MADRAS HIGH COURT
Penalty, Concealment Of Income, Law Applicable ... ... ... ... ..... pecting Assistant Commissioner by the Income-tax Officer, section 274(2) was not amended and, therefore, the Inspecting Assistant Commissioner had jurisdiction to complete the penalty proceedings, even though the order under section 271(1)(c) of the Act was passed on March 30, 1977, i.e., after the amendment of section 274(2) by the Taxation Laws (Amendment) Act, 1975, which came into effect from April 1, 1976. A similar view was also taken by the Supreme Court in CIT v. Smt. R. Sharadamma 1996 219 ITR 671. In view of the foregoing decisions, the Tribunal was not correct in holding that the Inspecting Assistant Commissioner had no jurisdiction to impose penalty under section 271(1)(c) of the Act. Since the Inspecting Assistant Commissioner is having jurisdiction to levy the penalty, the Tribunal is directed to dispose of the penalty appeal on merits. In that view of the matter, the question referred to us is answered in the negative and in favour of the Department. No costs.
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1997 (2) TMI 30 - MADRAS HIGH COURT
Business Expenditure, Contribution, Panchayat, School Admission, Preference ... ... ... ... ..... e assessee s business in the sense that the assessee s employees are the beneficiaries in getting preferential admission in the school. The fact that the benefit has percolated to the general public would not stand in the way of the assessee getting the necessary deduction once the expenditure is held to be business expenditure. Hence, we are of the opinion that the Appellate Tribunal has come to the correct conclusion that the expenditure incurred by the assessee was a revenue expenditure. It should also be noted that the contribution made to the Panchayat was not in contravention of any law, nor was it opposed to public policy. In this view of the matter, we hold that the contribution made by the assessee to the Panchayat for the upgradation of the elementary school should be regarded as an allowable business expenditure under the provisions of section 37(1) of the Act. Accordingly, we answer the question referred to us in the affirmative and against the Revenue. No costs.
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1997 (2) TMI 29 - MADRAS HIGH COURT
Diversion, Overriding Title, Dissolution, Commission ... ... ... ... ..... he retired partners and the money belonged to the retired partners. The disbursement made by the assessee can only be regarded as an incident of diversion by overriding title. Therefore, we have no hesitation in holding that there is an absolute obligation imposed on the continuing partners to hand over the commission to the retired partners and the income was diverted by overriding title. In a similar situation, in V. N. V. Devarajulu Chetty and Co. v. CIT 1950 18 ITR 357, this court has held that where a new firm which merely collected the money on behalf of the old firm and bank the same to the new firm (sic), the new firm cannot be assessed. According to us, the Tribunal has correctly come to the conclusion that the commission paid to the retired partners was not includible in the total income of the assessee. Accordingly, we answer both the questions in the affirmative and against the Department. The assessee will have the cost of the reference which is fixed at Rs. 500.
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1997 (2) TMI 28 - MADRAS HIGH COURT
Question Of Law, Long-term Capital Gains, Short-term Capital Gains, Bifurcation Of Capital Gains
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1997 (2) TMI 27 - MADRAS HIGH COURT
Income, Sugar Industry, Molasses, Incentive Rebate, Business Expenditure, Gratuity ... ... ... ... ..... nce, we are not permitting learned counsel to raise such a contention. The Appellate Tribunal has found that all the conditions of section 40A(7)(b)(ii) of the Act were satisfied and in view of the positive finding of the Appellate Tribunal that the conditions were fully satisfied, we are of the opinion that the Tribunal has come to the correct conclusion that the assessee was entitled to deduction of Rs. 8,46,400 representing the provision for gratuity made at the end of previous year. Accordingly, we answer the third question in the affirmative and against the Department. Consequently, we answer the questions referred to us as under (i) The first question is answered in the negative and in favour of the Department (ii) the second question is answered in the affirmative and against the Department (iii) the third question is answered in the affirmative and against the Department and (iv) the fourth question is answered in the affirmative and against the Department. No costs.
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1997 (2) TMI 26 - PUNJAB AND HARYANA HIGH COURT
Estate Duty, Assessment, Limitation ... ... ... ... ..... the date of notice. From a plain reading of section 73A of the Act and also in the light of the observations made by other High Courts, it is evident that the proceedings for the levy of estate duty can be said to have commenced from the date of notice. It has already been seen that the proceedings had been initiated after the survey report submitted by the Inspector of the Department. Notice under section 59 of the Act had, therefore, been issued by registered post A. D. to the two sons of the deceased at the given address. The notice was, however, not served but that would not render the issuance of notice ineffective or of no consequence. Commencement of proceedings has relevance to the issuance of notice and not its service. In the result, the question referred to this High Court is answered in the negative and in favour of the Department. It is held that the proceedings initiated under section 59 of the Act were not barred by limitation under section 73A(a) of the Act.
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