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1962 (10) TMI 54
Issues Involved:
1. Applicability of section 14(1) versus section 14(3) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Limitation period for assessments under the Central Sales Tax Act, 1956.
3. Validity and enforceability of the assessment order.
Issue-wise Analysis:
1. Applicability of Section 14(1) versus Section 14(3) of the Andhra Pradesh General Sales Tax Act, 1957:
The primary issue revolves around whether the assessment falls under section 14(1) or section 14(3) of the Act. Section 14(1) applies when the assessing authority is satisfied that the return submitted is correct and complete, requiring the assessment to be completed within four years. Section 14(3) applies if the dealer fails to submit the return on time, allowing the assessment to be completed within six years. The court noted that the assessees submitted their return late but before any inspection. The court held that a belated return should not be treated as a case of no return, referencing the case of State of Andhra Pradesh v. Pyarelal Malhotra, where a return filed after the prescribed time was still considered valid under section 14(1).
2. Limitation Period for Assessments under the Central Sales Tax Act, 1956:
The court examined whether the period of limitation prescribed under section 14(1) of the Andhra Pradesh General Sales Tax Act applies to assessments under the Central Sales Tax Act. The court referred to section 9(2) of the Central Sales Tax Act, which empowers state authorities to assess and collect tax as if it were under the state law. The court found no inconsistency between rule 14-A(5) of the Central Sales Tax (Andhra Pradesh) Rules, which prescribes no specific limitation period, and section 14(1) of the Act. The court emphasized that the four-year limitation period under section 14(1) is applicable, ensuring consistency and avoiding confusion.
3. Validity and Enforceability of the Assessment Order:
The court concluded that the assessment was made under section 14(1) since the return was accepted as correct and complete, and the assessment was not based on the best judgment of the assessing authority. Therefore, the assessment should have been completed within four years from the expiry of the assessment year. Since the assessment was completed beyond this period, it was deemed invalid and unenforceable. The court referenced the Supreme Court's decision in State of Madras v. S.G. Jayaraj Nadar & Sons, which supports the view that accepting account books and records negates the need for a best judgment assessment.
Conclusion:
The court allowed the revision case, setting aside the impugned assessment order due to its completion beyond the prescribed four-year limitation period under section 14(1) of the Andhra Pradesh General Sales Tax Act, 1957. The assessment was deemed invalid and unenforceable, with no order as to costs, and an advocate's fee of Rs. 150 was awarded.
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1962 (10) TMI 53
Whether the assessee company having distributed dividends of over 60% of the company's total income less income-tax and super-tax payable thereon is entitled to the rebate of 1 anna per rupee on the undistributed balance of profits as provided in clause (i) of the proviso to item B of Part I of the First Schedule to the Finance Act of 1955 ?
Held that:- Appeal dismiised. High Court was right in holding that the company was entitled to the rebate claimed by it.
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1962 (10) TMI 52
Whether the amount claimed by the assessee company as a deduction was not admissible either under section 10(2)(xi) or 10(2)(xv) ?
Held that:- Appeal dismissed. An advance paid by the assessee company to another to purchase shares cannot be said to be incidental to the trading activities of the assessee company. It was more in the nature of a price paid in advance for, the shares which the Southern Agencies had a right to allot in the Rodier Textile Mills Ltd. This cannot, therefore, be described as a debt and indeed the changes in the books of account of the assessee company clearly show that the assessee company itself was altering the entries to convert the advance into a debt so as to write it off and claim the benefit of section 10(2)(Xi). Thus section 10(2)(xi) was inapplicable to the facts of this case.
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1962 (10) TMI 51
Whether the sum of Rs. 37,847, Rs. 43,162, Rs. 34,899, Rs. 13,402 and Rs. 32,523 were assessable to income-tax in the hands of the assessee 'Amarchand N. Shroff, by his legal heirs and representatives' in the five respective years under reference?
Whether the income which was received subsequent to the previous year in which Amarchand died is liable to be assessed to income-tax under section 24B as his income in the hands of his heirs and legal representatives?
Held that:- Appeal dismissed. As the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax in the several years of assessment. It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are not liable to be taxed as income of the deceased, Amarchand, and are not liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be assessees for the purpose of assessment in regard to those years.
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1962 (10) TMI 50
Whether the amounts received by the assessee under the Attika Patra are liable to tax ?
Whether the contributions made through Annadan Patra by the donor would amount to a trust or else whether it is a mere device to give the entire income to the Panda for his own benefit?
Held that:- Appeal dismissed. On the true meaning of section 4(3)(i) in the absence of any finding that the Annadan income was derived from property held under a religious or charitable trust, the claim of the assessees for exemption must fail. Their claim to exemption under section 4(3)(ii) must fail because they are not a religious or charitable institution.
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1962 (10) TMI 49
Whether there was any legal admissible evidence to justify that the transactions in question was not the transaction of the assessee?
Whether the assessee firm can set off the loss Rs. 1,05,641 against its other profits from its other business?
Held that:- Appeal allowed in part. High Court did not exceed its powers in examining the evidence in support of the inference of the Income-tax Officer that no business was done in company with Damji but the assessee firm took over some of his losses. The answer of the High Court to the first question is therefore upheld.
High Court's answer to the second question is set aside.
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1962 (10) TMI 48
Whether an opportunity had to be given to the appellants as required by the proviso to section 35 to show cause against the demand for penal interest?
Held that:- Appeal allowed. The word "assessment" is used in the proviso not as an equivalent of the tax calculated at the rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of the order is to touch the pocket of the assessee and in our opinion this was such a case.
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1962 (10) TMI 47
Issues:
Interpretation of section 12(5) of the Orissa Sales Tax Act in relation to voluntary registration under section 9-A.
Detailed Analysis:
The case involved a question regarding the assessment of sales tax on a dealer who applied for voluntary registration under section 9-A of the Orissa Sales Tax Act. The dealer argued that the delay in granting the registration certificate was not his fault and therefore he should not be liable to pay sales tax for the period before the certificate was granted. The Appellate Assistant Commissioner initially agreed with the dealer, but the Sales Tax Tribunal held that section 12(5) applied to applications under section 9 and not section 9-A. This interpretation was challenged in the court.
The liability of a dealer to pay sales tax is governed by section 4 of the Act, which is based on the annual turnover. Section 9 requires dealers to register once their turnover exceeds the prescribed limit, with penalties for non-registration. Section 9-A allows for voluntary registration for dealers not liable to pay tax under section 4. The application process for registration under sections 9 and 9-A differs in terms of turnover declaration, highlighting the distinction between the two types of registration.
Section 12 of the Act deals with assessment, including sub-section (5) which pertains to dealers liable to pay tax but failing to apply for registration without sufficient cause. The court analyzed the language of this section along with section 4(2) and concluded that section 12(5) applies when the liability to pay sales tax accrued before registration. The court referenced a decision of the Patna High Court to support this interpretation.
The petitioner argued that the delay in granting the registration certificate should absolve him from liability under section 12(5). However, the court held that the mere pendency of the registration application under section 9-A did not exempt the dealer from the requirements of section 12(5). The court distinguished a previous case where a similar issue arose but related to registration under section 9, not section 9-A. Ultimately, the court upheld the Sales Tax Tribunal's interpretation of the law and dismissed the application with costs.
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1962 (10) TMI 46
Issues:
Assessment proceedings under the Madras General Sales Tax Act, 1959; Jurisdiction of the department to revise assessment under section 16(1) of the Act.
Analysis:
The judgment delivered by the High Court of Madras pertains to a petition arising from assessment proceedings under the Madras General Sales Tax Act, 1959. The Deputy Commissioner of Commercial Taxes, Madras Division, filed the petition against the respondent, an assessee assessed for the year 1954-55. The issue at hand was the reassessment of the turnover of the assessee by the Deputy Commercial Tax Officer under section 16(1) of the Act, totaling Rs. 4,68,515-37 nP, due to the alleged escape of assessment on turnover related to hire-purchase agreements during the original assessment. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal were involved in subsequent appeals against the reassessment order. The Tribunal held that the department exceeded its jurisdiction in revising the assessment, leading to the current revision petition by the department.
The core question before the court was whether the department acted within its jurisdiction under section 16(1) of the Act in reassessing the turnover that had allegedly escaped assessment. The Tribunal found that the assessing authority had deliberately excluded the turnover of hire-purchase agreements during the original assessment, citing a note in the assessment file stating, "The hire-purchase is held to be not taxable by the High Court." However, the court disagreed with the Tribunal's conclusion, stating that the original assessment order did not explicitly show the officer's opinion on the taxability of hire-purchase transactions. The court held that there was an actual escapement of tax due to the officer's failure to consider the entire taxable turnover properly, justifying the department's reassessment under section 16 of the Act.
Furthermore, the Tribunal's finding that the turnover related to hire-purchase agreements was assessable even during the first assessment was deemed well-founded based on the evidence presented. The court did not delve into the applicability of a Supreme Court decision in the present case, as the department was deemed justified in making the reassessment. Consequently, the revision petition was allowed, with no order as to costs, affirming the department's jurisdiction to reassess the turnover that had escaped assessment.
In conclusion, the court upheld the department's authority to reassess the assessee's turnover under section 16(1) of the Madras General Sales Tax Act, 1959, due to the actual escapement of tax resulting from the failure to consider the entire taxable turnover properly during the original assessment. The judgment highlights the importance of adhering to statutory provisions and conducting assessments diligently to prevent tax evasion and ensure accurate taxation in commercial transactions.
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1962 (10) TMI 45
Issues:
1. Whether cane crushers and boiling pans are agricultural implements exempt from sales tax under the U.P. Sales Tax Act.
Analysis:
The judgment delivered by the High Court of Allahabad pertained to the classification of cane crushers and boiling pans as agricultural implements for the purpose of sales tax exemption under the U.P. Sales Tax Act. The central issue revolved around the interpretation of the term "agricultural implements" as mentioned in a government notification exempting such implements from sales tax. The court considered whether the use of cane crushers and boiling pans in the production of gur from sugarcane qualified them as agricultural implements. The court emphasized that while sugarcane is an agricultural produce, the process of manufacturing gur from sugarcane does not constitute an agricultural process but rather a manufacturing process. The judgment referenced previous case law to support the distinction between agricultural activities and manufacturing processes, highlighting that the production of gur does not fall within the ambit of agriculture. The court also addressed the concept of "husbandry" within the scope of agriculture, noting that the use of cane crushers and boiling pans post-sugarcane production does not align with traditional farming practices. Ultimately, the court rejected the argument that cane crushers and boiling pans should be considered implements of agriculture, thereby denying the sales tax exemption sought by the applicants.
Furthermore, the judgment delved into the broader interpretation of "agriculture" and "agricultural operations" as defined by the Supreme Court in a previous case related to income tax. The court highlighted that agriculture encompasses activities directly related to land cultivation, including various operations essential for crop growth and maintenance. The court emphasized that post-harvest activities, such as preparing gur from sugarcane, do not inherently qualify as agricultural operations unless they directly stem from basic land cultivation processes. This distinction was crucial in determining the eligibility of cane crushers and boiling pans for the agricultural implements exemption under the sales tax law. The court's analysis underscored the fundamental requirement of a direct connection to land cultivation for an activity to be classified as agricultural, emphasizing the limited scope of what constitutes agricultural operations within the legal framework.
In conclusion, the High Court of Allahabad rendered a comprehensive judgment rejecting the classification of cane crushers and boiling pans as agricultural implements eligible for sales tax exemption under the U.P. Sales Tax Act. The court's decision was grounded in the interpretation of relevant legal provisions, precedents, and the distinction between agricultural processes and manufacturing activities. By dissecting the nature of gur production from sugarcane and its alignment with agricultural operations, the court elucidated the boundaries of agricultural activities for the purpose of tax exemptions, ultimately ruling against the applicants and upholding the tax liability on the sale of cane crushers and boiling pans.
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1962 (10) TMI 44
Issues:
1. Interpretation of Section 6 of the General Sales Tax Act, 1125.
2. Validity of the State Government's notification withdrawing the exemption on copra sales.
3. Impact of the expiry of the dealer's license on the exemption period.
Analysis:
1. The judgment revolves around the interpretation of Section 6 of the General Sales Tax Act, 1125, which empowers the Government to grant exemptions or reductions in tax rates. The Court clarified that the Government has the authority to withdraw exemptions granted through notifications without giving them retrospective effect. The case law of Subramania Iyer v. State was cited to support this principle.
2. The validity of the State Government's notification withdrawing the exemption on copra sales was challenged. The Court emphasized that the withdrawal of the exemption was not retrospective, even though it coincided with the expiry of the dealer's license. The Court reasoned that the duration of the license is irrelevant to the period of exemption granted by the notification. The withdrawal of the exemption was held to be valid and not retrospective in nature.
3. The impact of the expiry of the dealer's license on the exemption period was also addressed. The Court clarified that the exemption was granted based on the conditions stipulated in the notification, such as obtaining a license. The Court highlighted that the continuation of the license beyond the withdrawal of the exemption does not extend the exemption period. The Court emphasized that the withdrawal of the exemption was effective from the date specified in the amending notification, irrespective of the license's validity.
In conclusion, the Court allowed the appeal by the State Government, dismissing the plaintiff's suit in its entirety. The Court held that the plaintiff was liable to be assessed for tax on copra sales from the date of the exemption withdrawal until the expiry of the license, as the withdrawal was not retrospective. The judgment reaffirmed the principle that the duration of the license does not impact the duration of the exemption granted under the notification.
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1962 (10) TMI 43
Issues:
1. Whether the Tribunal can review the merits of an assessment after the first appellate authority summarily rejects an appeal?
2. Whether a notice served on one partner after the dissolution of a partnership is legal and does not vitiate assessments?
Detailed Analysis:
1. The case involved three applications with similar legal issues. The Sales Tax Tribunal was directed to refer two questions under the Orissa Sales Tax Act. The first question pertained to the Tribunal's authority to scrutinize assessments after the first appellate authority summarily dismisses an appeal. The Supreme Court precedent established that even a summary dismissal constitutes appeal disposal, allowing the Tribunal to review both facts and law. Thus, the first question was answered affirmatively based on legal precedents cited.
2. The second question revolved around the legality of a notice served on one partner after the dissolution of a partnership. The Sales Tax Tribunal's decision was influenced by judgments from Calcutta and Allahabad High Courts. However, conflicting views from various High Courts and Supreme Court interpretations of similar provisions were considered. The Supreme Court's stance on the broad interpretation of the term "liable to assessment" under the Income-tax Act was applied to the Orissa Sales Tax Act. Consequently, the Tribunal's decision was deemed incorrect, and the notice served post-dissolution was upheld as legal, aligning with the majority of High Court opinions.
In conclusion, the High Court answered the legal issues raised in the case, aligning with established legal principles and interpretations. The judgment provided clarity on the Tribunal's authority to review assessments post-summary dismissal and the validity of notices served after partnership dissolution. The references were disposed of accordingly, with no order for costs, and the judgment was agreed upon by all judges involved.
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1962 (10) TMI 42
Issues Involved:
1. Validity of the notification dated 5th August 1954.
2. Whether the Punjab General Sales Tax Act, 1948, was ultra vires due to delegation of legislative powers.
3. Impact of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952, on the Punjab General Sales Tax Act, 1948.
4. Severability of Section 5 from the rest of the Punjab General Sales Tax Act, 1948.
Issue-wise Detailed Analysis:
1. Validity of the Notification Dated 5th August 1954:
The primary issue was whether the notification issued by the Punjab Government on 5th August 1954, which abolished the sales tax exemption for certain edible oils produced in ghanis run by mechanical processes, was intra vires. The court found that the notification, which imposed a tax on edible oils declared essential for the life of the community, was invalid as it had not received the President's assent as required under Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952. The court answered in the negative, stating that the notification did not constitute law made by the Legislature of the State.
2. Whether the Punjab General Sales Tax Act, 1948, was Ultra Vires Due to Delegation of Legislative Powers:
The petitioners contended that the East Punjab General Sales Tax Act, 1948, was ultra vires from its inception because it delegated unfettered legislative powers to the executive, which was unconstitutional. The court noted that Section 5 of the Act gave unlimited power to the executive to levy sales tax at any rate, which was considered ultra vires and unconstitutional as per the Supreme Court's ruling in the Delhi Laws Act case. The Act was deemed invalid until it was amended by Punjab Act No. 19 of 1952, which limited the rate of tax to not exceed two naye paise in a rupee.
3. Impact of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952, on the Punjab General Sales Tax Act, 1948:
The court examined whether the provisions of the Central Act No. 52 of 1952, which required the President's assent for any state law imposing a tax on essential goods, applied to the Punjab General Sales Tax Act, 1948. It was determined that since the Act was amended in 1952, after the Central Act came into force, any notification issued under the amended Act would require the President's assent. The impugned notification of 5th August 1954 did not have such assent, rendering it invalid.
4. Severability of Section 5 from the Rest of the Punjab General Sales Tax Act, 1948:
The court considered whether Section 5, the charging section of the Act, could be severed from the rest of the Act. It was concluded that Section 5 was the kernel of the entire enactment, and without it, the remaining provisions would become inchoate or ineffective. The court applied the tests for severability laid down by the Supreme Court in R. M. D. Chamarbaugwalla v. Union of India and found that the invalidity of Section 5 rendered the entire Act ineffective until the defect was remedied by the 1952 amendment.
Conclusion:
The court concluded that the notification dated 5th August 1954 was invalid and ultra vires. The Punjab General Sales Tax Act, 1948, was initially unconstitutional due to the delegation of legislative powers to the executive, and the Act only acquired validity after the 1952 amendment. The court answered the reference in the negative, indicating that the impugned notification could not be justified without the President's assent as required by the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952.
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1962 (10) TMI 41
Issues:
- Whether the sales tax collected by the dealer should be considered part of his turnover as defined in the General Sales Tax Act, XI of 1125.
- Whether the amendment in the rules excluding sales tax collected by the dealer from the computation of net turnover applies retroactively.
Analysis:
1. The primary issue in this case revolves around whether the sales tax collected by the dealer should be included in his turnover as defined in the General Sales Tax Act. The plaintiff argued that the tax collected for remittance to the State should not be part of his turnover and, therefore, not assessable to tax. The State, on the other hand, contended that the sales tax collected should indeed be considered part of the turnover. The court examined the relevant provisions of the Act, specifically Section 2(k) which defines turnover, and Section 3(4) which directs the determination of turnover in accordance with prescribed rules.
2. The court also considered Rule 7 of the General Sales Tax Rules, which provided deductions from the gross turnover to ascertain the net turnover for levying sales tax. A notification dated 31st March, 1951, excluded "all amounts of sales tax collected by the dealer" from computation. Previous rulings by the Travancore-Cochin High Court supported the exclusion of sales tax collected by the dealer from turnover. However, the Supreme Court in a later case held that the sales tax collected by the dealer should be considered part of the turnover, as it forms part of the consideration for the goods sold. The court concluded that the previous rulings were impliedly overruled by the Supreme Court decision.
3. The second issue addressed in the judgment pertains to the retroactive application of an amendment in the rules excluding sales tax collected by the dealer from the computation of net turnover. The plaintiff argued that since the amendment came into force before the assessment order, he should benefit from the exclusion. However, the court held that rules are presumed to be prospective unless otherwise indicated, and the liability to tax for sales made before the amendment was complete before the exemption came into force. Therefore, the plaintiff could not claim the exclusion under the amendment.
4. Consequently, the court allowed the appeal by the State, dismissing the plaintiff's suit. The State was awarded costs for the appeal, and the cross-objection by the plaintiff regarding costs disallowed by the trial court was dismissed without costs. The judgment clarifies the treatment of sales tax collected by dealers in the turnover calculation and the application of amendments to tax rules.
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1962 (10) TMI 40
Whether the order of assessment was according to law?
Held that:- Appeal allowed. Rule 17 confers on the Deputy Commissioners the power to determine and tax escaped turn- over in cases where revisions have been taken to them [sub-rule (1-A)] and also where revisions have not been taken to them [sub-rule (3-A)]. Provisions of section 9(1) and (2) therefore are no bar to the exercise of power of assessing escaped turnovers. Moreover section 9 does not deal with escaped turnovers but is a provision for the determination of the turnover of a dealer in the first instance nor can it be said that rule 17 is in conflict with section 12(2). That section deals with another state of affairs and another jurisdiction, i.e., where the Deputy Commissioner suo motu or on an application made calls for the record and deter- mines the legality or propriety of an order made by one of the subordinate officers. It cannot be said in view of rule 17 that the power of revision by the Deputy Commissioners is limited to powers under section 12(2). Rule 17 deals with a separate and independent jurisdiction in regard to the determining and taxing escaped turnovers. The provisions of section 12(2) are in no way in conflict with the powers conferred under rule 17(1), 17(1-A) and 17(3-A).
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1962 (10) TMI 31
Issues Involved:
1. Whether the income-tax department is a creditor, contingent or prospective, of the company within the meaning of section 391 of the Companies Act, 1956.
2. Whether income-tax assessment proceedings are "other legal proceedings" which cannot be proceeded with within the meaning of section 446 of the Companies Act, 1956.
Issue-wise Detailed Analysis:
1. Creditor Status of the Income-tax Department under Section 391 of the Companies Act, 1956:
The primary contention was whether the income-tax department could be considered a creditor of the company before an assessment was made. The petitioner argued that the income-tax department was a creditor on the day the winding-up order was passed and should have proved its claim before the liquidator. The court examined the relevant part of section 391, which deals with the power to compromise or make arrangements with creditors and members. The court noted that if the income-tax department is a creditor within the meaning of section 391, it would be bound by the scheme sanctioned without considering the liabilities to income-tax.
The court referred to the case of Doorga Prasad v. Secretary of State, which established that income-tax becomes a debt due only when a demand is made under sections 29 and 45 of the Income-tax Act. The Supreme Court in E.D. Sassoon & Co. Ltd. v. Commissioner of Income-tax further clarified that a creditor-debtor relationship only arises when a debt is owed. Until an assessment is made, the income-tax department cannot be considered a creditor, contingent or prospective. The court concluded that the income-tax department could only become a creditor after an assessment is made and not before. Therefore, the department was not a creditor and could not have proved its claim in the liquidation proceedings.
2. Income-tax Assessment Proceedings as "Other Legal Proceedings" under Section 446 of the Companies Act, 1956:
The second issue was whether income-tax proceedings pending on the date of the winding-up order could not be proceeded with except by leave of the court. Section 446(1) states that no suit or other legal proceeding shall be commenced or proceeded with against the company except by leave of the court. The petitioner argued that income-tax proceedings fall within the ambit of "other legal proceeding," and thus, the assessment proceedings automatically stopped on the winding-up order.
The court referred to the Federal Court decision in Governor-General-in-Council v. Shiromani Sugar Mills Limited, which indicated that "other legal proceedings" should cover distress and execution proceedings but not necessarily assessment proceedings. The court also considered the provisions of sub-sections (2) and (3) of section 446, which give the court jurisdiction over certain proceedings but not income-tax assessments. The court concluded that income-tax proceedings are not "other legal proceedings" within the meaning of section 446 and do not automatically stop upon a winding-up order. The proceedings must continue as per the Income-tax Act, which is a complete code in itself.
Conclusion:
The court held that the income-tax department is not a creditor within the meaning of section 391 of the Companies Act, 1956, until an assessment is made. Additionally, income-tax assessment proceedings do not fall within the scope of "other legal proceedings" under section 446 of the Companies Act, 1956, and do not automatically stop upon the company's liquidation. The petition was dismissed, and the parties were left to bear their own costs.
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1962 (10) TMI 30
The High Court of Allahabad issued a notice to Tika Ram Uniyal for contempt of court for disobeying an order to furnish returns to the Registrar of Companies. Despite multiple opportunities, Uniyal failed to comply, leading to a fine of Rs. 200 and possible imprisonment for one month if the fine is not paid within two months. Additionally, he is liable for the Registrar's costs of Rs. 100.
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1962 (10) TMI 18
Issues Involved:
1. Validity of the allotment of shares to V. Rajagopal.
2. Inclusion of V. Rajagopal's name in the list of contributories.
3. Timeliness and propriety of Rajagopal's application for rectification of the share register and list of contributories.
4. Legality of the transfer of shares during winding-up proceedings.
Detailed Analysis:
1. Validity of the Allotment of Shares to V. Rajagopal:
The court examined the allotment of 406 shares to V. Rajagopal and 160 shares to his wife during the liquidation proceedings. Rajagopal contended that the allotment was irregular and invalid as it occurred after the filing of the petition for winding up the company. The official liquidator, however, argued that the allotment was recognized by the Controller of Insurance and Rajagopal's name was included in the share register. The court noted that Rajagopal himself applied to the Controller of Insurance to validate the irregularities in the allotment of shares, and the Controller recognized this allotment (Exhibit B-5).
2. Inclusion of V. Rajagopal's Name in the List of Contributories:
The official liquidator followed the procedure laid down in the Companies Act and Insurance Act to settle the list of contributories, including Rajagopal's name. Despite being served multiple notices and having ample opportunity to object, Rajagopal did not take timely steps to remove his name from the list. The court emphasized that Rajagopal was aware of his inclusion in the list and failed to act promptly, thereby waiving his right to object.
3. Timeliness and Propriety of Rajagopal's Application for Rectification:
Rajagopal filed applications for rectification of the share register and list of contributories long after the winding-up order was passed. The court referred to several precedents, including Scottish Petroleum Co., In re [1883] LR 23 Ch. D. 413 and Lakshmi Narasa Reddi v. Official Receiver, Sree Films Ltd. [1951] 21 Comp. Cas. 201, which establish that a delay in seeking rectification can be fatal. The court held that Rajagopal's applications were not maintainable due to the significant delay and the intervening winding-up order, which created rights for third parties (creditors).
4. Legality of the Transfer of Shares During Winding-Up Proceedings:
The court addressed the legality of the transfer of shares during winding-up proceedings in C.M.A. No. 166 of 1960. The transfer of shares by L. Balasubramania Sastriar to three individuals was found to offend section 227(2) of the Companies Act, which prohibits such transfers without the court's sanction. The court upheld the removal of the transferees' names from the register, affirming the District Judge's decision.
Conclusion:
The appeals filed by the official liquidator (C.M.A. Nos. 168, 165, and 167 of 1960) were allowed, and the applications for rectification by Rajagopal were dismissed due to the delay and the winding-up order. C.M.A. No. 166 of 1960 was dismissed, upholding the removal of names from the register for transfers made during winding-up proceedings. C.M.A. No. 119 of 1960, filed by Rajagopal for further rectification, was summarily dismissed. The costs of the liquidator were ordered to come out of the assets of the company.
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1962 (10) TMI 17
Whether the appellants were owners of this foreign exchange?
Whether the notification is ultra vires section 9 of the Act?
Held that:- Considering the fact that the appellants received this foreign exchange as gift, even though the intention might have been to spend the amount on their trip in the United States of America. Further, as the Appellate Board has rightly pointed out, it is obvious that the money was given to the appellants outright, as otherwise the appellants would not have offered the amount found on them on October 1, 1958, for sale through the Reserve Bank as they did on October 25, 1958. There can, therefore, be no doubt that the appellants became owners of this foreign exchange.
The notification in the present case by using the words "or who may hereafter become the owner of any foreign exchange" merely makes explicit what was already implicit in the section. In fact, even if the impugned clause had not been included in the notification, it would have made no difference to the meaning. Like the main section, the remaining part would have covered cases of owning and holding foreign exchange in the past as well as in the future. The clause has been added only to clarify the position, and that is all. We are therefore of opinion that the notification is completely intra vires section 9. Appeal dismissed.
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1962 (10) TMI 3
The judgment concerns the determination of value for levying duty under the Central Excises and Salt Act, 1944. The court ruled in favor of the petitioner, quashing the demand notice due to an arbitrary assessment. The assessing authority must make a fresh assessment in accordance with the law. No costs were awarded.
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9911796707
