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Showing 61 to 77 of 77 Records
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1972 (7) TMI 17
Search and Seizure - Currency notes were seized from a person by police officer - inasmuch as the currency notes produced in court are not those seized by the authorised officer, or which he was empowered to seize strictly in terms of section 132(1)(iii), the revision-petitioner is not competent to claim to have the documents (currency notes) made over to him for purposes of investigation. As the discovery is not claimed to be as a result of the search of any building or place as referred to in clause (iii) of sub-section (1) of section 132, the question of applying the provisions of sub-section (3) of section 132 also cannot arise. I, therefore, find that the order passed by the learned Sub-Magistrate, which has been confirmed by the learned District Magistrate, is perfectly in order and that it calls for no interference by this court in revision
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1972 (7) TMI 16
Assessee, a managing agent used company cars - Income-tax Officer, Coimbatore, who made the assessment on the company for the said years disallowed a portion of the company's claim on the ground that the cars were partly used by the managing agents of the company for their private purposes. – as it was found that the unauthorised use was by the assessees as managing agents and not as directors, the provisions of section 2(6C)(iii) cannot be applied.
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1972 (7) TMI 15
The difference between the fair market value and the actual consideration can be treated as capital gains despite the fact that it has been assessed to gift-tax - Besides, the scheme of taxation to income-tax is different from that under the Gift-tax Act. It is the income that accrues or arises or is deemed to accrue or arise as a result of the transfer that is subject to assessment under the Income-tax Act. It is the transaction of the gift itself, i.e., the transaction used for transmission of title that is assessed under the Gift-tax Act. So understood, there is no question of double taxation
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1972 (7) TMI 14
Whether, on the facts and in the circumstances of the case, and on a true interpretation of the various provisions of the Income-tax Act, 1961, the Tribunal was correct in holding that a registered firm was not entitled to have its losses in speculation business carried forward for set off against future profits in speculation business
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1972 (7) TMI 13
This petition under article 226 of the Constitution seeks to set aside notices, issued under section 148 - the grounds are that the Income-tax Officer had no reason to believe and had no material before him for that belief that the income amounting to Rs. 50,000 had escaped assessment or was likely to have escaped assessment for any of the years mentioned above and had, therefore, no jurisdiction to reopen the assessments that had been completed long years ago
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1972 (7) TMI 12
Issues Involved:
1. Legality and validity of proceedings initiated under section 147(b) of the Income-tax Act, 1961.
Issue-wise Detailed Analysis:
1. Legality and Validity of Proceedings under Section 147(b):
The core question referred to the High Court was whether the proceedings initiated under section 147(b) of the Income-tax Act, 1961, were legal and valid. The assessment year in question was 1963-64, with the original assessment completed on March 16, 1964. The Income-tax Officer reopened the assessment under section 147(b) on the ground that capital gains from the transfer of a property had not been taxed.
The property in question, Machungal Purayidom, originally belonged to the assessee's wife and was bequeathed to her four daughters. Two daughters sold their shares to the assessee, who then sold his interest to another daughter. The reassessment aimed to tax the capital gains of Rs. 30,000, the difference between the selling price and the purchase price.
The Income-tax Officer initially accepted the assessee's contentions about the property's value and improvements, resulting in a lower tax amount. However, during reassessment, the Officer concluded that the income had escaped assessment, leading to the taxation of Rs. 30,000 as capital gains.
Section 147(b) stipulates that the Income-tax Officer can reassess income if he has "reason to believe" that income chargeable to tax has escaped assessment due to information received after the original assessment. The definition of "information" was central to this case.
The information in this case was a communication from the audit party, pointing out errors in the original assessment. The Supreme Court in Commissioner of Income-tax v. A. Raman & Co. clarified that "information" must come from an external source and not be a mere change of opinion by the Income-tax Officer.
The revenue argued that information could come from any external source, including the audit department, while the assessee contended that it must come from a judicial authority. The Gujarat High Court in Kasturbai Lalbai v. R. K. Malhotra supported the latter view, while the Delhi High Court in Commissioner of Income-tax v. H. H. Smt. Chand Kanwarji supported the former.
The Kerala High Court favored the Delhi High Court's view, stating that the Supreme Court did not limit "external source" to judicial authorities. The Court emphasized that the information must lead the Income-tax Officer to believe that income had escaped assessment, regardless of whether the information could have been obtained during the original assessment.
The Court cited several cases supporting the broader interpretation of "information," including Salem Provident Fund Society Ltd. v. Commissioner of Income-tax and United Mercantile Co. Ltd. v. Commissioner of Income-tax. These cases established that information could come from any source, including audit notes, and still be valid under section 147(b).
In conclusion, the Kerala High Court held that the proceedings initiated under section 147(b) based on the audit note were legal and valid, answering the question in the affirmative. A copy of the judgment was directed to be sent to the Income-tax Appellate Tribunal, Cochin Bench.
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1972 (7) TMI 11
Loss arising from the advances made by the film distributors to film producers - Whether, on the facts and in the circumstances of the case, the irrecoverable part of the advance amounting to Rs. 10,457 was a business loss deductible in the computation of the assessee's income
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1972 (7) TMI 10
Respondents are insurance companies doing general insurance business and each of these companies derived an income which consists of dividends arising out of their investments. These dividends are received from Indian companies. The short question is whether the dividend income received by the three respondent-companies is wholly exempt from super-tax either under the provisions of section 99(1)(iv) (as it then stood) of the Income-tax Act, 1961, or under section 85A of the said Act. In Income-tax Reference No. 9 of 1971, the respondent-assessee has also claimed exemption under the provisions of section 85 and section 235 of the same Act in respect of dividend income. In each of the cases the department has claimed that exemption no doubt can be allowed but not upon the full amount of the dividend received by each company but only on the net dividend earned, that is to say, after the deduction of proportionate expenses of management from the total amount of the dividend
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1972 (7) TMI 9
Issues Involved:
1. Whether an appeal lies against an order of rectification made by the Income-tax Officer under section 35, sub-section (1), of the Indian Income-tax Act, 1922.
Issue-wise Detailed Analysis:
1. Appealability of Rectification Order under Section 35(1):
The core issue was whether an appeal lies against an order of rectification made by the Income-tax Officer under section 35(1) of the Indian Income-tax Act, 1922. The court examined the language of section 30(1), which confers the right of appeal. Section 30(1) allows an assessee to appeal against various orders, including the amount of income assessed under section 23 or tax determined under section 23. The assessee argued that an order of rectification under section 35(1) essentially modifies the assessment under section 23, thereby making it appealable under section 30(1).
The court rejected this argument, stating that the right of appeal is conferred against orders made under specific sections, and the rectification under section 35(1) is not an assessment under section 23 but an exercise of power under section 35(1). The court reasoned that the enhanced tax liability resulting from rectification owes its validity to section 35(1) and not section 23. Therefore, the rectified assessment cannot be considered an assessment under section 23 for the purposes of appeal under section 30(1).
2. Nature of Rectification Proceedings:
The court referred to the Supreme Court decision in S. Sankappa v. Income-tax Officer, which clarified that rectification proceedings are part of the assessment process. However, the court emphasized that the source of power for rectification is section 35(1), not section 23. The rectified assessment is a result of the exercise of power under section 35(1), and therefore, no appeal lies against it under section 30(1).
3. Denial of Liability to be Assessed:
The assessee also argued that challenging the rectification order amounts to denying liability to be assessed under the Act, thereby entitling them to appeal under section 30(1). The court disagreed, stating that denying liability to be assessed under the Act means denying liability to be charged with tax under any provision of the Act, not merely under a specific provision like section 35(1). The court held that the objection must be against the entire procedure of assessment under the Act, not just a part of it.
4. Supporting Case Law:
The court cited several decisions to support its view. The Madras High Court in Commissioner of Income-tax v. Vellingiri Gouder and VR. C. RM. Adaikkappa Chettiar v. Commissioner of Income-tax had similarly held that no appeal lies against an order of rectification under section 35(1). The court also referred to the Privy Council decision in Commissioner of Income-tax v. Khemchand Ramdas, which interpreted "liability to be assessed under this Act" as "charged with tax under the Act," reinforcing the view that the denial must be against the entire assessment process.
5. Alternative Remedies:
The court noted that if an order of rectification is made without fulfilling the conditions for the exercise of power under section 35(1), the assessee has the right to seek revision from the Commissioner under section 33A or approach the court under articles 226 or 227 of the Constitution. Furthermore, under the Income-tax Act of 1961, an express right of appeal is provided against an order of rectification under section 246(f).
Conclusion:
The court concluded that no appeal lies against an order of rectification made under section 35(1) of the Indian Income-tax Act, 1922. The answers to the questions referred were as follows:
- In Income-tax Reference No. 65 of 1970, the answer was in the negative.
- In Income-tax Reference No. 73 of 1970, the answer to question No. (2) was in the affirmative.
- In Income-tax Reference No. 23 of 1971, the answer to question No. (2) was in the affirmative.
The assessee was directed to pay the costs of each reference to the Commissioner.
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1972 (7) TMI 8
Assessee earned a profit of Rs. 2,54,862 being the appreciation in the exchange value of the price in dollars, in terms of the Indian rupee - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the amount of Rs. 2,54.862,19 represents income derived by the assessee in the course of trade
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1972 (7) TMI 7
Assessee’s business of manufacture of scientific instruments and communication equipment - it cannot be said to have started until the necessary machinery were installed - obtaining of land and ordering for machinery, etc. were merely operations for setting up of the business - finding of the Tribunal that the business of the assessee was set up in the previous year that is, prior to 31st March, 1966, was contrary to evidence or based on no evidence at all. It was impossible for the Tribunal to have come to that decision on the facts found by it - revenue expenditure incurred prior to that date would not be permissible deduction
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1972 (7) TMI 6
Companies Act - This is an application by the Income-tax Officer, Central Circle, Ernakulam, under section 559 of the Companies Act, 1956, for an order declaring the dissolution of the Mambad Timber and Estates (Private) Ltd. to have been void - since due to the amalgamation the private company did not have any assets and liabilities no purpose would be served by declaring the dissolution void
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1972 (7) TMI 5
Issues Involved:
1. Validity of penalty under section 28(1)(c) on the succeeding karta of a Hindu undivided family.
2. Concealment of income and deliberate furnishing of inaccurate particulars.
3. Legal continuity of a Hindu undivided family despite changes in kartaship.
4. Attribution of the karta's consciousness to the Hindu undivided family.
5. Assessment of the Hindu undivided family's liability for the actions of a previous karta.
Issue-wise Detailed Analysis:
1. Validity of Penalty under Section 28(1)(c) on the Succeeding Karta of a Hindu Undivided Family:
The court examined whether the levy of penalty under section 28(1)(c) on the succeeding karta was valid in law. Section 28(1)(c) of the Indian Income-tax Act, 1922, stipulates penalties for concealment of income or deliberate furnishing of inaccurate particulars. The court emphasized that a Hindu undivided family (HUF) is a distinct taxable entity under the Income-tax Act, and any change in kartaship does not affect the legal continuity of the HUF as a juristic entity. The court concluded that proceedings under section 28(1)(c) could be initiated against the HUF even after the death of the previous karta who filed the inaccurate return.
2. Concealment of Income and Deliberate Furnishing of Inaccurate Particulars:
The court identified three essential conditions for liability under section 28(1)(c): (1) concealment of income or deliberate furnishing of inaccurate particulars in the return submitted, (2) such concealment or inaccuracy by the assessee, and (3) the concealment or inaccuracy must be a conscious or deliberate act. The court found that the first condition was satisfied as the deposits of Rs. 54,202 belonged to the assessee and were not disclosed in the return for the assessment year 1948-49. The second condition was also met as the HUF remained the same assessable entity despite the change in kartaship.
3. Legal Continuity of a Hindu Undivided Family Despite Changes in Kartaship:
The court rejected the contention that a change in karta results in a different assessable entity. It held that under the Income-tax Act, an HUF is a juristic entity distinct from its individual members, and any change in kartaship does not disrupt its legal continuity. The court cited the Supreme Court's decision in Narendranath v. Commissioner of Wealth-tax, which affirmed that property in the hands of a single coparcener remains HUF property and does not become individual property.
4. Attribution of the Karta's Consciousness to the Hindu Undivided Family:
The court addressed the argument that the consciousness of the karta in concealing income or furnishing inaccurate particulars cannot be attributed to the HUF. It held that an HUF acts through its karta, who represents the family in all transactions. Therefore, the karta's actions, including conscious concealment of income, are attributable to the HUF. The court referenced the House of Lords' decision in Lennards Carrying Co. v. Asiatic Petroleum Co., which established that a corporation's actions are those of its directing mind and will.
5. Assessment of the Hindu Undivided Family's Liability for the Actions of a Previous Karta:
The court upheld that the HUF, as an assessable entity, could be held liable for the actions of the previous karta. It cited the decision in Nataraja Gounder v. Commissioner of Income-tax, where it was held that the succeeding karta represents the HUF and can be penalized for the previous karta's deliberate concealment of income. The court also distinguished the present case from the Supreme Court's decision in Kapurchand Shrimal v. Tax Recovery Officer, which dealt with corporeal punishment and did not apply to the present context of penal proceedings under section 28(1)(c).
Conclusion:
The court concluded that the levy of penalty under section 28(1)(c) on the assessee as the succeeding karta of the HUF was valid in law. The reference was answered in the affirmative, and costs were awarded to the department.
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1972 (7) TMI 4
Change of opinion - petitioner in this application challenges a notice under section 148 of the Income-tax Act, 1961 - assessment is reopened to dissallow development rebate on second-hand machinery and interest on arrears of income-tax allowed in the original assessment - condition precedent for issuing notice u/s 148 has not been fulfilled in this case
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1972 (7) TMI 3
Sale of a firm of chartered accountants - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the amount of Rs. 32,000 cannot be subjected to tax as capital gains – held that amount received on account of goodwill does not give rise to capital gains - Question answered in the affirmative
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1972 (7) TMI 2
Partner goes abroad for studies - Whether the income of the assessee derived from partnership business is earned income or unearned income - knowledge gained by the assessee during his stay abroad would finally benefit the firm in carrying on its business in a better manner - therefore, the income earned by him was an earned income
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1972 (7) TMI 1
Whether the price mentioned in the deed of conveyance can be rejected by the department while determining the actual cost - if circumstances exist for going behind the valuation as also the allocation given in the deed of conveyance, it was and is open to the income-tax authorities to determine the valuation as well as the allocation between depreciable and non-depreciable assets - assessee's appeal is dismissed
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