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1981 (10) TMI 88
... ... ... ... ..... certifies that the amount of Rs. 50,000 was received by the AICC in full from the assessee and that it was paid towards advertisement charges. From the above we are satisfied that the entire amount claimed was incurred by the assessee wholly for the purpose of the assessee rsquo s business. The IT Appellate Tribunal, Hyderabad Bench have taken the same view in regard to similar advertisements in the souvenir of AICC in other case as referred to above. Similar claim for allowance of Rs. 50,000 and even over 1 lakh has been allowed by the ITO towards expenditure for advertisement in the Souvenir of AICC as per the list furnished by the assessee before us and which have not been controverted by the revenue. In these circumstances, we hold that there is no justification for making any disallowance out of the claim of Rs. 50,000 made by the assessee towards publicity charges. The disallowance of Rs. 30,000 is, therefore, set aside. 9. In the result, the appeal is allowed in part.
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1981 (10) TMI 87
... ... ... ... ..... ions of Commr. (A) under the Act, were to come into force. According to cl. 4(ii) all appeals against orders against non-company assessee where the assessee denied his liability to be assessed or orders of assessment under s. 143(3) or s. 144 and the assessee objects to the amount of income or loss or tax or status determined and the amount of income or loss determined exceeds Rs. 10,00,000 fell in this category. Therefore, this appeal which was disposed of by the AAC as late as 22nd Feb., 1979 could not have been disposed of by him on that day and should have been transferred to the CIT(A). There is force in this contention. The judgment of the AAC in this behalf is quashed since he had no jurisdiction to decide the appeal on the relevant date and the matter is sent back to him for transferring it to the competent authority. 6. The net result is that the Appeal Nos. 436 to 440 (Gau) of 1979 are dismissed, while appeal No. 441 (Gau) of 1979 is allowed for statistical purpose.
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1981 (10) TMI 86
Business Expenditure ... ... ... ... ..... , was held by the Supreme Court to be admissible against the income from the illegal business for purposes of charging of income-tax. In the present case, it is not the stand of the assessee that the business carried on by it is an illegal business. It is a perfectly legitimate business of travel agents. The interest has been charged under section 201(1A) for a statutory default committed by the assessee. There is no nexus between the commission of such default and the carrying on of the business. In other words, it is not incidental to the carrying on of the legitimate business that the assessee should commit such a default incurring the payment of such interest. Thus, as the payment of the interest under section 201(1A) could not be said to be incidental to the carrying on of the business by the assessee, the authorities below were justified in rejecting the assessee s claim to deduct such interest while computing its total income. 8. In the result, the appeal is dismissed.
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1981 (10) TMI 85
... ... ... ... ..... ITR 170 (P and H), (1978) CTR (P and H) 304 (1979) 116 ITR 266 (P and H), (1979) 11 CTR (J and K) 187 (1980) 121 ITR 620 (J and K) and 122 ITR 179. 2. We have heard the rival parties and we are of the view that the AAC was right in directing that two assessments should be made for the two periods separately. After considering the case laws relied on both the sides, we are of the view that the reliance of the AAC on the case law mentioned above is well placed. We, therefore, see no reason to interfere with the order of the AAC which is confirmed. The appeal is dismissed.
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1981 (10) TMI 84
... ... ... ... ..... on became void, but we are of the opinion that at best, the share of the wife and the daughter of the deceased Roop Chand could be said to be a gift from those persons to the HUF and there is no restriction in law for the same. 12. Either way, the net result is that the order of the CIT (A) is upheld, the appeal by the Revenue fails and stands dismissed. 13. Before parting with the case, we will like to add that in coming to the above conclusion, we have since derived with utmost respect, the maximum benefit from the ratio of the decisions of the various Hon ble High Courts and Supreme Court, since relied upon before us by the parties. For the assessee, strong reliance has been placed on the cases as find mention in the impugned order of the CIT (A) and also on case law as stands reported in AIR 1966 SC 405 (1979) 116 ITR 908 (All), AIR 1971 Del 151. The Revenue has relied upon the case law which stand reported as 114 ITR 523 (Mad), 128 ITR 421 (Mad), (1981) 129 ITR 440 (SC).
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1981 (10) TMI 83
... ... ... ... ..... lacs paid last year in respect of the same shops, is a factor which, in my opinion, adversely affected the assessee s business. Since licence fee is an important item of expenditure in this line of business, the payment of an exhorbitant licence fee by the assessee during the year under consideration certainly affected the margin of profit. Apart from mentioning that the sales and expenses are not fully vouched and verifiable, the ITO has not pointed out to any discrepancy or any wrong entry in the books of accounts, no comparative case has also been pointed out to indicate that under similar circumstances, other liquor contractors during the same year earned a better margin of profit. In these circumstances and particularly in view of the exhorbitant licence fee paid by the assessee, I am of the opinion that the book results as disclosed by the assessee should be accepted and the addition as sustained by the CIT(A) should be deleted. 7. In the result, the appeal is allowed.
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1981 (10) TMI 82
Hindu Undivided Family, Assessability Of Income ... ... ... ... ..... an Chettiar 1978 114 ITR 523 (Mad.). Their Lordships have relied on a number of rulings of Allahabad High Court in CIT v. Rakshpal Ashok Kumar 1968 67 ITR 164, the Assam and Nagaland High Court in Ghasiram Agarwalla v. CGT 1968 69 ITR 235, and have differed from the Gujarat High Court ruling on which reliance has been placed by the learned AAC. Clearly the consensus appears to be in favour of the view that where a Hindu dies intestate and his property devolves on his sons and daughters under section 8 of the Hindu Succession Act, the property becomes the individual property and not the HUF property of the heirs. We, respectfully, follow the Madras High Court ruling and hold that the entire property in the hands of the two brothers is their individual property and no part of it is HUF property in the hands of Manmohan Kapur. 9. In the result, we dismiss the assessee s appeals and allow the departmental appeals. The order of the AAC is set aside and that of the ITO is restored.
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1981 (10) TMI 81
Rectification Of Mistakes, Apparent From Record ... ... ... ... ..... opment rebate in the original assessment he had committed an inadvertent error. This the ITO is entitled to rectify under section 154 as this is a mistake of law. It does not require any further enquiry or investigation into facts nor involve any debate or discussion as the position is well settled in law. The Commissioner (Appeals) was not justified in his conclusion that this was not a mistake apparent from record. Apparently, he has overlooked the ratio of the decision of the Supreme Court in T.S. Balram, ITO v. Volkart Brothers 1971 82 ITR 50, referred to by him in paragraph 3 of his order, which would be directly applicable to the facts of the present case. We, therefore, reverse the order of the Commissioner (Appeals), annulling the order passed by the ITO, and restore the order of rectification passed by the ITO under section 154 dated 21-11-1979, withdrawing the development rebate of Rs. 2,42,730. 12. In the result, the revenue s appeal succeeds and is hereby allowed.
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1981 (10) TMI 80
Charitable Or Religious Trust ... ... ... ... ..... y the Commissioner (Appeals) to be includible for purposes of section 13(2)(h). On this point the assessee is not in appeal and, therefore, this aspect of the matter is not required to be considered by us. 22. Thus, we hold that out of 27,64,856 shares of Mohan Meakin Breweries Ltd., the following shares are to be considered for purposes of section 13(2)(h) - 11,26,021 shares as per List A. - Nil out of 7,30,949 shares held by six HUFs - Nil out of 3,00,000 shares held by five trusts - 66,025 shares out of 2,19,955 shares - 3,88,431 shares pledged with banks Total 15,80,477 shares, The aforesaid shares compared to the total shares 85,09,479 give a percentage of 18.5 per cent, which is less than 20 per cent. Thus, the prohibited category of persons mentioned in section 13(3) does not have substantial interest in the concern in which funds of the trust are invested and, therefore, the provisions of section 13(2)(h) are not applicable. 23. Inthe result, the appeal is dismissed.
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1981 (10) TMI 79
Business Expenditure ... ... ... ... ..... he directors by way of perquisite. However, as stated earlier, we are not concerned with a situation like that as the assessee has not given its directors such a perquisites. In the result, the disallowance of that proportion of the car expenses and depreciation, which did not relate to the business of the company is properly disallowed. 3. The next contention is against the disallowance of Rs. 2,500 out of staff welfare expenses. The details of these expenses are already on record and these show that the expenses have been incurred on the supply of tea, soft drinks, etc., to the staff. There is no element of entertainment involved in any of the expenses claimed by the assessee. Accordingly, there is no reason to disallow an amount of Rs. 2,500 out of the assessee s claim. The addition is deleted. 4. The third ground relating to the disallowance of Rs. 5,000 was not pressed before us at the time of hearing of the appeal. 5. Accordingly, the appeal is partly allowed, as above.
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1981 (10) TMI 78
Acquisition Of Immovable Property ... ... ... ... ..... of the opinion that in the absence of any material indicating such a position there was no basis for the competent authority to entertain the belief that there was an object of tax evasion either on the part of the transferor or on the part of the transferee. The requirements of section 269C cannot, therefore, be considered to have been fully satisfied. Therefore, the initiation of the proceedings under section 269D by the IAC (Aqn.) cannot be considered to have been validly made. On this ground the order of the IAC (Aqn.) is cancelled as one without the requisite jurisdiction. 14. Several submissions have been made regarding the correctness of the estimation of the fair market value by the Valuation Officer. The Valuation Officer was also heard in this regard. We do not consider it necessary to deal with these submissions made by both the transferees and by the department as the IAC (Aqn.) cannot be considered to have acted with valid jurisdiction. 15. The appeal is allowed.
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1981 (10) TMI 77
Valuation Of Assets ... ... ... ... ..... er the Wealth-tax Act. Nevertheless the principle that has been recognised by the Supreme Court would be equally applicable to the case of valuation of the shares in the wealth-tax assessment of the shareholder. This principle has been reiterated in CWT v. Aluminium Corporation of India Ltd. 1970 78 ITR 483 (SC). In this decision, though it was with reference to section 7(2)(a) it has been held that the book value of the assets in the balance sheet and not the written down value should be taken as the primary basis of valuation and only if adjustment is required they may be made. We, therefore, do not accept the submissions advanced on behalf of the assessees here that the written down value for the purpose of income-tax assessments should be adopted as the value of these assets, namely, the ships held by the company, Collis Line (P.) Ltd. for the various assessment years. The order of the AAC is reversed and the order of the WTO on this are restored. The appeals are allowed.
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1981 (10) TMI 76
... ... ... ... ..... ceptable. 7. Apparently, the ITO in resorting to reassessments in all the three cases wrongly held the view that if an investment is not explained by wife, presumption can be that it belongs to the husband. We do not have to cite any authority that there is not such legal presumption and in the present case there was absolutely nothing to project that the investment by Dev Raj s wife belonged to him and he had mortgaged the lands himself and had entered into benami transactions. On such view of the matter, we hold that resort to reassessment proceedings in the assessee s case for which the only basis was a wrong and unjustified view of an officer of coordinate jurisdiction was totally unwarranted and uncalled for. The re-assessments, therefore, are vacated. 8. On the view which we have taken, it is not considered necessary to give any finding as to whether the AAC was justified in confirming the addition of Rs. 10,000 in each of the three assessee s cases. 9. Appeals allowed.
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1981 (10) TMI 75
... ... ... ... ..... ing the course of assessment for this year the ITO, after consultation with his IAC, disallowed interest at 12 per cent on the amount of Rs. 51,034 amounting to Rs. 6,120. This has been confirmed by the Commissioner (Appeals). We find, however, that there is no fresh borrowing by the assessee during the year under appeal. In the immediately preceding assessment year no disallowance of interest was made. The Revenue has not shown any direct link between the borrowing and the advance, if any, without interest. On such set of facts, we have no reason to sustain the addition made. It is deleted. . Appeal allowed.
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1981 (10) TMI 74
... ... ... ... ..... the Roorkee officer that the investment of Rs. 1,875 was brought from Ambala firm, proves his bona fide of not concealing any particulars. Otherwise, he could have avoided referring to the Ambala firm. After giving our thoughtful moments to the facts of the case, we cancel the penalty of Rs. 2,314 by holding that the assessee did commit a mistake of filing two returns and can be said to have committed a fault but even to think that the assessee s action of filing tow returns, as noted above, was prompted by even a remote thought of avoiding tax, would be doing injustice and wrong. It is a case of a petty taxpayer and we are not prepared to go with the Revenue that in order to avoid a tax of Rs. 100 or Rs. 200, the assessee was taking a chance or trying to dodge the Revenue s authorities in any fashion. 7. We like to observe that none of the parties before us cited any case law and accepted that only appreciation of facts are involved. 8. In the result, the appeal is allowed.
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1981 (10) TMI 73
... ... ... ... ..... only (a) Whether there was infraction of law (b) Whether there was any dishonest Mala fide and fraudulent breach of contract (c) Whether these payments were of the nature of penalty and (d) Whether these payments were intimately connected with the assessee s business and were incidental to such business? All the above points are pure questions of fact and did not involve any referable question of law. If at all, any question of law or legal controversy could be said to arise for consideration, the same has been finally set at rest by the following noted decisions of the Hon ble Supreme Court and in such view of the matter granting the Commr. s reference request is considered unnecessary litigation Mahalakshmi Sugar Mills Co. vs. CIT (1980) 16 CTR (SC) 198 (1980) 123 ITR 429 (SC), CIT vs. Piare Singh (1980) 17 CTR (SC) 111 (1980) 124 ITR 40 (SC). In view of the above Supreme Court Judgments, we decline the reference request. 3. Reference application is, therefore, dismissed.
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1981 (10) TMI 72
... ... ... ... ..... lwai shop, that there was ancestral land etc., and reduced the addition of Rs. 10,000. 3. After hearing the parties we are of the opinion that the addition sustained by the AAC is without any justification. It is to be noted that for withdrawals, low or excess, of the partners there could not be any adverse inference drawn is so far as the assessee firm is concerned. On the facts of the case, the partners were even in a position to explain their low withdrawals. Even for other defects, the ITO has not pointed out anything which would justify the addition made by him and which has been sustained in round figures by the AAC. In our opinion, from the facts and circumstances of the case no addition could be justified as no specific items had been found out by the authorities below which could constitute as items of income of the assessee taxable for the assessment year under appeal. We, therefore, delete the balance addition of Rs. 10,000 sustained by the AAC. 4. Appeal allowed.
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1981 (10) TMI 70
... ... ... ... ..... Dec, 1975 and from 5th Dec, 1975 to 31st Mar, 1976, in view of the change in the constitution of the firm. But here again, we are of the opinion that in view of the Full Bench judgment of the Punjab and Haryana High Court in the case of Nand Lal Sohan Lal (1977) 110 ITR 170 (P and H) there had to be only one assessment as the business had continued and there was only a change in the constitution by admission of new partners alongwith the continuing old partners. 11. The only other ground that survives for consideration is the sustention of the disallowance of Rs. 800 by the AAC out of the expenses of Rs. 2,000 under the head kitchen expenses of the arhties. In our view, this disallowance is rightly upheld. 12. Since we have held that the gifts are not cross gifts and are not of excessive amounts, we do not want to go into the other contentions raised on behalf of the assessee. 13. In the result, ITA No. 930 of 1976-77 is allowed and ITA No. 754 of 1977-78 is partly allowed.
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1981 (10) TMI 69
... ... ... ... ..... side there being only protective addition in the original assessment, we are inclined to accept Sh. Gupta s contention that the very charge of concealing particulars of income could not there and, therefore in the absence of satisfaction having been recorded by the ITO in the course of assessment proceedings, the very initiation of penalty proceedings were bad. 9. As far the Explanation to s. 271(1)(c) of the Act, the ITO did not require the assessee to discharge his onus because as is clear from the order passed u/s. 271 (1)(c) of the Act, the penalty was levied simply because the addition was made in the assessment and which came to be accepted by the assessee. In any case, explanation offered by the assessee in the course of penalty proceedings were such which can be said to take the assessee out of the ambit of the Explanation also. 10. The result would be that the penalty is cancelled on more than one count, independent of each other, as mentioned above. Appeal allowed.
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1981 (10) TMI 68
... ... ... ... ..... of the revenue that it was actually an arranged transfer, we fail to appreciate its import because the revenue as stated above had already accepted the firm to be a genuinely constituted entity and has raised an amendment in the status of a registered firm. Not only this, the assessment of the firm as well as of the company has been finalised and there is no grievances with regard to any other aspect of the matter except depreciation and development rebate. Therefore, it is clear that this contention is untenable. In our opinion, it is a case of clear succession to the business of the firm by the company and the provisions of s. 33(4) are clearly applicable. In such a case development rebate has to be allowed to the firm. Such being the case before us, we see on justification for refusing depreciation and development rebate to the assessee firm. We direct that depreciation and development rebate be allowed subject to fulfilment other requirements of law. 17. Appeal allowed.
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