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1976 (11) TMI 74
... ... ... ... ..... o be such a vital defect as to throw out the assessees claim for registration altogether. It was stated that the firm was granted renewal of registration even in subsequent years, which would go to show that the firm was a genuine firm in existence in the year under appeal. 4. In our opinion, there is no force in the submission of the Departmental Representative. We agree with the observation of the AAC that the default was merely a technical one. We also agree with the contention of the assessee s representative that the deed was in existence earlier. We have looked into the original deed also. A copy of the deed has also been filed before us. Taking the totality of circumstances, in our opinion the AAC was right in directing the ITO to reconsider the question of status after examining the genuineness of the firm. The Department will not suffer any prejudices on account of the said order of the AAC. We see no reason to interfere. 5. The appeal has no force and is dismissed.
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1976 (11) TMI 73
... ... ... ... ..... 7(2B) of the Income-tax Act, 1961? 4. As pointed out above the Tribunal after considering all the facts and circumstances of the case, and following the principles laid down by the High Court, of Gujarat in the aforesaid decision held that the expenses in question were not entertainment expenses in question were not entertainment expenses within the meaning of S. 37 (2B) of the Income-tax Act, 1961. Now as compared to the magnitude of the assessee s business, and the income assessed, the expenses in question cannot be said to be large. Whether the said expenses are allowed or disallowed the tax effect will be negligible in our opinion. Therefore, even if the question suggested by the revenue is a question for the opinion of the Hon ble High Court of Gujarat (vide decision of the Supreme Court in the case of Mathuraprasad vs. Commissioner of Income-tax, we are, not inclined to make a reference as prayed on behalf of the revenue. 5. In the result, the application is dismissed.
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1976 (11) TMI 72
Quantity discount based on future transactions - Admissibility of ... ... ... ... ..... a fixed figure of sale. It has also been noticed that Government of India vide order-in-revision No. 294 and 295 dated 6-3-1974 in revision petitions filed by the same party and on the same issue have already decided that quantity trade discount in question given by the petitioners is conditional on future transactions reaching fixed figure, the same is, therefore, not admissible under section 4 of the Central Excises and Salt Act, 1944. Further, quantity removed for consumption by the petitioner did not even reach this fixed figure. The revision petitions are, therefore, rejected . 5. In view of the fact that the quantity discount given by the party is conditional on future transactions reaching a fixed figure, the Government of India hold that the same is not admissible under section 4 of the Central Excises and Salt Act, 1944. The order-in-appeal is, therefore, set aside and the order-in-original passed by the Asstt. Collector of Central Excise referred to above restored.
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1976 (11) TMI 71
'Pulp Board' Scope ... ... ... ... ..... layers cannot be taken to have the same finish to make the board qualify as a pulp Board . The petitioner s plea that the addition of bitumen in the middle layer does not change the property of the particular layer is not acceptable since it does import the property of moisture-resistance to the board. The earlier decision of the Govt. of India, referred to by the petitioners refer to a different product. The Govt. of India, therefore, find that the order-in-appeal is correct in law and is based on the facts of the case. The revision application is rejected.
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1976 (11) TMI 70
Fan - Component parts used in electric fans ... ... ... ... ..... se of the conventional fans, two vertical rotors are used and they suck in and blow air, thus answering the description of electric fan. 8. The Assistant Collector of Central Excise rejected the claim of the petitioners for levy under Sub-item (1) on the sole ground that the diameter of the Swishflo fan cannot be ascertained. There are two rotors each rotor is 6 Ems. in width. The Assistant Collector seems to have been guided merely by the shape of the fan as it is not the conventional type of fans so as to fall under sub-item (1). 9. We are, therefore, of the opinion that the Swishflo fans fall within the description of fans described in sub-item (1) of Entry 33 and not under sub-item (3) of the same Entry. 10. We, therefore, allow this writ petition and direct the respondents to levy excise duty on Swishflo fans manufactured by the petitioners in accordance with the rates specified in Entry No. 33 (l). The petition is allowed accordingly. Rule made absolute in terms above.
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1976 (11) TMI 69
Valuation - Wholesale cash price - Determination of - - Interpretation of Voltas decision - Interpretation of Atic's decision - Alternative remedy
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1976 (11) TMI 68
Proforma Credit - Misuse of power ... ... ... ... ..... efusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. These observations fully apply to the instant case. 12. On the admitted facts, it is quite clear that if at all there was only a technical breach by the petitioner of sub-rule (3) (i) (b), all along the petitioner acted honestly and there was no loss of revenue to the Government. Having regard to the principles of law laid down by the Supreme Court, it was not only unreasonable but a misuse of power on the part of the Collector to dig out a stale and innocuous default and to penalise the petitioner. 13. The petition is allowed. All the impugned notices and orders are quashed. The petitioner will get costs of this petition from respondent No. 1 Union of India. Counsel s fee Rs. 500/-, if certified. The amount of the security deposit shall be refunded.
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1976 (11) TMI 67
Business Expenditure, Capital Or Revenue Expenditure, Collaboration Agreement ... ... ... ... ..... of 1 2. The provisions contained in the later part of article 8(a) of the agreement would seem to be in the nature of payment made to the Swiss company for what may be comparable to such consultancy service. The question of apportionment of such service between capital and revenue does not arise inasmuch as no case for the same has been made out by the department. The correspondence exchanged between the assessee-company and the Swiss company would seem to indicate that the questions referred to the Swiss company for their opinion and solution were mainly concerned with the day-to-day needs of the assessee-company in several different aspects and were not really of the nature contemplated in acquisition of assets of enduring nature. In the result, the question referred to us is answered as follows. The two sums mentioned are admissible deductions under section 10(2)(xv) of the Indian Income-tax Act, 1922. The Commissioner will pay the costs of this reference to the assessee.
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1976 (11) TMI 66
In Part, Minor Child, Proper Notice ... ... ... ... ..... erited the estate of the deceased. Therefore, every one of the heirs is interested in the issue of the determination of taxable income as well as the quantification of the tax liability. Hence the determination of the total income without proper notice to all the heirs cannot be said to be good so far as the heirs on whom notices were served and bad so far as the heirs on whom notices were not properly served. The assessment itself being one, single and indivisible, it is not possible to conceive of a situation where it can be said to be good in part and bad in part. Consequently, once it was established and found by the Tribunal that the notices on the minor legal representatives were not legally and properly served, the Tribunal was justified in setting aside the entire assessments. Under these circumstances, we answer the question referred to this court in the affirmative and against the department. Since the assessee is not represented, there will be no order as to costs.
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1976 (11) TMI 65
... ... ... ... ..... evenue from turning round and asserting that the assets which are exempt from payment of gift-tax should be deemed to belong to the donor. Similar view of this provision was taken by a Division Bench of the Calcutta High Court in Commissioner of Wealth-tax v. Smt. Sarala Debi Birla 1975 101 ITR 488 (Cal) and by the Madras High Court in T. Saraswathi Achi v. Commissioner of Income-tax 1976 104 ITR 185 (Mad). We are in respectful agreement with the view taken in the aforementioned two cases. We, accordingly, hold that the assets donated after the 31st day of March, 1964, up to the 1st day of April, 1972, shall not be included as belonging to the donating individual for computing his net wealth for all times to come, on the basis of the law as it stands today. Since the gift of the assets in question had been made in 1958, these assets could validly be included in the total assets of the assessee for computing his net wealth. The reference stands answered accordingly. No costs.
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1976 (11) TMI 64
Assessment Notice, Reassessment Notice ... ... ... ... ..... h curtails the source of information to the effect that it must come from some person who was authorised to pronounce upon the law. If such a test was applied then it might lead to the result that only judicial decisions would answer the test. We are not prepared to accept this test in view of the phraseology of the section. All that is required is that the information must come from some external source and must be of such a nature as would lead a prudent man to believe that it is correct. We have already indicated some of the sources of information which could lead the Income-tax Officer to form the belief that the information was prima facie correct and that the income has escaped assessment. The Central Board of Direct Taxes being an authority conversant with the tax laws, would be such a source. In view of these conclusions, the challenge to the notice issued under sections 148/147 must fail. The petition is accordingly dismissed with costs. The stay order is discharged.
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1976 (11) TMI 63
A Partner, Change In Constitution Of Firm, Firm Consisting, Retirement Of Partner ... ... ... ... ..... appellants were not entitled to claim that the registration made in respect of the firm earlier should be continued or should, have been treated as existing in respect of the year 1963. They cannot claim to be assessed as registered firm for the year 1963 merely on the basis of the prior registration. In view of the conclusion we have arrived at on the first submission of Mr. Das, it is not necessary for us to go into the second question, i.e., the question whether the application was defective or not. As we have held that there has been a change in the constitution of the firm, there was no question of filing of any declaration under rule 24 of the said Rules inasmuch as the firm was not entitled to the benefit of section 184(7). Contentions raised in support of the appeal fail. Accordingly, We dismiss the appeal. There will be no order as to costs. Upon prayers made on behalf of the appellants, the operation of this order is stayed for three weeks. A. N. SEN J. --I agree.
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1976 (11) TMI 62
Capital Employed, New Industrial Undertaking, Original Assessment, Original Order ... ... ... ... ..... d from in the case of J. M. Shah v. J. M. Bhatia, Appellate Assistant Commissioner of Wealth-tax 1974 94 ITR 519 (Bom). Following the decision in T. S. Balaram, Income-tax Officer v. Volkart Brothers 1971 82 ITR 50 (SC) and this court s decision in the aforesaid case reported in 1974 94 ITR 519, we are clearly of the view that the rectification orders passed by the Income-tax Officer, for the two assessment years 1957-58 and 1958-59, were not justified. We may also mention that when similar rectification orders were passed by the taxing authority under rule 19(5) while working out the capital for the purpose of section 84 of the Income-tax Act, 1961, the Gujarat High Court in the case of Commissioner of Income-tax v. Premraj Ganpatraj and Co. 1974 95 ITR 447 (Guj) has also taken the view that the rectification was unjustified. In the result, the question referred to us is answered in the negative and in favour of the assessee. The revenue will pay the costs of the reference.
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1976 (11) TMI 61
Adequate Consideration, Immovable Property, Movable Property ... ... ... ... ..... unsel, for, in that very case, the Supreme Court observed as under It cannot be laid down as a general rule applicable to all situations and circumstances that a multiple approximately equal to the return from gilt-edged securities prevailing at the relevant time forms an adequate basis for finding out the market value of the land. But in this case the trial court and the High Court were of the view that a multiple based on a return from the gilt-edged securities was the approximate multiple for determining the value of the property under acquisition, and no ground has been suggested for not accepting the basis and the rate of capitalization adopted by them. Apparently, the court accepted the method of fixing the fair market value on the basis of a multiple of the return accruing to the owner thereof. In this situation, the method adopted by the Tribunal cannot be held to be open to challenge. Accordingly, we find no merit in these appeals and order the same to be dismissed.
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1976 (11) TMI 60
Business Expenditure ... ... ... ... ..... a managing director who had devoted the best years of his life in the service of the company, who had also sacrificed a good portion of his remuneration over a long period of years, and who suddenly died, could certainly be an inducement to directors and other executives of the assessee-company to make all sacrifices in serving the company, in the expectation that if they do not live long enough to see the prosperous day of the company at least some provision will be made by the company for their legal heirs. In our view, having regard to the peculiar facts which obtain in the instant case, the Tribunal s view that the payment to the widow of late Chandavarkar was dictated by commercial prudence and commercial expediency was correct in any case the view cannot be said to be unreasonable and we uphold the same. In the result, the question, that has been referred to us is answered in the affirmative and in favour of the assessee. The revenue will pay the costs of the reference.
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1976 (11) TMI 59
Capital Of Company, Computation Of Capital ... ... ... ... ..... but an amount set aside out of profits and other surpluses to provide for any known liability of which the amount cannot be determined with substantial accuracy is a provision (see William Pickles Accountancy, second edition, page 192 Part III, clause 7, Schedule VI to Companies Act, 1956, which defines provision and reserve). We are of the opinion that, without anything more, the principles laid down by the above two decisions of the Supreme Court will themselves clearly establish that the dividend equalisation reserve created by the respective assessees in these cases will constitute reserves for the purpose of the Second Schedule to the respective Acts for the computation of the capital. Under these circumstances, we answer the questions referred to the court in the affirmative and in favour of the assessees in the respective references. The assessees in the respective cases will be entitled to their costs. Counsel s fee Rs. 500, one set in T.Cs. Nos. 287 and 289 of 1972.
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1976 (11) TMI 58
Contingent Interest, Liability To Tax, Minor Child, Strict Construction, Taxing Statutes
... ... ... ... ..... on Bench was given per incuriam. On the other hand, such a conclusion appears to be in accord with illustration (ii) to section 120 of the Indian Succession Act, 1925, and the provisions contained in section 21 of the Transfer of property Act. It is true that in Chandulal Shivlal v. Commissioner of Wealth-tax 1965 55 ITR 441 (Guj), a Division Bench of the Gujarat High Court has observed that the word benefit is a word of the widest import and would seem, in its opinion, to include a contingent benefit. With respect, however, and bearing in mind what the Gujarat High Court was called upon in that case to decide, this observation must be regarded as a stray observation, a casual use of a word or phrase and not even a well-considered obiter. In the result, I agree with the observations of my learned brother and in the final order. BY THE COURT.-Question is answered in the negative, in favour of the assessee and the department will pay the costs of the reference to the assessee.
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1976 (11) TMI 57
Assessment Year, Interest On Borrowed Capital ... ... ... ... ..... g based on no evidence at all on the record has anywhere been indicated even in the petition filed for obtaining rule. In fact, the question as framed in respect of which the rule has been obtained lays considerable emphasis only on the aspect of the user of the deposits or borrowed monies partly for payment of income-tax liability for the firm and partners. In other words, even the revenue has sought to challenge the Tribunal s conclusion only on the basis that the subsequent user of the deposits should be regarded as relevant and should make a difference on the question as to whether the deduction claimed should be allowed or not as on this aspect of the matter as we have already decided (sic). The Tribunal has rightly appreciated the ratio of the case reported in Commissioner of Income-tax v. Bombay Samachar P. Ltd. 1969 74 ITR 723 (Bom). Having regard to the above discussion, we feel that the rule deserves to be discharged. Accordingly, the same is discharged with costs.
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1976 (11) TMI 56
Fraud Or Gross Or Wilful Neglect ... ... ... ... ..... circumstances, we fail to see as to how can there be any question of concealment of income in this case. The aforesaid passage in the appellate order of the Tribunal would, in substance, amount to this, namely, that the omission or failure of the respondent to give correct particulars of the income of her husband was not due to any fraud or any gross or wilful neglect. In such a situation even if the Explanation to section 271(1) inserted by the Finance Act, 1964, should be applied, the respondent should be held to have discharged the burden placed by the Explanation. Hence, Sri Sharma is right in our opinion that the question referred by the Tribunal is academic in view of its clear finding that there was no concealment of income by the respondent. Consequently, it becomes unnecessary for us to answer the question referred to us. Hence, we return this reference without answering the same. In the circumstances of the case, parties shall bear their own costs in this reference.
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1976 (11) TMI 55
Claiming Development Rebate, Development Rebate Reserve ... ... ... ... ..... s, and the machinery with reference to which the development rebate was claimed was taken over by a new partnership of three partners out of the erstwhile five partners and the development rebate reserve originally created was also taken over by them. In such a situation, the reserve was not available to the five partners who originally constituted the firm and there was no question of that reserve being utilised for the purpose of the business of the undertaking because the business itself had ceased to exist. Consequently, the conditions precedent for the allowance of the development rebate as contemplated in section 34(3)(a) are not fulfilled and, therefore, the Income-tax Officer as well as the Income-tax Appellate Tribunal were right in holding that the erstwhile partners were not entitled to claim the development rebate, In view of this, we answer the question referred to this court in the affirmative and in favour of the department. There will be no order as to costs.
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