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Income Tax - Case Laws
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2001 (3) TMI 66
Appeal To Appellate Tribunal ... ... ... ... ..... ecifically remanded the present case to the Tribunal in view of the aforesaid well defined principles. The impugned order is accordingly set aside. The Tribunal to issue fresh notice to the parties, hear them and redecide the case according to law. We did hear the respondents learned counsel at some length. Inter alia, he tried to defend the order by submitting that in those of the cases where the appellate authority reaches a finding that interference is not necessary, it may not be required to record detailed observations or reasoning. While there is no quarrel with that principle, what we need to reiterate is that even in such instances, the order does not have to be long but the quality of the order must indicate that the authority has applied its mind to all aspects of the case factually and legally and that there is justification for its decision irrespective of whether it concurs or differs. The appeal accordingly succeeds and stands disposed of. No order as to costs.
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2001 (3) TMI 65
Reference, Additions To Income ... ... ... ... ..... n affected by labour disputes, that for the industrial health of the business as a whole, it was thought just and necessary that the industrial dispute in that one part of the business be stopped. This was the purpose for which the payment was made and it was, therefore, incurred for the purposes of the business . It further held as follows The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on the facts of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on the facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal . So far as the questions of law in the present case are concerned, we do not find any question of law referred as stipulated by the Supreme Court. Hence, we answer the questions in the positive and in favour of the assessee.
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2001 (3) TMI 64
Return, Loss, Time-Limit For Filing ... ... ... ... ..... pursuance of a notice under section 148. The facts of that case are totally different vis-a-vis the facts of the present case. In the present case, the period prescribed under section 139(4) did not expire though the return was filed in pursuance of a notice under section 148. As we have already held earlier, by issuing a notice under section 148, the statutory rights conferred on the assessee cannot be taken away and if so the assessee is entitled to file a return at any time before the expiry of the period prescribed under the statute. Therefore, this decision is not of any assistance to the Revenue. For the above foregoing reasons, we agree with the view taken by the Tribunal that the assessee is entitled to the benefit of the loss to be determined and carry forward for setting off against the income of the subsequent years. Accordingly, we answer the questions referred for the opinion of this court in the affirmative and against the Revenue and in favour of the assessee.
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2001 (3) TMI 63
Salary, Perquisite ... ... ... ... ..... tting out the furniture at an uniformly standard rate so as to bring it within the purview of the definition of perquisite. As I do not find any material that the bank concerned has made any concession in the matter of realisation of rent vis-a-vis the other employees, the rate charged for realisation of rent by the bank concerned from all the employees who are similarly situate and placed is uniform and there is no discrimination. Therefore, I hold that the recovery which has been done already and is being done is illegal and unjustified and there is no sanction under the law. Therefore, the writ petition succeeds. Whatever deductions have already been done the same shall be adjusted accordingly. I direct the respondent-bank not to deduct any amount save and except the standard deduction which is being done. There will be no order as to costs. All parties concerned are to act on a signed copy of the minutes of the operative portion of this judgment on the usual undertakings.
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2001 (3) TMI 62
Penalty, Return, Delay In Filing Return ... ... ... ... ..... the Act. It is correct to say that section 10(22) refers to income of an educational institution which does not form part of the total income. However, reading section 10(22) as a whole, it is clear that in order to avail of the said exemption, the trust should have existed during the relevant period solely for educational purposes and not for purposes of profit and in order to enable the Assessing Officer to ascertain whether the assessee existed solely for educational purposes and not for profit purposes, the return was required to be filed because in the absence of the return, it was not possible for the Assessing Officer to evaluate the exemption as laid down by the aforestated judgment of the Supreme Court reported in Aditanar Educational Institution v. Addl. CIT 1997 224 ITR 310. Accordingly, the above question is answered in the affirmative, i.e., in favour of the department and against the assessee Accordingly, both the appeals are disposed of. No order as to costs.
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2001 (3) TMI 61
Appeal To High Court, Additions To Income, Unexplained Investments ... ... ... ... ..... failed to prove the said cash credit standing in the name of Mrs. Mehrunnisa Begum. It is trite to state that section 69 clearly lays down the initial burden on the assessee of proving the nature of source of investments not recorded in the books of account. If the assessee fails to explain and prove the nature and source of investments, the unexplained investments would be assessable under section 69 and there would be no burden on the Department to prove that such investments were the income of the assessee. In taking this view, we are fortified by the judgment of the Gauhati High Court in Jatindra Nath Sarmah v. ITO 1978 113 ITR 898, of the Punjab and Haryana High Court in Raghunath Singh v. CIT 1965 57 ITR 562 and of the Calcutta High Court in Smt. Kamala Devi Jhawar v. CIT 1978 115 ITR 401. This appeal does not involve any question of law much less a substantial question of law. In that view of the matter, I.T.T.A. No. 36 of 2001, is dismissed with no order as to costs.
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2001 (3) TMI 60
Business Expenditure, Deductible In Year of Payment ... ... ... ... ..... uthorities and the Judicial Member. As the endorsement made by the purchaser on the order form itself shows, in case of delay the suppliers had the discretion to charge interest at 12 per cent. On a reading of the endorsement made by the purchaser, it was construed by the Accountant Member and the Vice-President that the same amounted to confirmation of a discretion and an option with the suppliers to charge or not to charge interest. That being the position, there was no accepted liability to pay such interest and the assessee was not required to provide for such contingencies, in its accounts. The above being the position, the Tribunal s conclusions cannot be said to be perverse or unreasonable. Merely because a different view may be available to be taken on the factual position that would not give rise to a question of law. Our answer to the question, therefore, is in the affirmative, in favour of the assessee and against the Revenue. Reference is disposed of accordingly.
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2001 (3) TMI 59
Weighted Deduction ... ... ... ... ..... n with the said business for promotion of sale of such services. The evidence clearly shows that the branch office was established for the execution of the contract as per the agreement entered into with the main contractor by the assessee and in fact the contention of the assessee was that successful execution of the contract work itself amounts to advertisement and therefore it is entitled for weighted deduction on that count. The said contention itself shows that the branch office is not intended for promotion of sale of the services with which the petitioner was dealing and under the above circumstances we are unable to accept the assessee s contention that the branch office at Baghdad was established for the purpose of promotion of the sale of services. Accordingly, we answer the questions in the affirmative and against the assessee and in favour of the Revenue and consequently the assessee is not entitled to any weighted deduction. The reference is accordingly answered.
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2001 (3) TMI 58
Gift Tax, Gift, Transfer of Property ... ... ... ... ..... rtition of the property amongst the beneficiaries. It was held that the provisions of section 2(xii) and section 2(xxiv)(a) had application to the facts of the case. On being moved for a reference, the question as set out above, has been referred for the opinion of this court. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessee in spite of notice. Learned counsel for the Revenue submitted that, in view of the conclusions arrived at in the income-tax proceedings the Tribunal was justified in its conclusion. The extracted portion of the Tribunal s order, so far as it relates to the income-tax proceedings, clearly shows that the trust deed was a valid one and that being the position there was a transfer in terms of section 2(xii) read with section 2(xxiv)(a) of the Act. In the above background, the question referred is answered in the affirmative, in favour of the Revenue and against the assessee. Reference is accordingly disposed of.
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2001 (3) TMI 57
Reference, Jurisdiction ... ... ... ... ..... resh evidence. On being moved for reference, the question as set out above, has been referred for opinion. We have heard learned counsel for the parties. So far as the question whether the Inspecting Assistant Commissioner was justified in refusing to entertain the fresh evidence is concerned, it has to be noted that the Inspecting Assistant Commissioner referred to the background material and on perusal of the record came to hold that the assessee had been granted adequate opportunity for explaining his stand. That conclusion is essentially factual. So far as the question of jurisdiction to entertain fresh evidence in a proceeding under section 144B(4) is concerned, the Tribunal has not dealt with the question and, therefore, the issue does not arise out of the order of the Tribunal. Looked at from any angle, the aforesaid question does not arise out of the order of the Tribunal to warrant any answer. We decline to answer the question. The references are returned unanswered.
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2001 (3) TMI 56
Reassessment, Jurisdiction, Intimation ... ... ... ... ..... ay assess or reassess such income as also other income chargeable to tax coming to his notice subsequently in the course of the proceedings under section 147 of the Act, subject to the provisions of sections 148 to 153. The power, therefore, is a wide power which includes the power to assess or reassess the income. The officer is not to act arbitrarily, but he must have some reason to believe that there has been escapement of income chargeable to tax. Reliance placed by the Assessing Officer on the report of an expert regarding the cost of construction of the building cannot be said to be improper, nor can it be said that the report would not provide sufficient justification for that belief that there had been escapement of income, as that report showed a substantial gap between what had been estimated by the valuer and what had been returned by the assessee as the cost of construction. The notice issued, therefore, was not in any way illegal. The writ petition is dismissed.
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2001 (3) TMI 55
Appeal To Appellate Tribunal ... ... ... ... ..... oper consideration or in an appropriate instance if a remand is unnecessary the higher authority must substitute the unsatisfactory order with a totally valid and legally tenable order. Here, we find that the malady started at the stage of the assessment, that it became glaring at the appellate stage and virtually reached the level of malignancy when it came to the level of the Tribunal. In the end result, cases which should have been disposed of at any of the three stages earlier are unnecessarily required to be brought to the High Court which is also avoidable. The impugned order is accordingly set aside, the Tribunal is directed to issue fresh notice, to hear the assessee and reconsider the case on the facts and law and redecide the same. We have refrained from making any comments on the merits of the case because it is the function of the Tribunal and we do not propose to prejudice either of the parties. With these observations, this appeal succeeds. No order as to costs.
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2001 (3) TMI 54
Appeal To Appellate Tribunal, Tribunal's Orders Set Aside ... ... ... ... ..... t s theory that it was because of the additional quantity and the hulling that the consumption of electricity had increased. Having reviewed all these factors, we are of the confirmed opinion that this was not a case in which interference was called for by the Tribunal. The ground on which the Tribunal has interfered, that too with a well considered decision, are in our view hardly satisfactory or plausible. It is incumbent upon the authority which interferes with a well considered or well reasoned order and substitutes it with a contrary one, to fully justify the grounds on which the interference is called for and to independently justify the new conclusions that have been recorded. Neither of these has been done. The reasons mentioned in the works order are relatively weak and perfunctory. Having regard to this position we have no option except to set aside the Tribunal s order and restore the earlier assessment order. The appeal accordingly succeeds, No order as to costs.
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2001 (3) TMI 53
Appeal To High Court, Depreciation, Assessment ... ... ... ... ..... der has clearly stated that he is applying a net profit rate at 8 per cent. without taking into account depreciation and interest paid to third parties. Thus, it has clearly postulates that net profit, which has been computed by the Income-tax Officer, is without appropriating the depreciation, which claim the assessee can legitimately made under section 32 of the Income-tax Act while claiming deductions in the computation of his income from profits and gains of business as depreciation on capital assets of the business. Since depreciation was explicitly not to form part of the net profit calculated at 8 per cent., the question of denial of deduction on account of depreciation as per section 32 of the Act would not simply arise, The Tribunal, in our opinion, was right in allowing the deduction on account of depreciation under section 32 and gives no rise to any substantial question of law, which may require consideration. This appeal, therefore, fails and is hereby dismissed.
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2001 (3) TMI 52
Search And Seizure, Block Assessment ... ... ... ... ..... cope of the assessment and was not really addressing himself as to the scope of exercising jurisdiction under Chapter XIV-B and section 158BA. The Tribunal, on analysis of the materials placed before it, has recorded the following finding In the case in hand admittedly undisclosed income is not on the basis of any search material but on the basis of change of opinion, particularly on the basis of the report of the special auditors, who had given a different colour to the existing facts which stood assessed by the income-tax authorities in the earlier assessment orders. The admitted position before the Tribunal was that the undisclosed income was not determined on the basis of any search material. That being the position, the Tribunal was justified in its view that section 158BA had no application to the facts of the case. The inevitable conclusion is that no substantial question of law arises out of the order of the Tribunal which needs adjudication. The appeal is dismissed.
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2001 (3) TMI 51
Business Expenditure, Disallowance ... ... ... ... ..... in the present case to prove that the supply of free samples was confined to the initial stage of production of a new drug. In this connection, learned counsel placed reliance on para. 2 of the aforestated judgment of the Supreme Court at page 119. We do not find any merit in this contention. Firstly, in the present case, we are concerned with the assessment year 1984-85. Secondly, nothing prevented the assessee from raising the aforestated contention before the authorities below. In fact, in the present matter, the Tribunal has observed that no details have been given by the assessee as to whether the expenditure incurred was on distribution of old drugs or whether it was given on distribution of new drugs. Hence, the judgment of the Supreme Court in Eskayef v. CIT 2000 245 ITR 116 squarely applies. Accordingly, the above question is answered in the negative, i.e., in favour of the Department and against the assessee. Appeal is accordingly allowed with no order as to costs.
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2001 (3) TMI 50
Estate Duty, Disposition ... ... ... ... ..... on, the two transactions taken together do result in the extinguishment, at the expense of the deceased, of his rights in the properties which go to the share of other coparceners at the subsequent partition and that, if the two can be treated as parts of the same transaction, Explanation 2 to section 2(15) may be attracted. But this, apart from being a totally new question of law not raised at any stage and not debated before us, would also require not only a closer look from the legal angle but also investigation into facts, particularly as to whether the act of blending and the subsequent partition can be treated, in law and on facts, as parts of a single transaction. We, therefore, express no opinion on this issue. As was the case before the apex court, the question of partition/allocation and its effect is not the question referred for the opinion of this court. As was done by the apex court, we express no opinion on the said issue. Reference is accordingly disposed of.
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2001 (3) TMI 49
Depreciation, Rate of Depreciation, Welfare Center ... ... ... ... ..... ouses schools, colleges and other educational institutions libraries welfare centres meeting halls cinema houses theatres and circuses and furniture and fittings let out on hire for use on the occasion of marriages and similar functions, the depreciation allowance is 15 per cent. According to the Tribunal, a hospital will come within the meaning of welfare centre . According to us, the interpretation given by the Tribunal is not correct. It is one of the principles of interpretation in the taxation law that words of ordinary use should be given the meaning which is given by common people. A hospital is a place where the sick are taken care of. When a person is taken to a hospital, nobody will say that he is taken to a welfare centre. A welfare centre is a centre for the well being of the community. Hence, a hospital will not come under item (2). If that be so, only 10 per cent. depreciation is available. Hence, we answer the question in the negative and against the assessee.
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2001 (3) TMI 48
Benami Transaction, Effect ... ... ... ... ..... the deceased. The benamidar subject to the equities flowing from section 41 of the Transfer of Property Act, 1882 (in short the TP Act ), could not deal with the property in any way. The inevitable conclusion is that the estate belonged to the deceased who possessed the same and under section 5(1) of the Act the value thereof was includible in the principal value of the estate of the deceased on his death. It is to be noted that in view of the decision in CED v. Aloke Mitra 1980 126 ITR, 599 (SC), the decisions referred to by the Appellate Controller which were also noted by the Tribunal are impliedly overruled. In fact the decision in Aloke Mitra v. CED 1971 82 ITR 430 (All), on which the Appellate Controller and the Tribunal relied was the subject-matter of challenge in the aforesaid case and has been overruled. The answer to the question referred, therefore, is in the negative, in favour of the Revenue and against the accountable person. The reference stands disposed of.
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2001 (3) TMI 47
Charitable Purpose, Charitable Trust, Exemption ... ... ... ... ..... relatives the exact figures being 717,12,174 and 6,383. To put it differently 24.69 per cent. of the shares were held by these persons. The Tribunal, therefore, rightly held that the persons mentioned in sections 13(3)(a), (b) and (d) had a substantial interest. The question, therefore, has to be answered in the affirmative, in favour of the Revenue and against the assessee. So far as the third question is concerned, the assessee s stand before the Tribunal was that the contributions in order to become substantial contribution have to be invested during a particular previous year. The language of the provision is crystal clear and it is not permissible to read the expression during the previous year into section 13(3)(b). That being the position, the Tribunal was justified in its conclusions. The answer to the question, therefore, is answered in the affirmative, in favour of the Revenue and against the assessee. All the four reference applications are accordingly disposed of.
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