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Case Laws
Showing 301 to 315 of 315 Records
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1953 (1) TMI 21
Issues Involved:
1. Validity of the eviction order under Chapter VII of the Presidency Small Cause Courts Act, 1882.
2. Applicability of Section 18(1) of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
3. Interpretation of the term "decree" in Section 18(1) of the 1950 Act.
4. Legislative intent and potential casus omissus.
Issue-wise Detailed Analysis:
1. Validity of the eviction order under Chapter VII of the Presidency Small Cause Courts Act, 1882:
The appellant initiated eviction proceedings under Chapter VII of the Presidency Small Cause Courts Act, 1882, alleging non-payment of rent for three consecutive months. The respondents deposited the due amount and contested the eviction. The trial court initially ordered the eviction ex parte but later vacated the order upon compliance by the respondents. The appellant contested this vacating order in the High Court, which was dismissed, leading to the present appeal.
2. Applicability of Section 18(1) of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950:
Section 18(1) of the 1950 Act allows tenants to apply for vacating a decree for possession made on the ground of default in payment of arrears of rent under the 1948 Act. The key question was whether this section applied to an order for possession made under Section 43 of the Presidency Small Cause Courts Act, 1882. The High Court had previously ruled that the term "decree for recovery of possession" included orders under Chapter VII of the 1882 Act. However, this interpretation was contested.
3. Interpretation of the term "decree" in Section 18(1) of the 1950 Act:
The Supreme Court examined whether the term "decree" in Section 18(1) of the 1950 Act could be extended to include orders for possession under the 1882 Act. The Court concluded that the language of Section 18(1) was clear and unambiguous, referring specifically to decrees made under the 1948 Act. The Court emphasized that "decree" and "order" are distinct terms within the 1948 Act, and there was no necessity to extend the meaning of "decree" to include "order" for possession under the 1882 Act. The Court also highlighted that the word "decree" should be interpreted in its ordinary sense, as defined in the Code of Civil Procedure, 1908.
4. Legislative intent and potential casus omissus:
The Court addressed arguments suggesting that a strict interpretation of "decree" would lead to unjust results, depriving tenants of relief intended by the Legislature. The Court rejected this argument, stating that the Legislature's intention was to provide relief only in specific circumstances and not to all tenants indiscriminately. The Court reiterated that it is not the role of the judiciary to correct or amend legislative deficiencies, even in cases of casus omissus (omitted cases).
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order and dismissing the respondents' application under Section 18(1) of the 1950 Act. The Court clarified that the term "decree" in Section 18(1) does not include orders for possession under the Presidency Small Cause Courts Act, 1882. The parties were ordered to bear their own costs throughout the proceedings.
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1953 (1) TMI 20
Issues:
- Interpretation of Section 25A of the Income-tax Act
- Validity of assessment proceedings against a Hindu undivided family post-partition
Interpretation of Section 25A of the Income-tax Act:
The case involved a question regarding the sustainability of assessments on a Hindu undivided family for the years 1943/44 and 1944/45 under Section 25A(2) of the Income-tax Act. The key issue revolved around the proper interpretation of Section 25A, specifically whether the notice of assessment should have been served on the karta of the undivided family or on the separated members post-partition. The court analyzed Section 25A(1) and (2) which outline the procedure for assessing the total income of a joint family as if no partition had taken place, with each member being liable for a share of the tax based on the portion of joint family property allotted to them. The court emphasized that the proceedings under Section 25A are initiated by assessing the income of the Hindu undivided family as a whole, even after partition, and not necessarily by issuing notices to individual members. The court held that the notice to the karta of the former undivided family was valid and in line with the provisions of Section 25A.
Validity of assessment proceedings against a Hindu undivided family post-partition:
The court addressed the argument raised by the assessee that the assessment proceedings were illegal and without jurisdiction since they related to a Hindu undivided family that had ceased to exist post-partition. The court rejected this argument, stating that the proceedings were properly initiated by issuing a notice to the karta of the joint family, even if it had been divided. The court relied on the decision of the Supreme Court in a similar case to support its interpretation that the notice to the erstwhile karta was sufficient and that it was not necessary to issue notices to every member of the family individually. Additionally, the court cited a Madras High Court decision to further affirm the validity of the notice served on the assessee under Section 34 for reassessment, even after the family had partitioned. The court concluded that the assessment on the Hindu undivided family post-partition was legally valid, and the question framed by the Income-tax Appellate Tribunal was answered in favor of the Income-tax Department.
In summary, the judgment delved into the intricate provisions of Section 25A of the Income-tax Act to determine the validity of assessment proceedings against a Hindu undivided family post-partition. The court clarified that the notice of assessment could be served on the karta of the undivided family, even after partition, and that the assessment on the joint family as a whole was legally sound. The decision was supported by previous court rulings and upheld the Income-tax Department's position, requiring the assessee to pay the cost of the reference.
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1953 (1) TMI 19
Issues:
1. Charging of penal interest under Section 18A(6) of the Income-tax Act.
2. Legal adjustment of advance tax paid by a third party to offset the deficiency of advance tax paid by the applicant.
Analysis:
The case involved the assessment of an individual for the year 1945-46, where income sources included house property, share of profits in a partnership firm, and receipts from a retail shop. Dispute arose regarding an agreement between the applicant and a third party, determining the allocation of income from the retail shop. The Income-tax authorities deemed the agreement invalid, leading to the addition of certain payments to the applicant's income. Consequently, penal interest was levied under Section 18A(6) for underestimating income. The Appellate Assistant Commissioner upheld the interest charged, emphasizing the statutory provision and rejecting the adjustment of advance tax paid by the third party against the applicant's liability.
The applicant contended before the Tribunal that the estimate was made in good faith, believing certain receipts were not taxable, thus challenging the imposition of penal interest. The Tribunal, however, upheld the interest charged, emphasizing the statutory provision's applicability irrespective of the estimate's bona fides. Additionally, the Tribunal noted that the adjustment of advance tax paid by the third party was not pressed before them but could be a legal question for reference.
The High Court, in its judgment, addressed the preliminary objection raised regarding the jurisdiction of the Appellate Assistant Commissioner and the Tribunal in dismissing the appeals. The Court highlighted that the order under Section 18A(6) was not appealable, rendering subsequent appeals without jurisdiction. As a result, the Court rejected the reference, emphasizing the lack of jurisdiction in the lower appellate authorities.
In conclusion, the High Court rejected the reference, emphasizing the lack of jurisdiction in the lower appellate authorities to entertain appeals against the order under Section 18A(6). The judgment underscores the importance of jurisdictional limitations in appellate proceedings, ultimately leading to the dismissal of the reference.
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1953 (1) TMI 18
Issues Involved:
1. Nature of the tenancy (whether it was permanent, heritable, and transferable).
2. Validity of the notice to quit.
3. Applicability of the doctrine of res judicata.
4. Assessment of rent under Regulation V of 1812.
Issue-wise Detailed Analysis:
1. Nature of the Tenancy:
The plaintiff contended that the tenancy of defendant No. 1 was not permanent, heritable, and transferable. The trial court found that the tenancy was indeed permanent, heritable, and transferable, and this finding was upheld by the High Court. The Supreme Court examined various historical documents, including deeds of sale and mortgages, which indicated that the land had been transferred multiple times with the right to enjoy the property forever. The court noted that permanent structures had been built on the land, and the rent had been consistently paid since 1860. The cumulative effect of these facts led to the conclusion that the tenancy was permanent and heritable.
2. Validity of the Notice to Quit:
The plaintiff served a notice to quit on the defendant, requiring him to vacate the premises by the last day of the month of Chaitra 1944 B.S. The defendant did not vacate, leading to the filing of the ejectment suit. However, since the tenancy was found to be permanent and heritable, the notice to quit was deemed ineffective in terminating the tenancy.
3. Applicability of the Doctrine of Res Judicata:
The plaintiff argued that the decision in the 1859 suit precluded the defendant from contending that the tenancy was permanent and heritable. The court found that the issues in the 1859 suit were whether the landlords had served notice for the assessment of rent and whether rent could be assessed under Regulation V of 1812. The character of the tenancy was not directly or substantially in issue in that suit. Therefore, the plea of res judicata was not sustained.
4. Assessment of Rent under Regulation V of 1812:
The court examined the historical context of rent assessment under Regulation V of 1812. In the 1859 suit, the Principal Sudder Amin had fixed the rent at Rs. 78 per annum. The court noted that the enhancement of rent in 1860 did not necessarily imply that the tenancy was not permanent. The principle that permanent tenancy does not imply both fixity of rent and fixity of occupation was upheld. The court referenced several precedents, including the Privy Council's decision in Shankarrao v. Sambhu Wallad and other relevant cases, to support this view.
Conclusion:
The Supreme Court upheld the findings of the lower courts that the tenancy was permanent, heritable, and transferable. The notice to quit was ineffective, and the plea of res judicata was not applicable. The assessment of rent under Regulation V of 1812 did not negate the permanency of the tenancy. Consequently, the plaintiff's appeal was dismissed with costs.
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1953 (1) TMI 17
Issues Involved:
1. Whether the procedure for trial laid down in the Special Tribunal Regulation is discriminatory and offends Article 14 of the Constitution.
2. Whether the continuation of the trial after the Constitution came into force is valid.
3. Whether the Special Tribunal Regulation violates Article 21 of the Constitution by not providing a procedure established by law.
4. Whether the discriminatory provisions of the Regulation can be severed from the rest of the Regulation.
Detailed Analysis:
1. Discriminatory Nature of the Special Tribunal Regulation (Article 14):
The primary contention was that the procedure laid down in the Special Tribunal Regulation deviated significantly from the ordinary law, thereby abridging the rights of the accused and depriving them of benefits under the general law. The appellant argued that the Regulation was discriminatory as it did not classify offences based on nature or area, leaving unfettered discretion to the Military Governor to refer any case to the Special Tribunal without any guiding principle. This was claimed to be in violation of Article 14, which guarantees equality before the law.
The court noted that the Regulation allowed the Special Tribunal to adopt a summary procedure, eliminate committal proceedings, and record only a memorandum of evidence, among other deviations from ordinary law. However, it was highlighted that in the present case, the warrant procedure was followed, and evidence was recorded in full. The court held that the mere possibility of discriminatory application was not sufficient to invalidate the Regulation; actual discrimination had to be shown.
2. Continuation of Trial Post-Constitution:
The appellant argued that the continuation of the trial after January 26, 1950, when the Constitution came into force, was invalid as the Special Tribunal Regulation conflicted with Articles 14 and 21. The court examined whether the discriminatory provisions of the Regulation were applied after the Constitution came into effect. It was held that if the trial continued without applying the discriminatory provisions, the conviction could stand. However, if discriminatory provisions were applied, the conviction would be invalid.
The court found that the trial procedure followed post-Constitution was substantially the same as the ordinary law, and no discriminatory provisions were applied. Therefore, the trial was not vitiated, and the resulting conviction and sentence were upheld.
3. Violation of Article 21:
The appellant contended that the trial was not conducted in accordance with the procedure established by law, as required by Article 21. It was argued that the Military Governor had no authority to refer individual cases to the Special Tribunal. The court rejected this argument, stating that Section 3 of the Regulation empowered the Military Governor to direct the Special Tribunal to try any offence, including individual cases.
4. Severability of Discriminatory Provisions:
The court considered whether the discriminatory provisions of the Regulation could be severed from the rest of the Regulation. It was held that if the discriminatory provisions could be eliminated while still securing a fair trial under the ordinary law, the trial could continue. In this case, since the discriminatory provisions were not applied, the trial was valid.
Conclusion:
The court dismissed the petition under Article 32, holding that the trial conducted by the Special Tribunal was not discriminatory and did not violate Articles 14 and 21 of the Constitution. The appeal was to be heard on its merits in the usual course. The judgments in the connected appeals were also governed by this decision.
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1953 (1) TMI 16
Issues Involved:
1. Whether "loom hours" are considered "goods" under Section 2(d) of the Bihar Sales Tax Act, 1947.
2. Whether sales to registered dealers of Bihar, through commission agents outside Bihar, are exempt from taxation under Section 5(2)(a)(ii) of the Act.
Detailed Analysis:
Issue 1: Whether "loom hours" are considered "goods" under Section 2(d) of the Bihar Sales Tax Act, 1947.
The assessee claimed that the sale of "loom hours" did not fall within the ambit of the Bihar Sales Tax Act. The taxing authorities rejected this argument, leading to the formulation of the first question for the High Court: "Are the sales of 'loom hours' in the circumstances of this case taxable under the provisions of the Bihar Sales Tax Act of 1947?"
The court examined whether "loom hours" could be classified as "goods" under Section 2(d) of the Bihar Sales Tax Act. Section 2(d) defines "goods" as "all kinds of movable property other than actionable claims, stocks, shares or securities and includes all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of immovable property." The court noted that the definition of "movable property" in the General Clauses Act includes "property of every description except immovable property."
The court found that the sale of "loom hours" did not fall within the definition of "goods" under the Bihar Sales Tax Act. The court reasoned that "goods" in the Bihar Sales Tax Act must be construed to mean only tangible corporeal property and not abstract rights like "loom hours." Therefore, the sale of "loom hours" was not taxable under the Act.
Issue 2: Whether sales to registered dealers of Bihar, through commission agents outside Bihar, are exempt from taxation under Section 5(2)(a)(ii) of the Act.
The second issue concerned the sale of gunny bags to Messrs. Tata Iron & Steel Co. Ltd., Jamshedpur, through Messrs. Shaw Wallace & Co. The assessee claimed that the sales were to a registered dealer and should be exempt from sales tax under Section 5(2)(a)(ii) of the Bihar Sales Tax Act. The taxing authorities rejected this claim, stating that the sale was effected in favor of Messrs. Shaw Wallace & Co., not Tata Iron & Steel Co. Ltd.
The court examined the evidence and found that the sales were indeed made to Messrs. Shaw Wallace & Co. and not to Tata Iron & Steel Co. Ltd. The books of the assessee showed that the goods were credited to Shaw Wallace & Co., and the responsibility for payment of the price rested with them. Therefore, the sales were not exempt from tax under Section 5(2)(a)(ii) of the Act.
Conclusion:
The court answered the first question in favor of the assessee, concluding that the sale of "loom hours" does not fall within the ambit of the Bihar Sales Tax Act and is not taxable. The second question was answered in favor of the Department, concluding that the sales of gunny bags were made to Messrs. Shaw Wallace & Co. and not to Tata Iron & Steel Co. Ltd., and therefore, were not exempt from tax under Section 5(2)(a)(ii) of the Act. There was no order as to costs of this reference.
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1953 (1) TMI 15
Issues Involved:
1. Limitation period for filing a petition under Section 25 of the Bihar Sales Tax Act.
2. Treatment of two firms as separate dealers under the Indian Partnership Act.
3. Application of the Bihar Sales Tax (Amendment) Act, 1949.
4. Applicability of the Amending Act to proceedings commenced before its extension to Chota Nagpur.
Detailed Analysis:
1. Limitation Period for Filing a Petition:
The first issue pertains to whether a petition filed under Section 25 of the Bihar Sales Tax Act after the expiry of 90 days from the date of the passing of the orders by the Board can be admitted. The court examined the proper construction of Section 25(1) of the Bihar Sales Tax Act, 1947, which states: "Within ninety days from the passing by the Board of Revenue of any order under sub-section (4) of Section 24 affecting any liability of any dealer to pay tax under this Act, such dealer may, by application in writing accompanied by a fee of one hundred rupees, require the Board to refer to the High Court any question of law arising out of such order." The court held that the period of limitation should be computed from the date of the passing of the order and not from the date of its communication to the assessee. This decision is consistent with the precedent set by the Division Bench in *Firm of Mohan Lal Hardeo Das v. Commissioner of Income-tax, Bihar and Orissa* (1930) I.L.R. 9 Pat. 172, which emphasized that the limitation period begins from the date of the order, not its communication.
2. Treatment of Two Firms as Separate Dealers:
The second issue questions whether, in the circumstances of this case and in consideration of the provisions of the Indian Partnership Act, the two firms should be treated as separate dealers, and whether Telu Ram Jain alone can be assessed to sales tax on the contracts obtained by him from the Central Public Works Department. The court found that the Sales Tax Officer and the Commissioner of Sales Tax did not accept the story of partnership as the real contractor was Telu Ram Jain, who was the moving spirit in both alleged firms. The Board of Revenue also doubted the bona fides of the alleged partnerships, considering them a convenience for Telu Ram and his partners to carry out the work done by the assessee. Thus, the two firms were not treated as separate dealers.
3. Application of the Bihar Sales Tax (Amendment) Act, 1949:
The third issue involves whether the Amending Act VI of 1949 can be applied, as it appears to be the intention of the legislature to correct the 1947 Act with effect from the date of its first publication, and whether the petitioners have been rightly assessed under the 1947 Act as amended by the 1949 Act. The court held that the provisions of the Ordinance and the amending Act have retrospective effect, meaning that the petitioners were rightly assessed under the 1947 Act as amended by the 1949 Act.
4. Applicability of the Amending Act to Proceedings Commenced Before its Extension:
The fourth issue questions whether the Amending Act, which was extended to Chota Nagpur on 22nd March, 1949, would govern the proceedings which were commenced on 13th January, 1949. The court did not find it necessary to express any opinion on this issue, as the first question of law was answered against the assessee, rendering the other questions moot.
Conclusion:
The court concluded that the first question of law should be answered against the assessee and in favor of the Sales Tax Department. Consequently, it was not necessary to address the other three questions of law. The assessee was ordered to pay the costs of the hearing, with the hearing fee fixed at ten gold mohurs.
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1953 (1) TMI 14
The State appealed against the acquittal of a dealer in chillies for non-payment of sales tax. The dealer claimed he was a commission agent, not a dealer. The High Court set aside the acquittal, convicted the dealer, imposed a fine of Rs. 50, and ordered the tax to be recovered as a fine. The dealer was given three weeks to pay. Appeal allowed.
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1953 (1) TMI 13
Issues Involved:
1. Whether the applicant is a dealer within the meaning of the Bihar Sales Tax Act VI of 1944 and is liable to be taxed as such.
2. Whether the application for reference to the High Court was filed within the prescribed time limit.
Issue-wise Detailed Analysis:
1. Whether the applicant is a dealer within the meaning of the Bihar Sales Tax Act VI of 1944 and is liable to be taxed as such:
The core issue revolves around whether the assessee qualifies as a "dealer" under the Bihar Sales Tax Act VI of 1944. The assessee argued that he merely operated a private bonded warehouse for non-duty paid tobacco under the Central Excise Law, and did not engage in purchasing or selling tobacco. Instead, he facilitated the storage and transportation of tobacco for others who purchased it in Nepal and stored it in his warehouse. The petitioner contended that the tobacco did not belong to him and thus, he should not be characterized as an arhatdar, commission agent, or supplier of tobacco.
However, it was established that the petitioner possessed licenses under the Central Excise Department in forms L-2 and L-5, which are for wholesale trade in tobacco and for operating a private bonded warehouse, respectively. Rule 172 of the Central Excise Manual specifies that a private warehouse should contain only goods belonging to the warehouse owner and on which duty has not been paid. The petitioner's operation was found to be possible only because he was a wholesale dealer holding a license in form L-2. The Central Excise and Salt Act, 1944, defines a "wholesale dealer" as someone who buys or sells excisable goods wholesale for trade or manufacture, including brokers or commission agents who stock such goods for others for sale.
Under the Sales Tax Act, a "dealer" is defined as any person who carries on the business of selling or supplying goods in Bihar, whether for commission, remuneration, or otherwise. Given that the petitioner held a wholesale dealer's license, he was deemed to be a dealer under the Sales Tax Act. Consequently, it was his duty to register under the Sales Tax Act. The failure to do so justified the imposition of the penalty.
2. Whether the application for reference to the High Court was filed within the prescribed time limit:
The preliminary objection raised by the State was that the petitioner applied to the Board of Revenue for making a reference to the High Court more than sixty days after the revision application was dismissed by the Board of Revenue. According to Sections 21(1) and 21(2) of the Bihar Sales Tax Act of 1944, an application for reference to the High Court must be made within sixty days from the passing of the order by the Board of Revenue. If the Board refuses to make a reference, the applicant may apply to the High Court within thirty days of such refusal.
The assessee argued that the case was governed by the Bihar Act XIX of 1947, which allowed ninety days for such applications. However, the court held that the assessment period in question was from 1st July, 1946, to 31st March, 1947, and the Act of 1947, which came into force on 1st June, 1947, did not affect liabilities incurred before its commencement. Thus, Section 21 of the Act of 1944 applied, and the application was required to be made within sixty days. The court referenced previous decisions, including Doma Sao Kishun Lal v. State of Bihar and Hukmi Chand v. Commissioner of Income-tax, which supported the principle that applications made beyond the prescribed period of limitation were invalid.
The court concluded that the Board of Revenue was justified in refusing to make a reference, and the High Court should not have called for a statement of the case under Section 21(3). The preliminary objection succeeded, and the application was dismissed with costs.
Conclusion:
The High Court did not express its opinion on the question of law referred due to the preliminary objection regarding the time limit. The assessee was required to pay the cost of the reference, assessed at Rs. 200. The reference was not answered.
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1953 (1) TMI 12
Issues:
- Competency of the appeal
- Nature of the order appealed from
- Locus standi of the official liquidator to prefer the appeal
- Merits of the appeal regarding the removal of the official liquidator
Competency of the appeal:
The appeal under section 202 of the Indian Companies Act was brought by the official liquidator against the order removing him from office. The respondent raised objections regarding the competency of the appeal, including the absence of a shareholder in the appeal and the nature of the order as a consent order. The court ruled that the absence of the shareholder did not affect the appeal's validity. The court also determined that the order was not a consent order, as it was in the best interest of the shareholders. The court rejected the contention that the retired judge's interpretation should be questioned, stating that official records must be interpreted as they stand without additional evidence.
Locus standi of the official liquidator:
The respondent argued that the official liquidator had no standing to appeal as he was not a party to the liquidation proceedings. However, the court held that the official liquidator, as the court's nominee overseeing the liquidation in the shareholders' interest, had the right to appeal. Drawing on analogies from other cases, the court concluded that the official liquidator represented the shareholders' interests and was entitled to appeal decisions affecting the liquidation process.
Merits of the appeal:
The court analyzed the reasons for the removal of the official liquidator and the appointment of the first respondent. It noted concerns that the first respondent's interests might conflict with those of the shareholders, potentially delaying the liquidation process. The court emphasized the importance of having a neutral party in charge of the liquidation to ensure the shareholders' best interests were protected. Ultimately, the court set aside the order removing the official liquidator, reinstating him in the position and emphasizing the need for a swift conclusion to the liquidation proceedings.
In conclusion, the court ruled in favor of the official liquidator, overturning the decision to remove him from office and appointing the first respondent in his place. The court highlighted the importance of prioritizing the shareholders' interests and ensuring the liquidation process was conducted efficiently.
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1953 (1) TMI 5
Whether the sums of ₹ 12,68,480 and ₹ 4,40,878 were sale proceeds of the goods sold by the assessee to merchants in British India or were debts due by the said merchants ?
Whether if they were sale proceeds, they were received in British India ?"
Whether the profits of the assessee's business are included in the sums of ₹ 12,68,480 and ₹ 4,40,878 ?
Held that:- The High Court was right in holding that the two sums of ₹ 12,68,480 and ₹ 4,40,878 were the sale proceeds of the goods sold and delivered by the appellant to merchants in British India, that they were received by Messrs. Jagmohandas Ramanlal & Co., and by the banks and shroffs through whom the railway receipts were negotiated, on behalf of the appellant in British India, that they were liable to tax under Section 4(1)(a) of the Act as having been received in British India on its behalf, that there is nothing either in the facts and circumstances of the case or in law why they should be exempted from such liability, that the answers given to the questions which were ultimately considered by the High Court were correct, and the appellant was rightly held liable for the tax on these two amounts subject to all just deductions and allowances. The appeal therefore fails and must stand dismissed
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1953 (1) TMI 4
Whether in the circumstances of this case, the moneys deposited by customers with the assessee firm as security deposits were 'borrowed money' within the meaning of Rule 2A of the Second Schedule to the Excess Profits Tax Act, 1940, either throughout the chargeable accounting period ended 12th April, 1945, or during any part of that chargeable accounting period ?
Held that:- Set aside the order of the court below and answer the question referred in the affirmative with reference to the last part of the chargeable accounting period, namely, 14th February, 1945, to 12th April, 1945, and in the negative with reference to the rest of that period.
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1953 (1) TMI 3
Whether, in the facts and circumstances of this case, the Tribunal was right in holding that the income, profits and gains derived from the sale of salt in British India are assessable to tax as income, profits and gains received or deemed to be received under Section 4(1)(a) ?
Whether, in the facts and circumstances of this case, the Tribunal was right in accepting the contention of the Department that the income accrued or arose or is deemed to accrue or arise in India and is assessable to tax as contemplated by Section 4(1)(c) ?
Whether the Tribunal was right in the circumstances of this case in rejecting the contention of the assessee (applicant) that the income, profits and gains are chargeable to tax from the sale of salt in British India under Section 42 only ?
Held that:- High Court correctly answered Question (1) in the affirmative so far as income-tax is concerned. Excess profits tax, however, cannot be levied on this basis.
Question (2). The Tribunal was wrong in accepting the contention of the Department that the income accrued or arose in India. The Tribunal did not hold that the income is income which should be deemed to accrue or arise in India. The part of the question which states that the Tribunal did so is not in accordance with fact. We find that the income, profits and gains must be deemed to have arisen or accrued in India so far as excess profits tax is concerned and that Section 42(3) of the Income-tax Act applies to the levy of excess profits tax by virtue of Section 21 of the Excess Profits Tax Act.
Question (3). The Tribunal was right in rejecting the contention that the income, profits and gains are chargeable to tax under Section 42 only. They are also chargeable to income-tax as falling within the purview of Section 4(1)(a) of the Income-tax Act as income received in India on behalf of the assessee company. In such a case Section 42 of the Income-tax Act would have no application. Appeal dismissed.
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1953 (1) TMI 2
Whether on a true construction of Rule 5 of Schedule II of the Excess Profits Tax Act the expression 'so far as the contrary is shown' applies only to sub-clause (a) or also to sub-clause (b) ?
Whether the managing agency commission payable by the company to its managing agents for the year 1943 is borrowed money for the purposes of Rule 2A or a debt for the purposes of Rule 2 of Schedule II to the Excess Profits Tax Act ?
Held that:- A loan imports a positive act of lending coupled with an acceptance by the other side of the money as a loan. The relationship of borrower and lender cannot ordinarily come about by mere inaction. The clause in the Articles of Agreement quoted above was relied on for the purpose of showing that there was such an agreement in the case. We are unable to construe the provisions in that way. They merely give the managing agents a right to receive their commission at a certain time. If the money is not paid in time it lies with the assessee as a debt due to the agents.
We agree with the High Court that it is a debt under Rule 2 and not a borrowing under Rule 2A. Appeal dismissed.
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1953 (1) TMI 1
Issues Involved:
1. Liability of a pledgee under Rule 160 of the Central Excise Rules, 1944.
2. Applicability of Article 226 of the Constitution of India to the case.
Issue-wise Detailed Analysis:
1. Liability of a Pledgee under Rule 160 of the Central Excise Rules, 1944:
The primary issue revolves around whether the appellants, who are pledgees and not absolute owners of the tobacco, are liable to pay excise duty under Rule 160 of the Central Excise Rules, 1944. The appellants argued that the liability under Rule 160 should be discharged only by the absolute owner of the goods. However, the court noted that Rule 160 states, "If any goods are not removed from the warehouse within three years from the date on which they were first warehoused, the owner of the goods shall forthwith pay the full amount of the duty chargeable thereon."
The court examined whether the appellants could be considered owners within the meaning of Rule 160. It was noted that under the Indian Contract Act, a pledgee does not become an owner under a contract of pledge, as the right of the pledgee is always subject to the right of redemption by the pledgor. However, Rule 3 of the Central Excise Rules extends the definition of "owner" to include a person expressly or impliedly authorized by the owner to act as an agent, provided such authorization is approved by the Collector. Although this was not applicable in the present case, the court considered the broader scheme of the Act and the Rules.
The court highlighted that various rules, such as Rule 7, Rule 19, Rule 145, and Rule 160, collectively indicate that the liability to pay excise duty attaches not only to the absolute owner but also to any person who stores the goods in the warehouse. The court reasoned that if the appellants' interpretation were accepted, it would render Rule 145 unworkable, as the liability to remove the goods would fall on M/s. M. James Canterbury & Co., who were neither in possession of the goods nor the owners of the godown.
Further, the court noted that the appellants had obtained permission under Rule 152 and a permit under Rule 153 to move the goods, which is permissible only for "owners" of the goods. This reinforced the conclusion that the term "owner" in these rules includes persons with partial interest, such as pledgees.
The court also examined Rules 140, 142, and 143, which involve the licensee's obligations and rights concerning the goods in the warehouse. The court concluded that the word "owner" in these rules refers to any person in possession of the goods with a partial interest, thus including the appellants.
In summary, the court determined that the term "owner" as used in the Central Excise Rules includes persons having either whole or partial interest in the goods, thereby making the appellants liable to pay the excise duty under Rule 160.
2. Applicability of Article 226 of the Constitution of India:
The second issue concerned whether Article 226 of the Constitution of India could be invoked by the appellants, given that the liability arose before the Constitution came into force. The learned Advocate General argued that the liability arose between December 27, 1949, and December 30, 1949, and thus, Article 226 could not be applied retrospectively. Additionally, it was argued that the original jurisdiction of the court in revenue matters was excluded by Section 226 of the Government of India Act, 1935.
The court examined the facts and noted that while the original demand notices were served in December 1949, the appellants continued to pursue remedies under the Central Excise Act and Rules. The final notice of demand was served on August 29, 1950, after the Constitution had come into force. This notice indicated that the Central Board of Revenue had ordered the realization of dues through certificate action under Section 11 of the Central Excises and Salt Act, 1944.
Given that the final demand notice was served after the Constitution came into force, the court concluded that Article 226 was applicable to the case. Therefore, the second point raised by the learned Advocate General was not accepted.
Conclusion:
The appeal was dismissed, and the court upheld the liability of the appellants to pay the excise duty under Rule 160 of the Central Excise Rules, 1944. The court also affirmed the applicability of Article 226 of the Constitution to the case, given the timeline of events. However, no order as to costs was made, considering the special circumstances of the case.
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