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1982 (12) TMI 21
Assessment, Gift Tax ... ... ... ... ..... ly followed. In this view of the matter, it is clear that the order dated 16th January, 1976, passed by the Competent Authority for acquisition of the property in exercise of powers under s. 269F(6), I.T. Act, as also the notice dated 19th May, 1979, issued by it under s. 269-1(1), I.T. Act, cannot be sustained and they are liable to be quashed. However, as no defect in the publication of the notice of the intended acquisition of the property in the Official Gazette under s. 269D(1), I.T. Act, has been pointed out, will be open to the respondents to pass appropriate orders under s. 269F(6) afresh after complying with the provisions of s. 269D(2)(a) afresh in accordance with law. Subject to aforementioned observations, the writ petition succeeds and is allowed with costs and the order dated 16th January, 1976, passed by the Competent Authority in exercise of powers under s. 269F(6) as also the notice dated 19th May, 1979, issued by it under s. 269-I(1), I.T. Act, are quashed.
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1982 (12) TMI 20
Business Loss ... ... ... ... ..... the shares held by him as executor were necessarily treated by him as stock-in-trade. Accordingly, our answer to the first question referred to us is in the negative, i.e., in favour of the Department and against the assessee. In view of our answer to question No. 1, it is not necessary to record our answer to the second question. We may, however, indicate that all the Members of the Tribunal are unanimous in their opinion that the transaction relating to one-third of the shares is also a sale, and not conditional sale. Our answer to the third question, if necessary, would be that the loss of Rs. 2,25,690 is a capital loss. The referred case is answered accordingly. No costs. The learned counsel for the assessee makes an oral request for leave to appeal to the Supreme Court. In our opinion, however, this case does not involve any substantial question of law of general importance which requires to be considered by the Supreme. Court. The oral request is accordingly rejected.
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1982 (12) TMI 19
Burden Of Proof, Penalty ... ... ... ... ..... r of fact the Full Bench of the Punjab High Court in the case of Viswakarma Industries v. CIT, has quoted with approval what has been said in Patna Timber Works case and so far as Addl. CIT v. Karnail Singh V. Kaleram 1974 94 ITR 505 (Punjab) is concerned, that has already been discussed in Patna Timber Works case 1977 106 ITR 452 (Pat). There is no conflict on principles of law amongst any of these cases and there is no case holding contrary to the view taken by this court in the aforementioned two Bench decisions. We, accordingly, do not find any infirmity much less any legal infirmity in the order of the Tribunal. We, accordingly, answer the question, referred to this court, in the affirmative, in favour of the assessee and against the Revenue. The Tribunal, on the facts and in the circumstances of the case, must be held to have acted legally in cancelling the penalty imposed upon the assessee. The assessee is entitled to the costs. Hearing fee is assessed at Rs. 250 only.
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1982 (12) TMI 18
Business Expenditure, Directors, Entertainment Expenditure, Perquisite, Reference ... ... ... ... ..... specified whether it is seeking to apply cl. (c)(i) of s. 40A(5) or the proviso to cl. (a) of s. 40A(5) and also having regard to the facts and circumstances of this case, we are not inclined to direct reference of this question. The only question remaining is question No. 9, which reads as follows Whether the Tribunal was right in holding that the amount of Rs. 22,438 on account of entertaining expenditure is allowable under the I.T. Act ? The finding is that the amount was spent by the assessee for providing snacks, lunch and dinner to the customers. It is not suggested that this amount was spent in giving parties or providing amusement or was otherwise wasteful in nature. Following the decision of this court in Addl. CIT v. Maddi Venkataratnam and Co. Ltd. 1979 119 ITR 514 (AP), we see no question of law arising from the order of the Tribunal, which ought to be referred to this court. For the above reasons, the income-tax case fails and is accordingly dismissed. No costs.
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1982 (12) TMI 17
Assessment, Firm ... ... ... ... ..... the transferor himself. There was no evidence before the authority about the rent payable in respect of similar accommodation situated in the locality. Therefore, the insistence of the learned counsel that the rental method should have been applied, is unjustified. It is also incorrect to say that in every case of valuation, the rental method is the only basis which can give the correct valuation of the property sold. No doubt, rental method is one of the methods recognized for the said purpose, but to which case a particular method would suit, depends on the facts emerging in that case. In the instant case, the submission of the learned counsel for the appellant for applying the rental value, on the basis that the rental method should have been applied, cannot be accepted. Lastly, it is pointed out that this is an appeal under s. 269H and is entertainable on a question of law. The question raised by the learned counsel is not that of law. The appeal is dismissed with costs.
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1982 (12) TMI 16
Cash Credits, Reassessment ... ... ... ... ..... he Act merely applies to the machinery part or procedural part of the assessment proceedings and cannot be said to effect any substantive right or liabilities. That being the settled position in law and the three High Courts having taken a similar view with regard to the nature of the provisions engrafted in s. 68 of the Act, this view we respectfully endorse as nothing was shown to us to the contrary. Therefore, the ultimate decision of this case must be in favour of the assessee. In the result, therefore, we answer the question referred to this court in the affirmative, in favour of the assessee and against the Revenue and we hold, on the facts and in the circumstances of the case, that the Tribunal was correct in holding that the provisions of s. 68 of the Act did not apply to this case and was also correct in deleting the addition of Rs. 15,521 added by the ITO as the assessee s income from undisclosed sources. The assessee will be entitled for costs. Hearing fee Rs. 250.
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1982 (12) TMI 15
... ... ... ... ..... contended that s. 52 of the Act had no application. Reliance was placed on the decision of the Supreme Court in K. P. Varghese v. ITO 1981 131 ITR 597. But the question as to whether the provisions of s. 52 of the Act are or are not attracted in the instant case, does not arise at this stage. The Commissioner has merely directed the ITO to consider the question of applicability of s. 52 of the Act in view of the material on record. The Tribunal has held that as the ITO had not stated that he had looked into that aspect of the matter, there was nothing wrong in the order of the Commissioner directing the ITO to look into the matter afresh. We see no cogent reason for holding that the Tribunal was not justified in upholding the order of the Commissioner on that account. Our answer to question No. 2 relating to assessment year 1972-73 is, therefore, in the affirmative and against the assessee. Reference answered accordingly. Parties shall bear their own costs of this reference.
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1982 (12) TMI 14
... ... ... ... ..... instant case, the return was filed and the infringement of the law was committed when actually the amended law came into force, i.e., during the assessment year 1968-69. Therefore, inevitably, it must be held that the Tribunal has clearly committed an error of law by holding that the quantum of penalty imposable would be governed having regard to the assessment year in question and not the date when the return was filed and actually the infringement took place. We, accordingly, hold that the question referred to this court must be answered in the negative, in favour of the Revenue and against the assessee and that, on the facts and in the circumstances of this case, the Tribunal was not justified in holding that the quantum of penalty imposable was to be governed by the law which was in force on the I St day of the assessment year and not the amended law which came into effect from April 1, 1968. In the special circumstances of the case, however, we make no order as to costs.
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1982 (12) TMI 13
Appeal To High Court, Limitation ... ... ... ... ..... it is clear that s. 269C was not attracted and the competent authority was in error in ordering acquisition. In view of this conclusion, it is not necessary to decide other points raised in these appeals. Before concluding we may point out that some of the tenants in occupation of the building were parties before the competent authority. Their contention was that there was no legally valid sale of Moti Building and so acquisition proceedings could not be taken. After the order of the competent authority directing acquisition, the tenants did not file any appeal. They were also not joined as parties in the appeals filed before the Tribunal by the purchasers and Kasturilal. The tenants applied in this court for intervention, but that application cannot be allowed, for, they did not go up in appeal to the Tribunal and they were also not joined as parties in the appeals before the Tribunal. All the appeals fail and are dismissed with costs. Counsel s fee Rs. 200 in each appeal.
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1982 (12) TMI 12
Reassessment ... ... ... ... ..... the assessee determined for the years under consideration. The following question of law has been referred to us by the Tribunal under s. 256(1) of the I.T. Act, 1961 Whether, on the facts and in the circumstances of the case, the assessment of the assessee for the year under consideration on the basis of the assessee s letter dated February 4, 1970, that the duplicate return filed on November 1, 1969, be treated as a return pursuant to the notice under s. 148 of the I.T. Act, 1961, is valid and in accordance with law ? In our view, the question raised in this reference has been correctly answered by the Tribunal. The Madras High Court had an occasion to go into the question in the case of K. S. Ratnaswami v. Addl. ITO 1963 48 ITR 568(Mad). In view of the principles laid down in that decision, the question is answered in the affirmative and in favour of the Revenue. In the facts and circumstances of the case, there will be no order as to costs. SABYASACHI MUKHARJI J.-I agree.
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1982 (12) TMI 11
Firm, Mistake Apparent From Record, Rectification ... ... ... ... ..... said report as follows The object of the provision as to notice in the second subsection of section 35 is that no order should be passed to the detriment of an assessee without affording him an opportunity but it cannot be said that the rule is so rigid that if, as a matter of fact, the assessee knows of the proceedings and the matter has been discussed with him then an adverse order would be invalid merely because no notice under section 63 was given. Of course this postulates that the reasonable opportunity has been given to show cause. Secondly, this provision is applicable only where the assessment is enhanced or refund is reduced. Neither of those contingencies has arisen in the present case. In that view of the matter, we are of the opinion that the Tribunal was right in arriving at its conclusion and, in the premises, the question must be answered in the affirmative and in favour of the Revenue. Parties will pay and bear their own costs. SUHAS CHANDRA SEN J.-I agree.
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1982 (12) TMI 10
Business Expenditure ... ... ... ... ..... 5960). Therefore, in view of the fact that in this case the expenditure was necessary for carrying out better or more efficiently earning of profit by the assessee concerned, in our opinion, these were incidental to the earning of the profit and that was the immediate purpose and object of incurring the expenditure if there was an incidental addition of some permanent nature enuring to the assessee, that in our opinion, is of no consequence in determining whether the expenditure should be, allowed or not. In this case it is necessary to bear in mind the principles of commercial expediency and to judge then whether such a test would satisfy the judicial commonsense. Having looked at from that point of view, in our opinion, the Tribunal arrived at the correct conclusion. The question must, therefore, be answered in the affirmative and in favour of the assessee. In the facts and circumstances of the case, parties will pay and bear their own costs. SUHAS CHANDRA SEN J.-I agree.
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1982 (12) TMI 9
Business, Business Income ... ... ... ... ..... loss of the firm gets merged in the crucible of the firm s net profit or net loss for the year. Having regard to these considerations, we hold that the Tribunal was right in treating the sum of Rs. 20,831 received by the assessee on the occasion of his retirement from the firm as not liable to be assessed as revenue receipt under s. 41 (1) of the Act, and that it must be regarded as payment to the assessee as consideration for his relinquishing his interest in the partnership firm including his share of the goodwill. On the assessee s own pleadings, the Tribunal, in our opinion, was also right in holding that tax has have got to be levied on the amount, treating it as a long-term capital gain considering that no other basis for tax treatment of this amount was put forward by the assessee himself at the assessment stage. In the result, the reference is answered in favour of the assessee and against the Department. The assessee will be entitled to costs. Counsel s fee Rs. 500.
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1982 (12) TMI 8
Advisory Jurisdiction, Business Expenditure, Entertainment Expenditure, Firm ... ... ... ... ..... ple, or on the construction of any provision in the taxing enactment, the last place where we should look for aid or guidance would be a circular from the CBDT on the subject. We are not bound by the Board circulars. Besides, these circulars have the knack of being inconsistent. For, they are, for the most part, circulars for the occasion. We are not, therefore, inclined even to take a look into the circular referred to us. If the circular has expressed a view which the Department has not followed in this case, the remedy is not to ask this court to render an opinion in accordance with the circular. The relief has to be sought elsewhere. It would be quite different from what or how a court of advisory jurisdiction would render on the merits. Be that as it may, for the reasons which we have earlier stated, our answer to the second question is in favour of the Department and against the assessee. In view of the mixed results of the reference, there will be no order as to costs.
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1982 (12) TMI 7
Valuation Of Share Of Deceased Partner ... ... ... ... ..... iv) of the Act. The said decision, however, did not deal with the, position after the enactment of s. 40A(7) of the Act. Under this section, an assessees cannot, after April 1, 1973, subject to certain exceptions, deduct a provision for gratuity even if based on actuarial valuation the only way to claim deduction in regard to gratuity, is to-create a gratuity fund, get the Commissioner s approval, make annual contributions to that fund and get a deduction for the amount of that contribution. The income-tax aspects of provision for gratuity do not arise in these references, but we have briefly touched upon them to show to what extent the taxing statute can make inroads into the fundamental accountancy principles governing a provision for gratuity. For the reasons which we have earlier set out at the appropriate places in the foregoing paragraphs, the questions of law in all these tax references are answered against the Department. There will, however, be no order as to costs.
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1982 (12) TMI 6
Burden Of Proof ... ... ... ... ..... be noticed that the amendment concerned herein was given retrospective effect right from the date of the commencement of the 1961 Act. It must, therefore, be deemed that the words assessed tax and the Explanation put in by the said Amendment Act were always there at all points of time. If so, the order of the ITO, dated January 30, 1969, levying penalty was valid and competent. Once that order is valid and competent, then its rectification by the ITO on the ground that he had ignored the provisions of sub-s. (2) of s. 271 must be held to be competent and valid. The Tribunal, therefore, ought to have revised its order dated July 30, 1974, and upheld the ITO s order, dated June 1, 1972. It ought to have allowed the miscellaneous application filed by the Department before it. For the above reasons, the question referred to us is answered in the negative, i.e., in favour of the Department and against the assessee. In the circumstances, however, there shall be no order as costs.
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1982 (12) TMI 5
Depreciation, Technical Know-how ... ... ... ... ..... P. Ltd. 1981 129 ITR 499 (Mad) Catalysts and Chemicals India (West Asia) Ltd. v. CIT 1982 137 ITR 110 (Ker) D and H Secheron Electrodes v. CIT 1981 132 ITR 1 (MP) and CIT v. Belpahar Refractories Ltd. 1981 128 ITR 610 (Orissa)). A reading of the judgment of this court in R. C. No. 21 of 1971 as also a reading of the agreement which have been placed before us, clearly shows that the payment of Rs. 1,60,000 under the two agreements is clearly for and on account of the technical know-how which the Hungarian company imparted to the assessee in the shape of drawings and designs. Following the uniform authority in this country, we must hold that the drawings and designs so acquired by the assessee constitute plant within the meaning of s. 32 of the Act and are entitled to depreciation accordingly. We, therefore, answer the question referred to us, in the affirmative, i.e., in favour of the assessee and against the Department. The referred case is disposed of accordingly. No costs.
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1982 (12) TMI 4
Estate Duty, Property Passing On Death ... ... ... ... ..... principle relevant for our purposes is concerned, viz., that, if an interest cannot be valued under s. 40, it does not pass under s. 7, there is no difference of opinion between the two courts. Before we conclude, we must refer to an attempt of Mr. Murthy to bring the annuity within the four corners of s. 10. We are wholly unable to appreciate this contention. For s. 10 to apply, there must be a gift of the property, the possession whereof has not been fully and completely delivered to the donee. We are unable to see how the annuity or its cessation can be made to fit into the scheme and content of s. 10. For this reason, we think it unnecessary to deal with the decisions cited by the learned counsel on s. 10. None of them deal with a situation like the one before us. For the above reasons, we answer the question referred to us in the affirmative, i.e., in favour of the accountable person and against the Department. In the circumstances, there shall be no order as to costs.
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1982 (12) TMI 3
Business Expenditure, Royalty ... ... ... ... ..... was not an admissible deduction in computing the total income for the assessment year 1964-65 ? In view of the judgment of the Supreme Court in the case of Mahalaxmi Textile Mills Co. Ltd. v. CIT 1980 123 ITR 429, the question is answered in the negative and in favour of the assessee. There will be, however, no order as to costs. R. N. PYNE J.-I agree.
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1982 (12) TMI 2
Estate Duty, Tribunal ... ... ... ... ..... or being considered by the Supreme Court. This is as regards one of two questions decided by us in this tax case. The other one relates to the validity of section 34(1)(c). This section had been struck down by a decision of this court in V Devaki Ammal s case 1973 91 ITR 24. V Devaki Ammal s case 1973 91 ITR 24 (Mad) is now pending before the Supreme Court in Civil Appeal No. 91 of 1975. Learned standing counsel for the Department submits that our decision in this case following V Devaki Ammal s case 1973 91 ITR 24 must also be permitted to be taken in appeal to the Supreme Court. In similar cases such as this which came after V Devaki Ammal s case 1973 91 ITR 24 (Mad), we have granted leave to appeal to the Supreme Court. This being so, even on the second question, we think that the Department is entitled to a certificate of fitness for appeal to the Supreme Court. Accordingly, leave is granted. Issue certificate of fitness on both the questions under section 65 of the Act.
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