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Showing 81 to 85 of 85 Records

• 1972 (10) TMI 5
  

  Manufacturing Concern - Diversion By Overriding Title - commission paid at a fixed percentage of the net profits as per the agreement between the company and the Government is spent wholly and exclusively for the purpose of the business - allowable expenditure

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• 1972 (10) TMI 4
  

  sales tax collected by an auctioneer from buyers and not paid to the buyers or Govt. nor refunded to the owners of goods - Whether, the sum of ₹ 32,986 had been validly excluded from the assessee's business income for the relevant assessment year - We, therefore, agree with the High Court in so far as it has answered the question referred to it in the negative and against the appellant

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• 1972 (10) TMI 3
  

  Whether the amount of Rs. 5,39,057 was rightly disallowed under rule 12(1) of the Schedule to the Excess Profits Tax Act - Whether the amount of Rs. 1,28,743 was rightly disallowed under rule 12(1) of Schedule I to the Excess Profits Tax Act - Excess Profits Tax Officer was perfectly justified in disallowing certain proportion which according to him was unreasonable and unnecessary having regard to the requirements of the business

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• 1972 (10) TMI 2
  
  Issues Involved:
  1. Deduction of wealth-tax from dividend income under Section 57(iii) of the Income-tax Act, 1961.
  2. Interpretation of amendments to Sections 40 and 58 of the Income-tax Act, 1961.
  
  Detailed Analysis:
  
  1. Deduction of Wealth-tax from Dividend Income under Section 57(iii) of the Income-tax Act, 1961:
  During the relevant accounting period 1962-63, the assessee paid wealth-tax of Rs. 21,963 on shares held and claimed this amount as a deductible expenditure from dividend income under Section 57(iii) of the Act. The Income-tax Officer rejected this claim, stating there was no direct or immediate connection between the payment of wealth-tax and the earning of dividend income. Both the Appellate Assistant Commissioner and the Tribunal upheld this decision. The High Court, upon reference, also rejected the assessee's contention, noting that wealth-tax was paid as the owner of assets, unrelated to the income produced by those assets. The court cited Kumbakonam Electric Supply Corporation Ltd. v. Commissioner of Income-tax and Travancore Titanium Products Ltd. v. Commissioner of Income-tax to support its decision.
  
  The High Court observed: "We find it difficult to hold that the wealth-tax was paid by each of the assessees in these cases as incidental to making or earning of income. The expenditure, in order to be a permissible deduction, should be directly connected with the purpose of making or earning of income."
  
  The Supreme Court reiterated that for an expenditure to be deductible under Section 10(2)(xv) of the Income-tax Act, 1922, it must be incidental to the business, justified by commercial expediency, and directly connected with the business. This principle was affirmed in the case of Travancore Titanium Products Ltd., where the court held that there must be a direct and intimate connection between the expenditure and the business.
  
  2. Interpretation of Amendments to Sections 40 and 58 of the Income-tax Act, 1961:
  The Supreme Court noted that a larger Bench in Indian Aluminium Co. Ltd. v. Commissioner of Income-tax had modified the test from the Travancore Titanium case. The court held that if the expenditure is laid out by the assessee as owner-cum-trader and is incidental to the business, it should be treated as such. However, subsequent amendments to Sections 40 and 58 of the Income-tax Act, 1961, specifically disallowed the deduction of wealth-tax as an expenditure.
  
  The amendments introduced sub-clause (ii-a) to clause (a) of Section 40 and sub-section (1A) to Section 58, which explicitly prohibited the deduction of wealth-tax: "any sum paid on account of wealth-tax." The amendments were given retrospective effect, barring deductions for assessment years prior to 1962-63.
  
  The court clarified that the Explanation to sub-clause (ii-a) of clause (a) of Section 40, which excludes "any tax chargeable with reference to the value of any particular asset of the business or profession," does not apply to wealth-tax under the Wealth-tax Act, 1957. The court stated: "There is no warrant for this construction because the words upon which reliance has been placed are related to the tax chargeable under a law in force in any country outside India with reference to the value of the assets of or employed in a business or profession carried on by the assessee."
  
  The court concluded that the amendments clearly disallowed any deduction of wealth-tax from the computation of an assessee's income. The learned advocate's attempt to argue otherwise was found to be "totally abortive."
  
  Conclusion:
  The Supreme Court upheld the High Court's decision, stating that the wealth-tax paid by the assessee was not directly or incidentally related to the earning of dividend income and thus could not be deducted under Section 57(iii) of the Income-tax Act, 1961. The appeal was dismissed with costs.
  
  Appeal dismissed.

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• 1972 (10) TMI 1
  

  Compensation paid for termination of the services of the managing agents was a payment made with a view to save business expenditure in the relevant accounting year as well as for a few more years. It was not made for acquiring any enduring benefit or income-yielding asset. We agree with the High Court that the Tribunal was right in its conclusion that the expenditure in question was a revenue expenditure

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