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1977 (11) TMI 59
Restriction On Transfer ... ... ... ... ..... on all the relevant factors. We are, therefore, unable to answer the questions that have been referred to us and in view of the fact that the Tribunal has not considered these matters before passing the orders in the cases, we consider that we should adopt the principle that was adopted by the Supreme Court, in dealing with references under the Income-tax Act, in the decisions of the Supreme Court in Commissioner of Income-tax v. Greaves Cotton and Co. Ltd. 1968 68 ITR 200 and Commissioner of Income- tax v. Indian Molasses Co. P. Ltd. 1970 78 ITR 474. Accordingly we direct the Tribunal to take back G.T.A. No. 83 (MDS)/73-74 and G.T.A. No. 25/ 74-75 on its file and deal with them afresh after issuing notice to the parties concerned and dispose of those appeals in the light of what is stated in this judgment. We order these two references in the above terms. We direct the parties to bear their respective costs. The costs hereafter incurred will be provided for by the Tribunal.
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1977 (11) TMI 58
Higher Rate, Interest Payable ... ... ... ... ..... of the section from which alone normally one can glean the intention of the legislature. So, ascertained, it is clear that the purpose and object is to provide for interest in all cases where refund had not been actually made before April 1, 1965, from the date of expiry of six months from the date of the order referred to in section 240. So read, 6 per cent. interest would be payable for the periods September 28, 1964, to September 22, 1965, for the tax directed to be refunded for the assessment year 1956-57 and for the period September 28, 1964, to October 6, 1965, for the tax due to be refunded for the assessment years 1957-58 and 1958-59. We answer the question referred to us accordingly, i.e., in favour of the assessee and against the department. The assessee will be entitled to his costs. Advocate s fees Rs. 250. A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal, Madras Bench.
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1977 (11) TMI 57
Charitable Trust, Income From Property, Income Tax ... ... ... ... ..... tioner could be clubbed with that of the trust and assessment made. Therefore, the impugned assessments are hereby set aside and the assessing authority will proceed to issue fresh notices and assess or continue the composition in the light of the observations made above, after affording an opportunity to the petitioner to put forth his representations either in person or through counsel. W. Ps. Nos. 3864 to 3869 of 1975 Applying my judgment in W.P. No. 2960 of 1975, these writ petitions will stand dismissed with costs. Counsel s fee Rs. 500 (one set). Since these writ petitions are directed against notices under section 16(2) of the Act and inasmuch as I have dismissed these writ petitions, the assessing officer will proceed to continue this assessment, however, after affording an opportunity to the petitioner to file his representations either in person or through counsel. The said representations will be filed within six weeks from this date before the assessing authority.
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1977 (11) TMI 56
Firm Registration, Income Tax Act ... ... ... ... ..... alf of the assessee, contends that the Tribunal has taken an equitable view of the matter and that since the firm has been registered and has been assessed as such for a long period of time, the order of the Tribunal shows that it did not wish to inflict a penalty of having the partnership treated as an unregistered firm for the purposes of the assessment. Now, as we have already pointed out, the view of the Tribunal runs counter to the plain terms of the proviso. If Parliament has made it obligatory that the conditions should, at the latest, be satisfied before the assessment is made as a registered firm for the year in question, those conditions will have to be fulfilled within the period prescribed by the proviso. In this view of the matter, it is difficult to sustain the view taken by the Tribunal. The question referred will, therefore, be answered in the negative and in favour of the revenue. However, in the circumstances of the case, there will be no order as to costs.
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1977 (11) TMI 55
Business Expenditure, Stamp Duty ... ... ... ... ..... e broker with a view to acquire the premises on rent. Similarly, the stamp duty was required to be paid in order to bring about the document of lease. Expenses so incurred for securing the premises on lease for a short period of five years were, therefore, clearly in our view, allowable as revenue expenditure. The Tribunal has relied upon a decision of the Supreme Court in India Cements Ltd. v. Commissioner of Income-tax 1960 60 ITR 52, and the ratio spelt out therein that where there is no express prohibition, an outgoing by means of which an assessee procured the use of a thing by which he made profit was deductible from the receipt of the business to ascertain the taxable income. In our view, the Tribunal has, therefore, taken the correct view of law and consequently the reference must be answered in the affirmative and in favour of the assessee. The question is accordingly answered in the affirmative and in favour of the assessee. Revenue to pay the costs of the assessee.
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1977 (11) TMI 54
Share Income ... ... ... ... ..... the partner s share of profits from that firm and once the true position is realised, the argument such as the one which appealed to the Tribunal must be decisively rejected. By running the motor car for the business of the firm, by entertaining clients in connection with the business of the firm and by incurring other expenses for studio and journals which must have a direct effect on the business of the firm the assessee has sought to increase the profits of the firm and, therefore, to increase his share in those profits. If that is so, under section 10(2)(xv), as far as the Indian Income-tax Act, 1922, is concerned, and under the general principles of commercial accounting which would apply to the later two years, we are of opinion that the Tribunal was in error in not allowing the deductions claimed by the assessee. In the result, the question referred to us is answered in the negative and in favour of the assessee. The parties will bear their own costs of the reference.
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1977 (11) TMI 53
Business Expenditure, Capital Receipt, Cash Basis, Income Tax ... ... ... ... ..... here accounts had been maintained on cash basis by an assessee, the share of arrears of rents and royalties falling due during his lifetime but realised after his death which devolves upon his heirs is not stamped with the character of income and was not liable, therefore, to be taxed. In our case also there is a clear finding, which has not been disputed, that the accounts of the firm were maintained on cash basis. As far as this court is concerned, the question appears to have been concluded by the earlier observations in Amarchand N. Shroff s case (of this court) reported in 1959 36 ITR 124 and the construction placed on section 24B in the later decision in Arvind Bhogilal s case 1976 105 ITR 764 (Bom). In view of these clear authorities it appears to us unnecessary to discuss the matter further and we now proceed to answer the question referred to us. The answer will be in the negative and in favour of the assessee. The parties will bear their own costs of the reference.
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1977 (11) TMI 52
Adventure In The Nature Of Trade, Business Income, Land Acquisition, Revenue Receipt ... ... ... ... ..... perty was repaid by increasing the share capital. It is amply clear that the authorities below had sufficient material to hold that the assessee had no intention to undertake an adventure in the nature of trade when if originally purchased the land and that the property was held by the assessee only as an investment. As laid down by the Supreme Court in the case of G. Venkataswami Naidu and Co. 1959 35 ITR 594, in such cases, any one particular fact would not be conclusive even the original intention of the assessee would only be a relevant factor and it is the total impression gathered from all the relevant facts and circumstances which would govern the position. This has been taken into account in the instant case by the Tribunal and it appears to us that the Tribunal has drawn a correct conclusion from the same. For the reasons given above we answer the question referred to us in the negative and against the revenue. There will be no order as to costs. BANERJI J.-I agree.
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1977 (11) TMI 51
Assessment Of Income ... ... ... ... ..... qual share. The other aspect which was sought to be raised before us had at no time been canvassed before the authorities below, i.e., the quantum of distribution being dependent on the discretion of the trustees, i.e., no part of the income of the trust estate can be said to be specifically receivable by any person or persons. This question was never agitated earlier and in any event reading the trust deed it appears to us that the income of the estate is receivable by the trustees on behalf of the beneficiaries mentioned in the trust. No doubt, the distribution may be withheld in a particular year in the discretion of the trustees, but the second proviso clearly applies in the instance case, and the individual shares in which the beneficiaries will receive such income are clear and not left to be determined. For the reasons given above we answer the question referred to us in the negative and in favour of the assessee. There will be no order as to costs. BANERJI J.-I agree.
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1977 (11) TMI 50
Allowable Expenditure, Business Expenditure, Income Tax Act, Tax Proceedings, Wealth Tax ... ... ... ... ..... prakaram of the temple and it would be an accretion to the temple requiring no deed of transfer of the building by the assessees to the temple after its completion, for the building has been constructed on the land belonging to the temple. Instead of handing over the money either in cash or by way of a cheque to the temple and then getting it back and carrying out the work of construction of the building with that money, the assessees had themselves contributed their physical effort and put up the museum building with the funds set apart for that purpose. Therefore, the transaction in effect would amount to donation of a sum of money falling within section 80G(2)(b) of the Act. We are, therefore, of the opinion that the Tribunal rightly held that the assessees are entitled to rebate. Accordingly, we answer the question referred to us against the revenue and in favour of the assessees. The revenue shall pay the costs of this reference to the assessees. Advocate s fee Rs. 250.
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1977 (11) TMI 49
Actual Cost, Res Judicata Not Applicable ... ... ... ... ..... e plea omitted to be taken should have been one which not only might have been raised in the previous proceeding, but ought to have been so raised. We doubt whether this doctrine of constructive res judicata in all its rigour and severity can be applied to a taxing statute, on the ground that each assessment year is a separate unit of assessment. Without finally pronouncing, on that question, we think, there is sufficient indication in the terms of section 33A, from the provisions we have already adverted to, to show that even if the claim here in question might have been made in the first and the second year of planting, it was not one which ought to have been so made. We answer the question referred in the negative, that is, in favour of the assessee and against the revenue. We make no order as to costs. A copy of this judgment under the seal of the court and the signature of the Registrar will be sent to the Income-tax Appellate Tribunal, Cochin Bench, as required by law.
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1977 (11) TMI 48
Computation Of Capital Reserves ... ... ... ... ..... r and Pegler many items of contingent liability are given by way of example, viz., discounted bills, forward contracts, guarantees for third parties and speculative transactions, but there is no mention of future taxation. The Dictionary for Accountants states that only an obligation relating to a past transaction might result in a contingent liability. A future assessment as provided for in the instant case is not a past transaction in that sense. The facts in the case of the Century Spg. and Mfg. Co. 1977 108 ITR 431 (Bom) are also clearly distinguishable from the facts in the instant case. In that case, there was in existence a claim for bonus or past years, the quantum of which had not been finalised by adjudication. This was clearly a contingent liability in existence and it had been provided for. For the reasons as stated above we answer the question referred to us in the affirmative and in favour of the assessee. There will be no order as to costs. BANERJI J.--I agree.
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1977 (11) TMI 47
Insurance Company ... ... ... ... ..... It is only registered as a company under the Indian Companies Act. No evidence has been brought on the record to show that the degrees awarded by it have been recognised by any university or by the University Grants Commission or by the Central Government. Apparently, the licence was granted to the petitioner under a mistake of law and the Commissioner of Income-tax, while cancelling his licence, has only rectified an earlier mistake. He was well within his rights to do so. In any event, no injustice, much less manifest injustice, is shown to have been resulted because of the cancellation of this licence. In the circumstances, we cannot grant any relief to the petitioner. This petition is accordingly dismissed.
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1977 (11) TMI 46
Development Rebate Reserve, Rectification Proceedings, Reserve For Development Rebate ... ... ... ... ..... he assessment originally, it is difficult to perceive how this view, which is a possible view, can be subsequently rectified under section 154 on the basis of manifest error on the record. As far as the tools, structurals and the motor car are concerned, it appears to us that the view taken by the Tribunal as reflected in the paragraph above. extracted is the correct view and we are in agreement with the conclusion that the second Income-tax Officer, therefore, did not have any material to warrant action under section 154. In this view of the matter it is unnecessary to consider the contentions of the assessee as reflected in the question referred to at his instance (i.e., Question No. 2 as marked by us). Accordingly the two questions are answered as follows Question No. 1.--In the negative and in favour of the assessee. Question No. 2.--Unnecessary to answer in view of the answer given to question No. 1. The Commissioner will pay to the assessee the costs of this reference.
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1977 (11) TMI 45
Advance Tax, Penal Interest ... ... ... ... ..... tax payment will be the date on which the proceeds of the cheque are realised and credited to the Goverment account. Relying upon the above clause, counsel for the revenue stated that it is only on realisation of the proceeds that payment could be said to have been made. While it will ordinarily be so, where the non-realisation is on account of the neglect or default of the Income-tax Officer---as in this case---we do not think, the assessee can be visited with the levy of penal interest or other burdens under the provisions of the taxing statute. We are, therefore, of the view that, in this case, the assessee had discharged the burden of proving that there was payment of advance tax by cheque duly forwarded by them, and the non-realisation of the cheque was only owing to the default and neglect of the Income-tax Officer, for which the assessee is not to blame. We answer the question in the affirmative, that is, in favour of the assessee and against the department. No costs.
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1977 (11) TMI 44
Expenditure Incurred, Income Tax Act ... ... ... ... ..... of constant use to which they were being put. This court, therefore, has taken the view that the roads or roadways will have to be regarded as part of the factory buildings entitled to depreciation. In view of this decision, question No. 6 will have to be answered in the affirmative and in favour of the assessee. With regard to the last question in respect of legal fees paid for contesting the levy of penalties and fine in the proceedings for breach of the Central Excise Rules, Mr. Vyas has stated that he does not desire the question to be answered in view of the smallness of the amount involved. Question No. 7 thus need not be answered. In the result, questions Nos. 1, 2 and 3 need not be answered. Question No. 4 is answered in the affirmative and in favour of the revenue. Question No. 5 is answered in the negative and against the assessee. Question No. 6 is answered in the affirmative and in favour of the assessee. Question No. 7 need not be answered. No order as to costs.
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1977 (11) TMI 43
Fixed Assets, Income Tax, Net Wealth, Wealth Tax Act, Written Down Value ... ... ... ... ..... options in section 6 read with the Sixth Schedule to the Supply Act. It is not possible for us, therefore, to read the observations of the Tribunal that the value for the purposes of the wealth-tax had to be taken at nil while determining the value for the purposes of computing the net wealth in the manner contended by the counsel apart from the fact that such an issue never arose before the Tribunal. In this view of the matter, as already pointed out above, question No. 1 is answered as follows The written down value of the assets as determined under the Income-tax Act, could not be taken as the value of the fixed assets of the company but that the written down value as shown in the balance-sheet on the relevant valuation dates should be taken as the value of the fixed assets of the company. Question No. 2 is answered in the negative and against the assessee. Question No. 3 is answered in the negative and against the assessee. The revenue to get the costs from the assessee.
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1977 (11) TMI 42
New Industrial Undertaking, Taxing Statutes ... ... ... ... ..... in the statutory provision its ordinary and popular connotation as indicated by Lord Atkinson and restricted connotation as canvassed on behalf of the assessee. Our attention has not been drawn to any requirement of law or logic which would require the narrower meaning to be preferred over the popular meaning. If that is so, the question will have to be answered in favour of the revenue and against the assessee. In the result, question No. 2 is answered as follows In our opinion the cost of the building occurring in the Explanation to section 80J of the Act would not mean only the superstructure but would also include the cost of the land married to the superstructure on which the superstructure stands. As indicated earlier this is the only question arising from the order of the Tribunal and answer to question No. 1 is indicated by answer to this question. Accordingly, question No. 1 is not separately answered. The assessee will pay the costs of the reference to the revenue.
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1977 (11) TMI 41
Expenditure Incurred, Foreign Income, Provident Fund, Remuneration Paid To Directors ... ... ... ... ..... ribed in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . It appears to us that the Tribunal correctly appreciated the question involved and proceeded to compute the foreign income of the assessee. In such computation, the Tribunal proceeded by deducting the contribution to the foreign provident fund as expenditure allowable for the purpose of earning the foreign income for the determination or computation of such income. We see no reason to differ from the view taken by the Tribunal and following the decision of the Supreme Court in Mysore Spg. and Mfg. Co. Ltd. 1970 78 ITR 4, we answer the question No. 2 in the affirimative and in favour of the assessee. There will be no order as to costs. C. K. BANERJI J.-I agree.
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1977 (11) TMI 40
Capital Or Revenue, Question Of Law ... ... ... ... ..... the proposition that such an expense has been rightly regarded as revenue expense. We are not concerned with the final outcome of this case. Whether this expenditure should be regarded as capital expense or revenue expenses it does raise a question of law. We accordingly allow this petition and direct the Tribunal to state the case for our decision on the following question Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sum of Rs. 32,500 is allowable as revenue expenditure ? No costs.
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