|
Advanced Search Options
Case Laws
Showing 41 to 60 of 79 Records
-
1968 (11) TMI 39
Expenditure-tax Act, 1957 - amount spent on the foreign education of son - share of the compensation is the separate property of the son, Mallikarjuna Prasad, and he is entitled to spend from that amount the expenses towards his education, which cannot be said to have been incurred by the joint family- therefore it is excludible from the taxable expenditure of the family
-
1968 (11) TMI 38
Issues Involved:
1. Inclusion of expenditures incurred by the wife and minor sons of the assessee in the taxable expenditure of the assessee under the Expenditure-tax Act.
2. Interpretation of the term "dependant" under section 2(g)(i) of the Expenditure-tax Act.
3. Applicability of section 4(ii) of the Expenditure-tax Act to expenditures incurred by dependants.
Issue-wise Detailed Analysis:
1. Inclusion of Expenditures Incurred by the Wife and Minor Sons of the Assessee:
The primary issue was whether the expenditures incurred by the assessee's wife and minor sons should be included in the taxable expenditure of the assessee for the assessment years 1959-60 and 1960-61. The Expenditure-tax Officer included these amounts, considering the wife and minor sons as "dependants" under section 2(g)(i) and thus, the expenditures were liable to be included under section 4(ii). The Appellate Assistant Commissioner disagreed, stating that since the wife and minor sons had their own sources of income and were not dependent on the assessee, they could not be considered dependants. The Tribunal reversed this decision, holding that the wife and minor sons were dependants within the meaning of section 2(g)(i) and their expenditures were includible under section 4(ii).
2. Interpretation of the Term "Dependant" under Section 2(g)(i):
The court examined the definition of "dependant" as amended in 1959. The amended section 2(g)(i) defines "dependant" to include the spouse or minor child of the assessee, irrespective of whether they are wholly or mainly dependent on the assessee for support and maintenance. The court rejected the assessee's argument that dependency for support and maintenance was necessary even for the spouse and minor children. The court held that the amended definition clearly distinguishes between the spouse and minor children, who are always considered dependants, and other persons, who must be wholly or mainly dependent on the assessee.
3. Applicability of Section 4(ii) to Expenditures Incurred by Dependants:
The court addressed the interpretation of section 4(ii), which includes expenditures incurred by dependants in the taxable expenditure of the assessee. The assessee argued that only expenditures incurred from income or property transferred by the assessee to the dependants should be included. The court disagreed, stating that the provision applies differently to individual assessees and Hindu undivided families (HUFs). For individual assessees, any expenditure incurred by dependants is includible, while for HUFs, the expenditure must be from income or property transferred by the HUF. The court concluded that the expenditures incurred by the wife and minor sons, being dependants, were includible in the taxable expenditure of the assessee.
Conclusion:
The court affirmed the Tribunal's decision, holding that the wife and minor sons of the assessee were dependants under section 2(g)(i) and the expenditures incurred by them were includible in the taxable expenditure of the assessee under section 4(ii). The assessee was ordered to pay the costs of the Commissioner.
-
1968 (11) TMI 37
Whether the notice under section 154 of the Income-tax Act, 1961, is invalid and deprives the revenue authorities of jurisdiction under section 35 - mistake being apparent from the record was rectified under section 35 after obtaining no objection from the authorised representative of the assessee-firm - appeal by assessee fail
-
1968 (11) TMI 36
U.P. Agricultural Income-tax Act, 1948 - On the death of the Raja, the Court of wards entered into the management of the estate on behalf of his widow - Collector took assessment proceedings against the Court of wards for the assessment of the agricultural income of the estate for the year 1359 - held that assessment order u/s 16(3), U.P.Agrl. IT Act, in respect of the agricultural income of the year 1359 Fasli could not be made against the receiver
-
1968 (11) TMI 35
Estate Duty - properties derived from the father of the deceased under the will - properties had obtained the character of joint family properties of the deceased and his four sons on the date of the death of the deceased - inclusion of these properties in the estate of the deceased as his individual property is not correct
-
1968 (11) TMI 34
Issues Involved:
1. Whether the value of the properties covered by the document dated October 14, 1953, could be included in the net wealth of the assessee as on the valuation date, March 31, 1957.
2. Whether the document in question constituted a wakf or a will.
3. Whether the properties could be excluded from the net wealth of the assessee under section 3 of the Wealth-tax Act.
4. Whether the document could be revoked by the assessee.
5. Whether the assessee's case fell within the exception contained in section 5(1)(i) of the Wealth-tax Act.
Issue-wise Detailed Analysis:
1. Inclusion of Property Value in Net Wealth:
The primary question was whether the properties covered by the document dated October 14, 1953, could be included in the net wealth of the assessee as on the valuation date, March 31, 1957. The court found that the properties could not be included in the net wealth of the assessee because the ownership of the properties was transferred to God the Almighty upon the execution of the wakf deed on October 14, 1953. Hence, the properties ceased to belong to the assessee from that date.
2. Nature of the Document (Wakf or Will):
The court examined whether the document constituted a wakf or a will. It was determined that the document was a wakf deed and not a will. The court noted that the executants intended to reserve the income of the properties for their benefit during their lifetime while dedicating the corpus of the properties for charitable purposes. The document's reference to "192 Mulla Shariat 1950" and the absence of any provision preserving the interest of the executants in the corpus of the properties indicated that the properties were dedicated for charitable purposes from the date of the document's execution.
3. Exclusion from Net Wealth under Section 3 of the Wealth-tax Act:
According to section 3 of the Wealth-tax Act, wealth-tax is charged on the net wealth of an individual, Hindu undivided family, or company on the valuation date. The court concluded that since the ownership of the properties was transferred to God upon the execution of the wakf deed, the properties ceased to belong to the assessee. Therefore, the properties could not be included in the net wealth of the assessee on the valuation date, March 31, 1957.
4. Revocability of the Document:
The court addressed the argument that the document could be revoked by the assessee. It was held that the document, being a wakf deed, was not capable of being revoked. Even if the document were considered a will, the court noted that there is a difference of opinion on whether a joint and mutual will can be revoked after the death of one of the testators if there is no specific provision prohibiting revocation. However, since the document was determined to be a wakf deed, the question of revocation did not arise.
5. Exception under Section 5(1)(i) of the Wealth-tax Act:
The court considered whether the assessee's case fell within the exception contained in section 5(1)(i) of the Wealth-tax Act, which exempts property held under trust or other legal obligation for any public purpose of a charitable or religious nature in India from wealth-tax. The court did not decide on this point, as the finding that the properties could not be included in the net wealth of the assessee under section 3 of the Act was sufficient to answer the reference.
Conclusion:
The court answered the question referred to it in the negative, concluding that the value of the properties covered by the document dated October 14, 1953, could not be included in the net wealth of the assessee as on the valuation date, March 31, 1957. The assessee was entitled to her costs of the reference, with counsel's fee set at Rs. 200.
-
1968 (11) TMI 33
Issues Involved:
1. Whether the value of the properties mentioned in the deed dated July 15, 1951, had been correctly included in the estate of the deceased under section 10 of the Estate Duty Act.
2. Whether the value of the money lending business was rightly charged to estate duty under section 9 of the Estate Duty Act.
Detailed Analysis:
Issue 1: Inclusion of Property Value Under Section 10 of the Estate Duty Act
The primary question here is whether the properties mentioned in the partition deed dated July 15, 1951, were self-acquired properties of the deceased or joint family properties. The interpretation of the partition deed and the subsequent conduct of the parties are crucial in this determination. The deed stated, "all our family property was the self-acquisition of party No. 1 amongst us," indicating that the deceased intended to treat his self-acquired property as family property. This intention was further supported by the fact that the partition was consensual among all family members, including the minor son represented by the father.
Under Hindu law, a person can convert self-acquired property into joint family property by merely declaring an unequivocal intention to do so, without any formalities (refer to Commissioner of Income-tax v. Stremann and Sadasiva Vittal v. Rattalu). The subsequent conduct of the parties, such as the separate accounts opened in the money-lending business for each son, and the income from agricultural lands credited to these accounts, supports the implementation of the partition.
The Assistant Controller and the Central Board did not consider certain critical documents, such as the exchange deed dated May 13, 1955, which confirmed the separate possession and enjoyment of the properties by the sons. This document, coupled with the fact that the income from the properties was credited to the sons' accounts, indicates that the deceased did not retain control over the properties post-partition.
The contention that the act of converting self-acquired property into joint family property constitutes a gift involving a transfer of property was addressed. The court held that the partition deed and subsequent conduct demonstrated that the properties became joint family properties, and the partition did not constitute a gift. The court also noted that a partition of joint family property does not amount to a transfer of property (see Commissioner of Income-tax v. Keshavlal Lallubhai Patel).
Even if the conversion were considered a transfer, the deceased did not retain possession or enjoyment of the properties, thereby not attracting section 10 of the Act. The properties were partitioned, and the sons assumed bona fide possession and enjoyment, excluding the donor. Thus, the values of the properties under the partition deed dated July 15, 1951, were not includible in the estate of the deceased under section 10 of the Act.
Issue 2: Inclusion of Money-Lending Business Value Under Section 9 of the Estate Duty Act
The money-lending business was acknowledged as the individual business of the deceased, with the income being utilized by him until his death. The division of the money-lending business on October 4, 1957, was treated as a gift to his sons, as evidenced by the deceased describing the property as his self-acquired property in the division document.
There was no evidence to suggest that the money-lending business was treated as joint family property before October 4, 1957, nor was there any unequivocal declaration by the deceased to that effect. The Assistant Controller and the Board found that the income from the money-lending business was utilized by the deceased, and since the shares were gifted within two years prior to his death, section 9 of the Act applied. Consequently, the value of the money-lending business was rightly charged to estate duty.
Conclusion:
The court answered the first question in the negative, concluding that the properties mentioned in the partition deed dated July 15, 1951, were not includible in the estate of the deceased under section 10 of the Estate Duty Act. The second question was answered in the affirmative, confirming that the value of the money-lending business was rightly charged to estate duty under section 9 of the Act. No order as to costs was made.
-
1968 (11) TMI 32
Assessee claimed that the amount of Rs. 12,000 which he received as allowance in the relevant previous year was received by him as the subordinate chief of the Ruler of the merged State, namely, Khairagarh, and was, therefore, exempt from tax - held that amount received by the assessee was not exempt from income-tax in the hands of the assessee
-
1968 (11) TMI 31
Issues Involved:
1. Whether the purchase of the site and the buildings known as "Brengun Estate" was in the course of a profit-making scheme or adventure in the nature of trade?
2. If the answer to question No.1 is in the affirmative, whether the extra compensation of Rs. 99,245 awarded by the District Judge on 12th July, 1956, is assessable for the assessment year 1955-56?
Detailed Analysis:
Issue 1: Nature of the Purchase of "Brengun Estate"
The court had to determine if the purchase of "Brengun Estate" by the assessee was an adventure in the nature of trade or part of a profit-making scheme. The court referenced a prior decision in R.C. No. 42/62, where it was established that the purchase was indeed an adventure in the nature of trade. This decision was affirmed by the Supreme Court in Khan Bahadur Ahmed Alladin and Sons v. Commissioner of Income-tax. Consequently, the court answered the first question in the affirmative and in favor of the department, confirming that the purchase was part of a profit-making scheme.
Issue 2: Assessability of Extra Compensation
The second issue revolved around whether the additional compensation of Rs. 99,245, awarded by the District Judge on 12th July, 1956, should be assessed in the year 1955-56. The assessee argued that the compensation should be assessed in the year it was awarded, not when possession was taken. The department contended that the right to compensation accrued when possession was taken, thus it should be included in the year the Collector awarded the initial compensation.
The court examined the nature of acquisition proceedings and the timing of compensation accrual. It concluded that the right to compensation becomes inchoate when possession is taken, but it only accrues when the compensation amount is determined and payable. The court noted that income for tax purposes accrues or arises when it becomes a tangible, enforceable right, not merely a claim or an inchoate right. The court cited several precedents, including E.D. Sassoon & Co. Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. A. Gajapathy Naidu, to support this view.
The court also referenced the decision in Mahalakshmi Rice & Oil Mill v. Commissioner of Income-tax, which distinguished between an ex gratia payment and a right to receive compensation. The court emphasized that income tax is not levied on a mere right to receive compensation but on an ascertained amount that becomes payable. Therefore, the enhanced compensation awarded by the District Judge accrued only on the date of the award, i.e., 12th July, 1956.
In conclusion, the court held that the enhanced compensation of Rs. 99,245 did not accrue in the year 1955-56 but in the year it was awarded by the District Judge. Thus, the answer to the second question was in the negative and in favor of the assessee.
Summary of Judgments:
The court answered the first question in the affirmative, confirming that the purchase of "Brengun Estate" was an adventure in the nature of trade. The second question was answered in the negative, determining that the extra compensation of Rs. 99,245 accrued in the year it was awarded by the District Judge, not in the year 1955-56. The assessee was awarded costs, with an advocate's fee of Rs. 250.
-
1968 (11) TMI 30
Issues:
Interpretation of managing agency agreement for calculating managing agency remuneration.
Analysis:
The judgment of the High Court of Andhra Pradesh involved the interpretation of a managing agency agreement dated April 18, 1937, for calculating managing agency remuneration. The agreement specified that the managing agents were entitled to 10% of the net profits of the company or a minimum payment of Rs. 1,000 a month if there were no profits. The dispute arose regarding the calculation of profits and depreciation on fixed assets and other assets of the company as per the agreement. The Income-tax authorities interpreted the agreement to allow depreciation based on the British India Income-tax Act in force from time to time, resulting in reduced profits. However, the Tribunal disagreed with this interpretation, holding that the depreciation should be calculated based on the Income-tax Act in force on the date of the agreement. The Tribunal also confirmed that the managing agency commission claimed was a deductible expenditure and a bona fide payment. The department contended that the Tribunal's interpretation was incorrect, emphasizing the need to consider depreciation in accordance with the Income-tax Act in force from time to time. On the other hand, it was argued that when a deed or statute adopts another statute by reference, the provisions of the statute as existing on the date of the deed should apply, not subsequent amendments.
The High Court analyzed the language of the agreement, particularly clause 2(b, which defined "Net profits" of the company. The clause specified that profits should be calculated by allowing for depreciation on fixed assets and other assets as per the British India Income-tax Act in force at the date of the agreement. The Court agreed with the Tribunal's interpretation, emphasizing that depreciation should be allowed based on the Income-tax Act in force on the date of the agreement. The Court noted that the parties intended for the Income-tax Act in force at the date of the agreement to govern the calculation of profits throughout the agreement period. The Court rejected other contentions raised by the department and the assessee, except for a preliminary objection regarding the academic importance of the question. Despite the objection, the Court answered the question in favor of the assessee, affirming that the managing agency remuneration should be calculated based on the Income-tax Act in force at the date of the agreement. The Court awarded costs and advocate's fee to the assessee, concluding the judgment in their favor.
-
1968 (11) TMI 29
Firm - assessment - Tribunal was not right in holding that the income from July 1, 1959, to the date of dissolution should be assessed as income of the previous year relevant for the asst. yr. 1960-61 and that the firm should be registered for this assessment year - as there was no application for renewal of registration for 1961-62, the ITO was justified in assessing the firm as unregistered firm
-
1968 (11) TMI 28
Issues Involved:
1. Inclusion of Rs. 22,630 in the estate of the deceased under section 46(2) of the Estate Duty Act.
2. Inclusion of properties under section 10 of the Estate Duty Act:
- N.G.P. notes of the value of Rs. 21,249.
- House property No. 85, Nallagunta.
- House properties Nos. 1234, 1235, and 1238 at Pioneer Bazar, Bolarum.
Detailed Analysis:
Issue 1: Inclusion of Rs. 22,630 in the Estate of the Deceased under Section 46(2) of the Estate Duty Act
The Central Board of Direct Taxes referred the question of whether Rs. 22,630 was correctly included in the estate of the deceased under section 46(2) of the Act. The accountable person, the widow of the deceased, argued that the cash belonged to her and not to the deceased. However, the Assistant Controller found that the deceased had withdrawn significant amounts from his accounts, which were found in the iron safe. The Board concluded that the amount withdrawn by the applicant during the two years prior to the death of the deceased should be treated as part of the estate under section 46(2) of the Act. This section extends the principle of section 46(1) and includes any debt satisfied or discharged within two years prior to death as part of the estate. Thus, the sum of Rs. 22,630 was correctly included in the estate, and the first question was answered in the affirmative and against the assessee.
Issue 2: Inclusion of Properties under Section 10 of the Estate Duty Act
(a) N.G.P. Notes of the Value of Rs. 21,249
The Assistant Controller and the appellate authority found that the deceased was not entirely excluded from the benefit or enjoyment of the N.G.P. notes. The income from these notes was received by the deceased and merged with his business funds. There was no effective transfer of the notes to the wife until 1955, and no evidence showed that she enjoyed the interest from them. Therefore, the N.G.P. notes were correctly included in the estate under section 10 of the Act.
(b) House Property No. 85, Nallagunta
This house was constructed by the deceased in the name of his wife, and he lived in it until his death. The accountable person argued that the deceased living in the house did not amount to deriving a benefit from it. The court referred to a similar case where it was held that a husband living with his wife in a house gifted to her does not constitute a benefit under section 10 of the Act. The court concluded that the property was not includible in the estate of the deceased under section 10, answering this part of the question in the negative and in favor of the assessee.
(c) House Properties Nos. 1234, 1235, and 1238 at Pioneer Bazar, Bolarum
The Assistant Controller and the appellate authority found that the deceased received rental income from these properties, which was used in his business. The deceased was not entirely excluded from possession and enjoyment of these properties. Thus, these properties were correctly included in the estate under section 10 of the Act, answering this part of the question in the affirmative and against the assessee.
Conclusion
- Question 1: Affirmative and against the assessee.
- Question 2:
- House Property No. 85, Nallagunta: Negative and in favor of the assessee.
- N.G.P. Notes and House Properties at Pioneer Bazar, Bolarum: Affirmative and against the assessee.
No order as to costs was made in this reference.
-
1968 (11) TMI 27
Whether the allotment of the properties to the adopted son under the deed constitutes a `gift` within the meaning of the GT Act - Held, yes - Whether the income from the properties in question can be included in the total income of the applicant u/s 16(3)(a)(iv) of the IT Act - Held, yes
-
1968 (11) TMI 26
Best judgment assessment under section 13 of the Indian Income-tax Act, 1922, in one case and under the proviso to sub-section (1) of section 145 of the Income-tax Act, 1961, in the other - rejection of accounts produced by the assessee being based merely on method of valuation of stock - whether assessment was justified
-
1968 (11) TMI 25
Issues Involved:
1. Applicability of the first proviso to section 41(1) of the Indian Income-tax Act, 1922.
2. Determination of shares of beneficiaries under the trust deed.
3. Taxation of income in the hands of the trustee versus beneficiaries.
Issue-wise Detailed Analysis:
1. Applicability of the First Proviso to Section 41(1) of the Indian Income-tax Act, 1922:
The central issue was whether the trustee could be taxed at the maximum rate under the first proviso to section 41(1) of the Indian Income-tax Act, 1922. The Income-tax Officer applied the maximum rate, concluding that the shares of individual beneficiaries were indeterminate and unknown during the relevant assessment years. This was contested by the assessee, leading to appeals and subsequent references to higher authorities.
The Tribunal upheld the Income-tax Officer's decision, stating that the shares of the beneficiaries were indeed indeterminate, thus justifying the application of the maximum rate. The court ultimately agreed with this assessment, concluding that the shares were indeterminate and unknown, thus affirming the Tribunal's decision to apply the maximum rate.
2. Determination of Shares of Beneficiaries under the Trust Deed:
The trust deed executed on December 9, 1944, by the settlor transferred land to trustees with specific instructions on its sale and the use of proceeds. The deed outlined various terms for the marriage expenses and construction of houses for the settlor's daughters. The critical terms, Nos. 10 and 11, specified that any remaining fund after meeting the daughters' marriage expenses would be equally divided among the surviving daughters, and if any daughter died unmarried or childless, her share would devolve upon the settlor's male heirs.
The court analyzed these terms and concluded that the daughters did not have a vested interest in the income during the assessment years. The interest was contingent upon the occurrence of certain events, such as the completion of marriage and construction expenses. Therefore, the shares of the daughters were not determinable during the relevant years, as any daughter alive during the assessment years could potentially die before the fund became distributable, thus losing her right to any share.
3. Taxation of Income in the Hands of the Trustee versus Beneficiaries:
The court examined whether the income from the trust should be taxed in the hands of the trustee at the maximum rate or in the hands of the beneficiaries based on their receivable shares. Dr. Debi Pal, representing the assessee, argued that the shares were determinable since the number of living daughters was known during the assessment years. However, the court found that the shares were indeterminate due to the contingent nature of the interest.
The court referred to sections 19 and 21 of the Transfer of Property Act, distinguishing between vested and contingent interests. It concluded that the daughters' interest was contingent, as it depended on their survival until the fund became distributable. Consequently, the income could not be considered receivable by the beneficiaries in defined shares during the assessment years.
Conclusion:
The court held that the shares of the beneficiaries were indeterminate and unknown during the relevant assessment years, thereby justifying the application of the maximum rate of tax under the first proviso to section 41(1) of the Indian Income-tax Act, 1922. The Commissioner of Income-tax was entitled to costs, and the question referred to the court was answered in the affirmative.
-
1968 (11) TMI 24
Issues Involved:
1. Whether there was any taxable gift of the 208 "B" shares and 8 "A" shares in Palani Andavar Mills for the assessment year 1959-60.
2. Whether, in any event, the value of the property gifted should not be restricted to the life interest of the donor in the said shares as on March 31, 1959.
Detailed Analysis:
Issue 1: Taxable Gift of Shares
The central issue was whether the inclusion of Rs. 38,880 for gift-tax, representing the value of 208 "B" shares and 8 "A" shares held by the assessee in Udumalpet Palani Andavar Mills Limited, was proper. The assessee argued that there was no actual transfer of the shares to his daughter, despite two settlement deeds dated April 1, 1951, and March 31, 1959, which purported to make an absolute gift of the shares to her. The shares remained registered in the assessee's name, he continued to receive dividends, and no transfer deed was executed or request made to the company to transfer the shares to his daughter's name.
The Tribunal disagreed with the Appellate Assistant Commissioner, who had deleted the addition on the grounds that there was no transfer of the shares without mutation of the register in favor of the daughter. The Tribunal held that the assessee had done everything in his power to divest himself of his title to the shares, constituting a completed gift to his daughter.
The court considered the definitions under the Gift-tax Act, 1958, which included the transfer of property as any disposition, assignment, settlement, or other alienation of property. The second settlement deed explicitly stated that the shares were given absolutely to the daughter, and she had surrendered any interest under the earlier settlement to allow a revised disposition.
The court concluded that the second settlement deed complied with the requisites for a valid transfer of movable property under Section 123 of the Transfer of Property Act. Despite the shares' physical custody remaining with the assessee, the transfer was valid as between the transferor and transferee, and the daughter had assumed possession of the shares.
Issue 2: Value of Property Gifted
The assessee contended that the value of the property gifted should be restricted to his life interest in the shares as on March 31, 1959. The court noted that the first settlement deed retained a life interest in the assessee, but the second settlement deed, executed with the consent of all parties, including the daughter, transferred the entire interest in the shares to her.
The court referenced several cases to support its decision, including Societe Generale De Paris v. Walker, Milroy v. Lord, and Howrah Trading Co. Ltd. v. Commissioner of Income-tax, which dealt with the transfer of shares and the necessity of registration under the Companies Act. The court emphasized that the transfer of shares as between the transferor and transferee was valid and complete upon execution of the transfer deed, even if the registration in the company's books was pending.
The court also cited Rose, In re: Rose v. Inland Revenue Commissioners, which held that a transferor who had done everything in his power to transfer shares had effectively transferred his legal and beneficial interest, making the transferee the beneficial owner.
The court concluded that the second settlement deed of March 31, 1959, constituted a completed gift of the shares to the daughter, and the value of the property gifted should not be restricted to the life interest of the donor.
Conclusion:
The court answered both questions under reference against the assessee, affirming that the inclusion for gift-tax purposes of the total value of the shares as on March 31, 1959, was correct. The gift of the shares was complete and valid as between the assessee and his daughter, and the value of the property gifted included the entire interest in the shares. The assessee was ordered to pay costs, with counsel's fee set at Rs. 250.
-
1968 (11) TMI 23
Estate Duty Act, 1953 - Whether, on the facts and in the circumstances of the case, the estate duty authorities had any material to come to the conclusion that the donees had not immediately assumed possession of the properties and thenceforward retained the same to the entire exclusion of the deceased and that the provision of section 10 were attracted - Held, yes
-
1968 (11) TMI 22
Issues Involved:
1. Applicability of Section 147(a) of the Income-tax Act.
2. Validity of the reasons to believe that income had escaped assessment.
3. Applicability of the new Income-tax Act for the assessment year 1960-61.
Detailed Analysis:
1. Applicability of Section 147(a) of the Income-tax Act:
The first issue concerns whether Section 147(a) of the Income-tax Act, which authorizes the assessment of escaped income, applies to the case. The petitioner argued that the assessee had fully and truly disclosed all material facts necessary for the assessment, thus Section 147(a) should not apply. The court referred to the Supreme Court's elucidation in Calcutta Discount Company Limited v. Income-tax Officer, which clarified that the material facts under Section 147(a) are primary facts that must be disclosed. If these primary facts are true, there is no power to assess escaped income. The court concluded that if the assessee-company received a commission but stated it was a loan, this would constitute a concealment of a material fact necessary for the assessment. Therefore, Section 147(a) would apply if the assessee did not truly state the nature of the receipt.
2. Validity of the Reasons to Believe that Income had Escaped Assessment:
The second issue involves whether the Income-tax Officer had valid reasons to believe that income had escaped assessment. The court cited the Supreme Court's pronouncement in S. Narayanappa v. Commissioner of Income-tax, which stated that the sufficiency of the grounds inducing the belief is not a justiciable issue, although the assessee can contend that the Income-tax Officer did not truly entertain the belief. The court found that the Income-tax Officer had set out the entire chronology of events and circumstances, such as the non-repayment of the loan, absence of security, and lack of original invoices, which could induce a belief that the transaction described as a loan was actually a commission. The court concluded that the Income-tax Officer honestly entertained this belief and that the reasons were neither extraneous nor irrelevant.
3. Applicability of the New Income-tax Act for the Assessment Year 1960-61:
The third issue is whether the new Income-tax Act applies to the assessment year 1960-61. The petitioner argued that the new Act, which came into force on April 1, 1962, could only apply to assessment years starting from 1962-63. The court examined Section 147(a) and Section 297(2)(d)(ii) of the new Act. Section 297(2)(d)(ii) allows for the commencement of proceedings under Section 147 for escaped income for assessment years prior to 1962-63, provided no proceedings under Section 34 of the old Act were pending when the new Act commenced. Since no such proceedings were pending, the court concluded that the new Act could apply to the assessment year 1960-61.
Lastly, a contention was raised that the income should be assessed for the financial year beginning April 1, 1959, not 1960-61, based on a statement by the Income-tax Officer. However, this issue was not raised in the writ petition, and the court noted that the assessee could still argue this point before the Income-tax Officer.
Conclusion:
The court dismissed the writ petition, holding that Section 147(a) was applicable, the Income-tax Officer had valid reasons to believe income had escaped assessment, and the new Income-tax Act could apply to the assessment year 1960-61. The petition was dismissed with no costs.
-
1968 (11) TMI 21
Issues:
1. Validity of recovery proceedings under the Income-tax Act, 1961 in relation to the Zamindari Abolition Rules.
2. Compliance with the Second Schedule to the Income-tax Act, 1961 in the sale proceedings.
3. Authority of the Tahsildar to conduct the auction and accept bids.
4. Allegations of irregularities and undue haste in the auction process.
Analysis:
1. The petitioner challenged the recovery proceedings for income-tax dues, arguing that the Zamindari Abolition Rules were improperly invoked. The respondents admitted that the proceedings fell under the Income-tax Act, 1961, not the Zamindari Abolition Act. The court noted the discrepancy and considered whether the proceedings could be treated as under the Second Schedule to the Income-tax Act, 1961.
2. The court found discrepancies in the sale proceedings concerning compliance with the Second Schedule to the Income-tax Act, 1961. Rule 55 of the Second Schedule mandates a 30-day period post-proclamation before the sale of immovable property, which was violated in this case. Additionally, Rule 11 provides for investigation by the Tax Recovery Officer and the option to postpone a sale pending objections, which was not properly followed by the authorities.
3. The auction of the property was conducted by the Tahsildar, who lacked the authority of a Tax Recovery Officer as defined under the Income-tax Act, 1961. Despite no evidence of the Tahsildar being empowered as such, he accepted the highest bid at the auction. This raised concerns about the legality of the auction process and the acceptance of bids by an unauthorized officer.
4. The court noted irregularities and undue haste in the auction process, with the Collector reversing a decision to postpone the sale within a short timeframe. The hurried sale made it difficult to gather bidders, and the auction itself was conducted with questionable practices, such as the Tahsildar accepting bids. Due to these irregularities and procedural violations, the court quashed the auction sale and ordered the property to remain under attachment, allowing for fresh recovery proceedings to be conducted in accordance with the law.
-
1968 (11) TMI 20
Proceedings under section 147 - was right in law in holding that Appellate Assistant Commissioner conferred no jurisdiction on the Income-tax Officer to initiate proceedings under section 147 - Tribunal was right in holding that those proceedings under section 147 were barred by time
|
9911796707
