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1977 (11) TMI 39
Question Of Law ... ... ... ... ..... ld be regarded as wilful or not prima facie raises a question of law. We accordingly allow this petition and direct the Tribunal to state the case after framing the question of law, after hearing the parties, for our decision. The parties through their counsel are directed to appear before the Tribunal on December 26, 1977. No costs.
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1977 (11) TMI 38
Firm Registration, Income Tax Act ... ... ... ... ..... ns of the Indian Partnership Act, 1932, and further that the said partnership was a genuine one. In view of the conclusions of the Tribunal that the partnership was both valid and genuine, it appears that the question would be required to be answered in the affirmative and in favour of the assessee. Mr. Joshi has very fairly pointed out that this would be so by reason of the decision of our High Court in R. K. Dhingra and Co. v. Commissioner of Income-tax 1976 102 ITR 643 (Bom). In view of the clear finding as to genuineness given by the Tribunal and since in our opinion there was no legal bar to formation of such partnership, the question will be required to be answered in favour of the assessee. Such a firm cannot be denied registration under section 26A merely because there would be some loss of revenue. In the result, the question referred to us is answered in the affirmative and in favour of the assessee. The parties, however, will bear their own costs of the reference.
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1977 (11) TMI 37
Business Expenditure, Capital Asset, Collaboration Agreement ... ... ... ... ..... penses of the two directors and the production manager of the company for expansion of the factory would partake of revenue expenditure. We are more inclined to agree with the decision of the Gujarat High Court in Sayaji Iron and Engineering Works Pvt. Ltd. s case 1974 96 ITR 240 (Guj). We are, therefore, of the considered view that the tax authorities were in error in declining to allow a deduction of Rs. 21,842 on the ground that it was capital expenditure. In the view which we have taken on this question, question No. 4 referred by the Tribunal does not arise and need not be answered. Consequently, the questions referred by the Tribunal are answered as follows Question No. 1 In the affirmative and that the entire amount of Rs. 1,35,343 was deductible as revenue Question No. 2 Does not arise and need not be answered Question, No. 3 In the negative and in favour of the assessee. Question No. 4 Does not arise and need not be answered. Revenue to pay the costs of the assessee.
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1977 (11) TMI 36
Business Expenditure ... ... ... ... ..... on is whether any formal contract or bond is required. We are of the opinion, that the factum of relationship itself will confer assurance on any scrutinising mind that as far as possible the result of the training will be utilised for the benefit of the company. On the facts as found by the Tribunal, which, have been indicated and summarized above, it appears to us that the reason given by the Tribunal for the disallowance in the facts and circumstances of this case and particularly bearing in mind the close relationship of the two directors and the trainee is clearly unsustainable and if that be the only reason which has weighed with the Tribunal, we must answer the question referred to us in favour of the assessee since the view we have taken is that the reason given by the Tribunal is not a good reason. In the result, the question referred to us is answered in the affirmative and in favour of the assessee. The parties, however, will bear their own costs of the reference.
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1977 (11) TMI 35
Dissolution Of Firm ... ... ... ... ..... dayal s case 1968 68 ITR 425 (Bom) which followed the Supreme Court decision in Abraham s case 1961 41 ITR 425 (SC), the matter was concluded against the assessee and no useful purpose would be served by reagitating the same as far as the Bombay High Court is concerned. We are not concerned with the second question considered in Laxmidas and Co. s case 1969 72 ITR 88 (Bom), which was on the point of limitation. In the result, it would have to be held by us that as far as this court is concerned, the question sought to be raised by the assessee in this reference is concluded against the assessee by reason of the Bombay decision referred to in the order of the Tribunal (which was subsequently dissented from by the Gujarat High Court) and the two subsequent decisions to which we have referred to in this judgment. In this view of the matter, the question is answered in the affirmative and against the assessee. The assessee will pay the costs of the reference to the Commissioner.
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1977 (11) TMI 34
Business Expenditure, Income Tax Act ... ... ... ... ..... xpenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income. This clause would show that on the terms of the clause the expenditure incurred had to be exclusively for the purpose of deriving the agricultural income. In other words, a nexus has to be established between the payment and the agricultural income. Clause (xv) of section 10(2) of the Indian Income-tax Act, 1922, is differently worded and on the construction which is now well established, all that has to be found is whether the payment was justifiable on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business which is a much wider terminology than that found in clause (j) of section 5 of the Kerala Agricultural Income-tax Act. In this view of the matter, the question referred must be answered in the affirmative and in favour of the assessec. Revenue to pay the costs of the assessee.
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1977 (11) TMI 33
Bonus Shares, Gift Tax Act, Private Company ... ... ... ... ..... the shares in a private limited company, depreciation from the value so fixed may have to be allowed. We have dealt with the matter in our judgment pronounced today in Commissioner of Gift-tax v. Venu Srinivasan 1978 112 ITR 771 (Mad). The Tribunal has not considered the aspects which have to be considered. So, following the principle laid down by the Supreme Court in the decisions 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. (I 978 78 ITR 474 and following what we did in the above mentioned case, we direct the Tribunal to take back the appeal, G. T. A. No. 10 (MDS) 69-70, on its file and deal with it afresh in the light of what we have stated in the judgment read with the principles stated in our judgment in T. Cs. Nos. 588 and 595 of 1975 Commissioner of Gift-tax v. Venu Srinivasan 1978 112 ITR 771 (Mad) and pass fresh orders. We direct the parties to bear their respective costs.
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1977 (11) TMI 32
Business Expenditure, Capital Asset, Collaboration Agreement ... ... ... ... ..... similar contentions for four other assessment years had been rejected. This must be taken to mean that, in the view of the Tribunal, the notice served on the assessee for the assessment year in question was identical with the notices served for the four years commencing with the assessment year 1942-43. A copy of the notice for the assessment year 1942-43 is annexed to this reference at annexure D. It is this very notice which has been considered in the decision given by the Division Bench of this court for this very assessee in Income-tax Reference No. 50 of 1966. What has been decided in that reference must govern the decision in this case. Accordingly, the question referred to us is answered as follows Answer The notice was issued to the assessee in their status of a firm. There was no valid notice issued to the assessee in the status of a HUF and, accordingly, their assessment in the status of a HUF would not be valid. The parties will bear their own costs of this case.
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1977 (11) TMI 31
Capital Or Revenue Expenditure, Collaboration Agreement, High Court ... ... ... ... ..... ements, as we find that the Gujarat High Court has fully applied its mind and taken a reasoned decision on the question. It will be sufficient to observe that, broadly speaking, we are in agreement with the approach of the Tribunal indicated in para. 12 of the statement of the case where the Tribunal considered the nature of the advantage obtained under the collaboration agreements by the assessee-company and came to the conclusion that the expenditure was allowable as revenue expenditure and could be considered as wholly and exclusively laid out for the purpose of carrying on the business of the assessee. In view of the Gujarat decision referred to above, it is unnecessary to set out the rival contentions in detail and to evaluate them more closely as we would ordinarily have done. In the result the questions referred to us in the two references are answered in the affirmative and in favour of the assessee. The parties, however, will bear their own costs of these references.
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1977 (11) TMI 30
Income From Other Sources ... ... ... ... ..... We are concerned with the position prior to that which existed in 1906 in South Behar Railway Company s case 1925 12 TC 657 (HL). The position of the agreement before us is substantially the same is the agreement between the South Behar Railway Company Ltd. and the Secretary of State and the view which we have taken is the same as that taken by the House of Lords. We are not concerned with considering the agreement similar to the one of 1906 between the South Behar Railway Company Ltd. and the Secretary of State. In this view of the matter, it becomes unnecessary to consider the alternative submission of the assessee-company which had found favour with the Tribunal and which is reflected in question No. 2. Accordingly, the questions are answered as follows Question No. 1 In the affirmative and in favour of the assessee. Question No. 2 Unnecessary to answer, in view of the answer given by us to question No. 1. The assessee will get the costs of the reference from the revenue.
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1977 (11) TMI 29
Accounting Year, Deemed Dividend ... ... ... ... ..... the assessment year in question to go into the other questions on which the decision was rendered against the revenue and the assessee respectively and which have been now brought to this court by this reference. We have, therefore, declined to go into the merits of the correctness or otherwise of the decision of the Tribunal on the questions which have been referred in view of the finding recorded on the question as to what was the correct accounting period. In this view of the matter, we do not think it necessary to answer, in the peculiar facts of this case, the questions which have been referred to us because for the purposes of the assessment year in question a decision thereon is not necessary. Parties to bear their own costs. Arising out of the order of the Tribunal, since the revenue wanted one more question to be referred they had taken out a motion dated 20th December, 1968. Mr. Joshi states that he does not now press the motion. Motion disposed of as not pressed.
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1977 (11) TMI 28
Co-operative Society, Income From Business ... ... ... ... ..... 12 of the order of the Tribunal, it was not possible for Mr. Trivedi to point out any other discussion in the order of the Tribunal which could be said to be relevant to the second question referred by the Tribunal. It was then contended by Mr. Trivedi that, in order to clear the doubt raised, namely, that the question does not arise out of any part of the order of the Tribunal, a supplementary statement of the case should be called for. We are not inclined to adopt such a course as it is clear from the Tribunal s order that the contention on which the second question was framed was not argued before the Tribunal at all. We, therefore decline to answer question No. 2 on the ground that it does not arise at all out of the order of the Tribunal. In the result, question No. 1 is answered in the affirmative and against the asseessee. Question No. 2 does not arise out of the order of the Tribunal and therefore, need not be answered. The assessee must pay the costs of the revenue.
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1977 (11) TMI 27
Capital Gains, Dissolution Of Firm, Retirement Of Partner, Share In Partnership ... ... ... ... ..... t, it was executed on 9th March, 1961. Therefore, in respect of the amount of Rs. 4,67,529 or any part thereof, in view of the fact that the document of assignment was not executed in the relevant assessment year, it will not be possible to disturb the final conclusion reached by the Tribunal that no liability in respect of capital gains tax arose in the assessment year 1960-61. Mr. Joshi on behalf of the revenue wanted us to consider the question as to whether the liability to capital gains would be attracted in the year in which the document was executed. In our view, this would be outside the scope of the question referred which is only in respect of the year 1960-61. We have, therefore, declined to go into the question as to when and in respect of what amount the liability, if any, will be attracted in respect of capital gains. In the view which we have taken, the question referred to us is answered in the negative and against the revenue. Parties to bear their own costs.
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1977 (11) TMI 26
Family Property, Income From Property, Individual Income ... ... ... ... ..... nce at the time when this income was shown as the income of the HUF, it is clear that Khimji was unaware of the true character of that income or of his true legal rights since he was not aware of the will. He proceeded upon the footing that this was the income of the HUF which would be the correct footing in law if there was no will. Since he was not aware of the existence of the will there could be no estoppel against him nor any question of an intention on his part to waive his separate right and throw the property into the hotchpotch. In this view of the matter, all the three arguments of Mr. Joshi deserve to be rejected. In the result, the question referred to us is answered as follows On the facts and in the circumstances of the case, the assessee s income from the firm of Messrs. Teja Kaya and Co. belonged to Khimji in his individual capacity and not as representing the HUF of which he was the karta. The Commissioner will pay the costs of the reference to the assessee.
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1977 (11) TMI 25
Income Tax Act, Life Insurance Business ... ... ... ... ..... provided that any sums taken credit for in the accounts or actuarial valuation balance-sheet on account of appreciation of or gains on the realisation of investments shall be included in the surplus . It was this latter part of rule 3(b) that was given effect to by this court because it was found that that amount was liable to be included as a part of the surplus. That decision is, therefore, clearly distinguishable. We must, therefore, reject the contention that the Tribunal was in error in not permitting the said amount of Rs. 29,39,959 to be deducted out of the surplus. Question No. 7 will, therefore, have to be answered in the negative and against the assessee. Accordingly, question No. 1 is answered in the negative and in favour of the assessee. Questions Nos. 2 to 6 are answered in the affirmative and in favour of the assessee. Question No. 7 is answered in the negative and in favour of the revenue. In the circumstances of the case, there will be no order as to costs.
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1977 (11) TMI 24
Capital Or Revenue Expenditure, Collaboration Agreement, Depreciation And Development Rebate, Income Tax Act
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1977 (11) TMI 23
... ... ... ... ..... nsistent method of accounting and the manner was not found to be in any wise mala fide or a device for showing lower profit than was showable. The Tribunal considered the main provision of s. 271(1)(c) and observed in its order that the mental element, i.e., any intention had not been established. The Tribunal thereafter went on also to consider the Explanation and held on the material on record and on the submissions before it that the assessee should be held to have discharged the onus which was cast on him by the Explanation. It is difficult to find fault with the thorough approach of the Tribunal, though a few expressions used in the order here and there may be objected to. We are of opinion that no useful purpose will be served by referring the three questions sought by the Commissioner as the order, on the material before the Tribunal, is a proper one and will have to be ultimately sustained. In the result, the rule will stand discharged, but with no order as to costs.
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1977 (11) TMI 22
Allowable Expenditure, Business Expenditure, Income Tax Act, Tax Proceedings, Wealth Tax ... ... ... ... ..... AAC and the order of the Tribunal were passed. On that day, the correct legal position was that the wealth-tax was deductible because the amendment in the I.T. Act came much later. It cannot, therefore, be said that the assessee was not justified in claiming the amount of professional fees in relation to the wealth-tax proceedings since the wealth-tax levied was itself in respect of the assets of the trading company. The fact that further by a legislative provision the decision of the Supreme Court came to be rendered ineffective would be no ground for holding that the assessee was not entitled to deduct the expenses on account of professional fees in regard to the wealth-tax assessment. As a result, the answer to the first question must be in the negative and against the assessee and the answer to the second question must be in the affirmative and in favour of the assessee. Questions answered accordingly. In the circumstances of the case, there will be no order as to costs.
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1977 (11) TMI 21
1922 Act, Appellate Authority, Development Rebate Reserve, Income Tax Act, New Industrial Undertaking Relief, One Partner, Splitting Up
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1977 (11) TMI 20
Capital Of Company, Companies Profits Surtax, Insurance Company ... ... ... ... ..... bility of the decision of the Supreme Court in CIT v. Century Spg. and Mfg. Co. Ltd. 1953 24 ITR 499, the decision of the Punjab and Haryana High Court in CIT v. Hindustan Milk Food Mfg. Ltd. 1975 98 ITR 517, the decision of the Kerala High Court in Aluminium Industries Ltd. v. CIT 1968 68 ITR 125 and the decision of the Allahabad High Court in CIT v. Hind Lamps Ltd. 1973 90 ITR 487. It appears to us that these are cases which deal with the facts which are different from the one arising before us. In all those cases, there was no setting apart or making any provision made as reserve at all, as it appears to us on a reading of the judgments, though an argument was advanced that the amounts which were decided to be paid out as profits by way of dividend must be taken as a reserve. We do not consider that aspect now. In the light of the above, we answer the questions for the three years in the affirmative. The revenue will get its costs from the assessee. Counsel s fee Rs. 250.
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