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Case Laws
Showing 41 to 60 of 81 Records
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1965 (11) TMI 41 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the Wealth-tax Officer was justified in taking the value of the assets of the assessee as shown in its balance-sheet on the relevant valuation date ?
Whether, on the facts and in the circumstances of the case, in computing the net wealth of the assessee the amount of proposed dividend was deductible from its total assets ?
Whether, on the facts and in the circumstances of the case, in computing the net wealth of the assessee, the amount of the provision for payment of income-tax and super-tax in respect of the year of account was a debt owed within the meaning of section 2(m) of the Wealth-tax Act, 1957, and as such deductible in computing the net wealth of the assessee ?
Held that:- It was open to the assessee to convince the authorities that the said figure was inflated for acceptable reasons ; but it did not make any such attempt. It was also open to the Wealth-tax Officer to reject the figure given by the assessee and to substitute in its place another figure, if he was, for sufficient reasons, satisfied that the figure given by the assessee was wrong. But he did not find any such reasons to do so. When he accepted the figure shown by the assessee himself, he did the right thing and there is nothing to complain about. The High Court was right in answering the first question in the affirmative.
Till the company in its general body meeting accepts the recommendation and declares the dividend the report of the directors in that regard is only a recommendation which may be withdrawn or modified as the case may be. As on the valuation date nothing further happened than a mere recommendation by the directors as to the amount that might be distributed as dividend, it is not possible to hold that there was any debt owed by the assessee to the shareholders on the valuation date. The High Court rightly answered the second question in the negative.
We agree with the conclusion arrived at by the Gujarat High Court. We, therefore, hold that the liability to pay income-tax is a debt within the meaning of section 2(m) of the Wealth-tax Act and it arises on the valuation date during the accounting year.
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1965 (11) TMI 40 - SUPREME COURT
Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Explanation to section 8 is not applicable in this case and that the entire interest of ₹ 44,720 earned by the assessee from securities issued by the former Native States, etc., is entitled to rebate of income-tax?
Held that:- Though the point of time from which the exemption works is when it is received within the territories of the State of Travancore-Cochin, what is exempted is the interest receivable." Interest receivable " can only mean the amount of interest calculated as per the terms of the securities. It cannot obviously mean interest receivable minus the amount spent in receiving the same. We, therefore, hold agreeing with the High Court, that no income-tax is payable in respect of the entire interest of ₹ 44,720 earned by the assessee from securities issued by the former Native States. Appeal dismissed.
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1965 (11) TMI 39 - SUPREME COURT
Whether, in the circumstances of the case, the Tribunal was justified in assessing the income of the minors in the hands of the guardians as the income of a Hindu undivided family?
Held that:- Section 40 plainly applies to the facts of this case and consequently the guardians have to be assessed, treating the minors as constituting a Hindu undivided family. In the result, the appeal is accepted and the question referred to the High Court is answered in the affirmative. Appeal allowed.
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1965 (11) TMI 38 - SUPREME COURT
Whether, on the facts and the circumstances of the case, the Tribunal is correct in law in holding that the assessee-firm (R. B. Jodha Mal Kuthiala, Abdullapur Depot, Simla) was not entitled to the benefit provided in section 25(3) or section 25(4) of the Income-tax Act, in relation to the assessment in question ?
Held that:- The partnership therefore came into being at the precise point of time at which the Indian Income-tax (Amendment) Act (7 of 1939) came into force and it could not be said that the assessee was not carrying on business at the commencement of the Indian Income-tax (Amendment) Act, 1939 (7 of 1939). The High Court was, therefore, in our judgment, right in holding that the assessee was entitled on the dissolution of that firm in March, 1943, to the benefit of section 25(4) of the Indian Income-tax Act. Appeal dismissed.
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1965 (11) TMI 37 - SUPREME COURT
Whether by enacting section 18 of the Act, Parliament has not rendered the estate of a person liable to expenditure-tax, if such person had died before the date on which the Act was brought into force?
Held that:- A person who has rendered himself liable to pay tax on the expenditure incurred by him in the previous year may, not being aware of the proposal to enact a statute like the Expenditure-tax Act, part with his estate. But on that account he cannot set up a defence against the levy of the tax that he has parted with the estate. Nor can the legal representative of a deceased person set up a plea that because the estate is distributed, he should not be rendered liable to pay the expenditure-tax which has been imposed by the statute. Thus unable therefore to agree with the High Court that, by enacting section 18 of the Act, Parliament has not rendered the estate of a person liable to expenditure-tax, if such person had died before the date on which the Act was brought into force. Appeal allowed.
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1965 (11) TMI 36 - SUPREME COURT
Was the post office the agent of the assessee to receive the cheques representing the sale proceeds on its behalf, and did the assessee consequently receive the sale proceeds through its agent in British India?
Whether the revenue authorities could raise this contention for the first time at the hearing of the reference before the High Court, though this contention was not raised by it before the Tribunal or at any stage of the assessment proceedings ?
Held that:- We are satisfied that the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the cheques were posted, and consequently, the profits in respect of the sales were taxable under section 4(1)(a). The High Court, therefore, rightly answered the question in the affirmative.
As the assessee was not prevented from adducing any material evidence by reason of the omission of the revenue authorities to argue the new point before the Tribunal. We do not, therefore, think it necessary to express any opinion on the question whether the court should refuse to allow the revenue authorities to raise a new contention where, by reason of their omission to raise the contention before the Tribunal, the assessee had been prevented from adducing material evidence on the point. Appeal dismissed.
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1965 (11) TMI 35 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the sum of ₹ 96,000 paid by the assessee during each of the relevant accounting years was rightly allowed as a revenue deduction in computing the business profits of the assessee-company?
Held that:- in the present case the royalty payment is not a direct payment for securing an enduring advantage ; it has relation to the raw material to be obtained, we must hold that the royalty payment, including the dead-rent, have relation only to the lime deposits to be got. If it has no direct relation to the acquisition of the asset, then the principle relied on by the learned Attorney-General does not afford him any assistance. We, therefore, hold that the yearly payment of ₹ 96,000 should be treated as revenue expenditure and the answer to the question referred to the High Court must be in favour of the assessee. Appeal allowed.
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1965 (11) TMI 34 - SUPREME COURT
Whether, on the above facts and circumstances of the case, the assessee is entitled to rebate equal to the difference between the British Indian rate and Baroda State rate in respect of the dividend income ?
Whether, on the facts and circumstances of the case, the dividend income accrued or arose to the assesee at Bombay ?
Held that:- Since that amendment, income accruing or arising after the merger in Indian States outside British India alone would be exempt under section 14(2)(c). There is nothing in the Concessions Order which suggests that it was intended to ensure continuance of the exemption under section 14(2)(c) to residents of British India as it was before merger, as if the merger had not taken place. The use of the expression " had he been resident in the taxable territories " introduces a fiction; it grants the benefit of section 14(2)(c), though on the express terms it is not available, to a person who was not before the merger covered thereby, and in respect of income which would have been, if the Merger Act had not been passed, exempt from taxation in his hands, if he had been resident in British India.
In the view on the first question, it is unnecessary to record an answer on the second question. Appeal dismissed.
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1965 (11) TMI 33 - SUPREME COURT
Whether on a true interpretation of the deed of agreement dated 2nd January, 1931, appointing the assessee as treasurer of the Allahabad Bank Limited, income earned by the assessee from his activities as such treasurer fell to be computed under section 10 of the Act or section 7 or section 12 of the Income-tax Act?
Held that:- Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the bank from his own acts and omissions or of the servants introduced by him into the business of the bank, the assessee may be regarded as following a vocation. The remuneration must therefore be computed under section 10 of the Income-tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year. Appeal dismissed.
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1965 (11) TMI 32 - SUPREME COURT
Whether, in the facts and circumstances of the case, the unabsorbed depreciation of the past years should be added to the depreciation of the current year and the aggregate of the unabsorbed depreciation and the current year's depreciation be deducted from the total income of the previous year relevant for the assessment year 1952-53 ?
Held that:- The unabsorbed depreciation allowance is carried forward under proviso (b) to section 10(2)(vi) and the method of carrying it forward is to add it to the amount of the allowance or depreciation in the following year and deeming it to be part of that allowance ; the effect of deeming it to be part of that allowance is that it falls in the following year within clause (vi) and has to be deducted as allowance. If the legislature had not enacted proviso (b) to section 24(2), the result would have been that depreciation allowance would have been deducted first out of the profits and gains in preference to any losses which might have been carried forward under section 24, but as the losses can be carried forward only for six years under section 24(2), the assessee would in certain circumstances have in his books losses which he would not be able to set off. It seems to us that the legislature, in view of this, gave a preference to the deduction of losses first. But it is wrong to assume that section 24(2) also deals with the carrying forward of depreciation. This carry forward having been provided in section 10 (2)(vi) and in a different manner, section 24(2) only deals with losses other than the losses due to depreciation. Appeal dismissed.
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1965 (11) TMI 31 - SUPREME COURT
Whether, in the case of the assessee, an investment company, its dividend income is part of its profits and gains chargeable to tax under section 10 of the Indian Income-tax Act, 1922 ?
Held that:- No facts have been brought out in this case to show that the company was in any way carrying on business in respect of shares. Its position, on the facts placed before us, is in no way different from an individual merely buying shares with a view to holding them for the purpose of earning dividends. No authority has been cited before us that in the case of an individual to acquire and hold shares with the object of receiving dividends is to carry on business. We are unable to hold that if a company does the same, it carried on business within section 10 of the Act. Appeal dismissed.
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1965 (11) TMI 30 - SUPREME COURT
Whether, on the facts and in the circumstances of the case, the commission of ₹ 2,45,557 was exempt in the hands of the assessee by virtue of the Notification No. 878F dated March 21, 1922, as amended by Notification No. 8 dated March 24, 1928 ?
Held that:- Whether the commission was paid out of the profits or determined with reference to the profits has to be decided on the facts of each case. In the present case, the Tribunal rightly found that the commission was paid out of the profits of the business. We, therefore, agree with the conclusion of the High Court, though on different grounds. Appeal dismissed.
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1965 (11) TMI 29 - SUPREME COURT
Advance Tax, Net Wealth ... ... ... ... ..... section 2 of the Wealth-tax Act. Following that judgment, we answer the first question in the affirmative. The result is that Civil Appeal No. 66 of 1965 is allowed with costs. This court in Commissioner of Wealth-tax v. Standard Vacuum Oil Co. Ltd. held that demand for advance payment of tax under section 18A of the Income-tax Act was a debt within the meaning of section 2(m) of the Wealth-tax Act. Following that judgment, we dismiss Civil Appeal No. 67 of 1965 with costs. SHAH J.---I agree that Civil Appeal No. 67 of 1965 should fail. For reasons mentioned in the judgment delivered by me in Civil Appeal No. 539 of 1964 Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax, Appeal No. 66 of 1965 should also fail. ORDER.---In accordance with the opinion of the majority, Civil Appeal No. 66 of 1965 is allowed with costs. Civil Appeal No. 67 of 1965 is unanimously dismissed with costs. Civil Appeal No. 66 of 1965 allowed. Civil Appeal No. 67 of 1965 dismissed.
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1965 (11) TMI 28 - SUPREME COURT
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... ... ..... out authority of law or ultra vires the Sales Tax Act and the rules. This court in K. S. Venkataraman and Co. (P.) Ltd. v. State of Madras (Civil Appeal No. 618 of 1963 decided on October 18, 1965) held that the Sales Tax Tribunal could only decide disputes between the assessee and the Commissioner in terms of the provisions of the Madras General Sales Tax Act, 1939, and the question of ultra vires was foreign to its jurisdiction. For the same reason, we must hold that the question raised by the appellant before the High Court could not be decided by the sales tax authorities under the Orissa Sales Tax Act, 1947. The High Court, therefore, went wrong in dismissing the applications on the ground that the appellant should exhaust his internal remedies under the said Act. The order of the High Court is set aside, the appeals are allowed and the matter is remanded to the High Court for disposal in accordance with law. Costs will abide the result. Appeals allowed. Cases remanded.
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1965 (11) TMI 27 - SUPREME COURT
Whether the Tribunal misdirected itself in law in disallowing a part of the bonus paid to the employees ?
Held that:- As the High Court held that the Tribunal, inasmuch as it did not take into consideration the relevant factors in terms of the said proviso, misdirected itself in law in disallowing a part of the bonus paid by the assessee to the employees, it will, therefore, be seen that the High Court answered the reference, as in the view expressed by it a question of law arose for its consideration. Therefore no question of want of jurisdiction arises in this case. The argument of the learned counsel, in substance, was not that the question referred to and answered by the High Court did not raise a question of law, but that the circumstances mentioned by the High Court were also taken into consideration by the Tribunal.
Ihis is not a fit case for interference in exercise of our extraordinary jurisdiction under article 136 of the Constitution as the amount involved in the appeal was a few thousand rupees; and no important question of law arises for our decision. Appeal dismissed
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1965 (11) TMI 26 - SUPREME COURT
Whether the assessments should have been made under section 12 of the Assam Agricultural Income-tax Act ? or under section 13 thereof?
Held that:- On this interpretation of the document, it is manifest that it cannot fall under section 13, for the trustees cannot be described as common managers appointed under any law for the time being in force or under any agreement. They are obviously not receivers, administrators or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom.
The High Court was right in holding that the case fell under section 12 and not under section 13 of the Act. The answer given by the High Court to the question referred to it is correct. Appeals dismissed.
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1965 (11) TMI 25 - SUPREME COURT
Whether the assessment of the income of the assessee, other than his salary in the hands of the assessee, as an individual and not as a Hindu undivided family till 11th December, 1952, for the assessment year 1953-54 is valid?
Held that:- We would not be justified in introducing uncertainties and anomalies in the working of the Act by introducing this doctrine for the purpose of section 3 of the Act.
Apart from the difficulty of reconciling this doctrine with the scheme of the Act, Mr. Sastri has not been able to satisfy us that any rights of the son are being affected by not recognising his existence for the purposes of section 3 of the Act till he is actually born. Income-tax is a liability and it could not have been the intention of the legislature to impose a liability on persons yet unborn.
Even if a Hindu undivided family was in existence towards the end of the accounting year, still the whole income received or accrued in the accounting year did not thereby become the assessable income of the Hindu undivided family. Till the child was born the income which accrued to, or arose to, or was received by the assessee was his income. The Act disregards subsequent application of income and profits once they have arisen. When the income and profits arose, they belonged to the assessee, as no Hindu undivided family was then in existence. This position cannot be displaced by the birth of the son, which brought into existence a Hindu undivided family. Appeal dismissed.
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1965 (11) TMI 24 - SUPREME COURT
Whether the income made by the Corporation can be assessed under the provisions of section 44D of the Income-tax Act in the hands of the present assessees and, if so, to what extent?
Held that:- The words " by means of a transfer of assets " mean nothing more than " as a result or by virtue or in consequence of the transfer ", therefore, reject the first contention of the learned counsel that the expression " by means of a transfer " in section 44D(1) of the Act means a transfer by an assessee and that, as in the instant case the transfer was by the firm, which was a juristic entity separate from the assessees, the income of the Corporation was not assessable to tax in their hands.
The second contention that the said sub-section can be invoked only if at the time of the transfer the income from the said assets was liable to tax and that, as in the present case, when the transfer of the assets was effected in 1933, the income therefrom was not chargeable to income-tax, for it was foreign income not remitted to India---the said assets fell outside the ken of the said sub-section also rejected as the sub-section was designedly couched in the widest phraseology to prevent evasion of tax in the manner prescribed thereunder. If it was not so, a person can transfer his assets to another in a year they have not yielded any income at all, reserving indirectly the right to enjoy the income therefrom in future or he may transfer his assets when they are not yielding any income, but which may, under a scheme of future development, yield enormous profits. On the other hand, a bona fide transferor is amply protected by sub-section (3) of section 44D of the Act.
As it is recorded in the statement of case that it was conceded before the Tribunal that the assessees had power to enjoy the income of the assets transferred within the meaning of section 44D(1) of the Act. In the circumstances, the High Court rightly held that the assessees had the power to enjoy the income within the meaning of section 44D(1) of the Act. The Tribunal found as a fact on the material placed before it that the transfer was to avoid the liability to taxation ; and that being a finding of fact, the High Court rightly accepted it. The correctness of the said finding of fact cannot be permitted to be canvassed in these appeals. Appeal dismissed.
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1965 (11) TMI 23 - SUPREME COURT
Whether the sums of ₹ 66,790 and ₹ 3,35,371 are assessable under section 10 for the assessment years 1951-52 and 1952-53 ?
Held that:- In the present case, the covenant was an independent obligation undertaken by the assessee not to compete with the new agents in the same field for a specified period. It came into operation only after the agency was terminated. It was wholly unconnected with the assessee's agency termination. We, therefore, hold that that part of the compensation attributable to the restrictive covenant was a capital receipt and hence not assessable to tax.
The answer to the question referred to the High Court is that only such part of the sums of ₹ 66,790 and ₹ 3,35,371 as is attributable to the loss of the agency is assessable under section 10 of the Act for the assessment years 1951-52 and 1952-53. We accordingly modify the answer given by the High Court in that regard. Appeal allowed in part.
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1965 (11) TMI 22 - SUPREME COURT
Whether, on the facts found, it could be said that the company had been carrying on business in the two accounting years?
Held that:- The company had ceased to carry on business and we would answer the first question in the negative. The appeals must be allowed
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