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1962 (12) TMI 78
Issues:
- Determination of whether a loss incurred by the assessee company from the sale of shares was a trade loss or an investment loss.
Analysis:
The judgment by the Calcutta High Court under section 66(1) of the Income-tax Act involved a reference regarding the treatment of a loss of Rs. 3,71,300 by the assessee company arising from the sale of shares. The Income-tax Officer initially disallowed the loss, considering it as an investment transaction. However, the Appellate Assistant Commissioner and the Tribunal deemed it a trade loss, allowing the deduction. The central question was whether the shares were acquired for investment purposes or as part of the company's business as dealers in shares.
The Tribunal identified key facts supporting the trade loss classification, including the company's history of dealing in shares, the purchase of shares using borrowed funds, transactions at prevailing market rates, and the company's objective to engage in share trading. The Tribunal disagreed with the Income-tax Officer's view that the shares were acquired for investment, highlighting the improbability of purchasing shares with borrowed money for investment during a declining market. The Court emphasized the importance of adhering to the Tribunal's factual findings unless proven otherwise.
The Court deliberated on the genuineness of the share transactions, distinguishing the case from a Supreme Court precedent involving fictitious transactions. In this instance, the shares were transacted at market rates, and no evidence suggested the transactions were not authentic. The Court rejected the argument that subsequent events, such as the purchaser acquiring a company secretaryship, determined the nature of the initial transaction. Ultimately, the Court upheld the Tribunal's decision, affirming the loss as a trade loss rather than an investment loss.
The judgment concluded by affirming the Tribunal's decision, allowing the loss as a trade loss and granting costs to the assessee. The second judge, S. Datta, concurred with the decision. The case exemplifies the significance of factual findings, the distinction between trade and investment transactions, and the necessity of genuine business dealings in determining tax implications.
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1962 (12) TMI 77
The Kerala High Court ruled in favor of the assessee, a banking company, allowing deductions for expenses related to kuri business under the Income-tax Act for the assessment years 1957-58, 1958-59, and 1959-60. The expenses were considered revenue expenditure and not capital expenditure, following precedents set in previous cases. The court answered the questions in favor of the assessee with no costs awarded.
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1962 (12) TMI 76
Issues Involved:
1. Deductibility of Rs. 10,22,463 demanded under Section 18A of the Indian Income-tax Act.
2. Deductibility of Rs. 2,56,762 demanded under Section 29 of the Indian Income-tax Act.
3. Deductibility of Rs. 20,45,384 reserved for anticipated future tax liability.
Issue-Wise Detailed Analysis:
1. Deductibility of Rs. 10,22,463 Demanded Under Section 18A of the Indian Income-tax Act:
The assessee, a non-resident company, claimed Rs. 10,22,463 as a deductible debt under the Wealth-tax Act, 1957. The Wealth-tax Officer disallowed this deduction, and the Appellate Assistant Commissioner upheld this decision, stating that the assessee could repudiate the tax by submitting its own estimate of income under Section 18A(2). However, the Judicial Member of the Income-tax Appellate Tribunal held that this amount was deductible, a view later supported by the Tribunal's President. The High Court agreed, stating that once a notice of demand is issued, the tax liability becomes a "debt owed" under Section 2(m) of the Wealth-tax Act. Thus, the sum of Rs. 10,22,463 was deemed deductible.
2. Deductibility of Rs. 2,56,762 Demanded Under Section 29 of the Indian Income-tax Act:
The assessee also claimed Rs. 2,56,762 as a deductible debt, which was disallowed by the Wealth-tax Officer and the Appellate Assistant Commissioner on the grounds that the collection was postponed due to a claim for double income-tax relief. The Judicial Member of the Tribunal allowed this deduction, and the President of the Tribunal concurred. The High Court upheld this view, noting that the issuance of a notice of demand under Section 29 creates a debt owed by the assessee. Therefore, the sum of Rs. 2,56,762 was also deemed deductible.
3. Deductibility of Rs. 20,45,384 Reserved for Anticipated Future Tax Liability:
The assessee claimed Rs. 20,45,384 as a reserve for anticipated future tax liability. The Wealth-tax Officer, Appellate Assistant Commissioner, and Judicial Member of the Tribunal disallowed this deduction, stating it was not a real and present liability. The Accountant Member of the Tribunal disagreed, but the High Court sided with the Judicial Member. The Court emphasized that a debt must be an "ascertained liquidated, quantified obligation enforceable in praesenti or in futuro." Since the amount was merely a provision for an anticipated liability and not a debt due, it did not qualify for deduction under Section 2(m) of the Wealth-tax Act.
Conclusion:
The High Court concluded that the amounts of Rs. 10,22,463 and Rs. 2,56,762 were deductible as they constituted debts owed due to the issuance of notices of demand. However, the sum of Rs. 20,45,384, being a reserve for anticipated future tax liability, was not deductible as it did not constitute a debt owed. The question was thus answered partly in favor of the assessee and partly in favor of the department, with no order as to costs.
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1962 (12) TMI 75
Issues Involved:
1. Jurisdiction of the Commissioner under Section 34 to revise the order of the Appellate Assistant Commissioner.
2. Applicability of Section 34 when the order of the Appellate Assistant Commissioner is appealable under Section 32.
3. Authority of the Commissioner to act under Section 34 in cases of escaped income in light of Section 35.
4. Justification of the Commissioner in concluding that the income estimate should be made.
5. Determination of whether income has escaped assessment.
6. Jurisdiction of the Commissioner to interfere with the order of the Agricultural Income-tax Officer.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Commissioner under Section 34 to revise the order of the Appellate Assistant Commissioner:
The court examined whether the Commissioner had the jurisdiction to revise the order passed by the Appellate Assistant Commissioner under Section 34 of the Agricultural Income-tax Act. The court referred to the precedent set in Anantha Mallan v. Commissioner of Agricultural Income-tax, which held that the Commissioner should not exercise his revisory powers when he himself has objections to the assessment. Instead, he should follow the procedure indicated in Section 32(2) to have the matter adjudged by the Appellate Tribunal. The court concluded that the Commissioner ought not to have sat in judgment on the Assistant Commissioner's assessment and should have followed the particular procedure indicated in Section 32(2). Therefore, the court answered this issue in the negative, indicating that the Commissioner did not have the jurisdiction to revise the order.
2. Applicability of Section 34 when the order of the Appellate Assistant Commissioner is appealable under Section 32:
This issue was taken together with the first issue. The court reiterated the principle that when two courses of action are indicated by the statute, one general and the other particular, the latter should be followed, especially when it is consistent with the principles of natural justice. The court held that the Commissioner should have followed the procedure under Section 32(2) rather than exercising his revisory powers under Section 34. Thus, the court answered this issue in the negative as well.
3. Authority of the Commissioner to act under Section 34 in cases of escaped income in light of Section 35:
The court analyzed whether the Commissioner could act under Section 34 in cases of escaped income given the specific provisions in Section 35. The court found that the Commissioner's actions were not justified as he did not follow the proper procedure or provide sufficient evidence to reject the assessee's accounts. The court emphasized that the rejection of accounts must be based on positive evidence of their unreliability, not mere suspicions. The court concluded that the Commissioner had no justification to reject the assessee's accounts or set aside the assessment made by the Agricultural Income-tax Officer. Therefore, the court answered this issue in the negative.
4. Justification of the Commissioner in concluding that the income estimate should be made:
The court scrutinized the Commissioner's conclusion that the income estimate should be made. The court found that the Commissioner's observations were not supported by the facts or evidence on record. The court highlighted that the Commissioner overlooked material facts and unjustifiably set aside the orders of assessment. The court emphasized that the accounts maintained in the ordinary course of business should be accepted unless there is positive evidence to the contrary. The court concluded that the Commissioner's actions were not justified and answered this issue in the negative.
5. Determination of whether income has escaped assessment:
The court examined whether the income had escaped assessment for the years 1956-57 and 1957-58. The court found that the Commissioner's reasoning for setting aside the assessments was not warranted by the circumstances of the cases. The court reiterated that the rejection of accounts must be based on positive evidence and not mere suspicions. The court concluded that the Commissioner had no justification to reject the assessee's accounts or to set aside the assessment made by the Agricultural Income-tax Officer. Therefore, the court answered this issue in the negative.
6. Jurisdiction of the Commissioner to interfere with the order of the Agricultural Income-tax Officer:
The court analyzed whether the Commissioner had the jurisdiction to interfere with the order of the Agricultural Income-tax Officer. The court found that the Commissioner's disapproval of the Income-tax Officer's acceptance of the assessee's accounts was not justified. The court emphasized that the rejection of accounts must be based on positive evidence of their unreliability. The court concluded that the Commissioner had no jurisdiction to interfere with the order of the Agricultural Income-tax Officer. Therefore, the court answered this issue in the negative.
Conclusion:
The court concluded that the Commissioner did not have the jurisdiction to revise the order of the Appellate Assistant Commissioner under Section 34, should have followed the procedure under Section 32(2), and had no justification to reject the assessee's accounts or set aside the assessments made by the Agricultural Income-tax Officer. The court did not make any order as to costs in these references and directed that a copy of the judgment be forwarded to the Commissioner as required by Section 60(6) of the Agricultural Income-tax Act, 1950.
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1962 (12) TMI 74
Issues:
1. Valuation of closing stock discrepancy in income tax assessment.
2. Allocation of losses between accounting years.
3. Valuation of closing stock for income tax purposes.
Issue 1: Valuation of closing stock discrepancy in income tax assessment
The case involved B. Natwarlal and Co., where the assessee, Dhoribhai Lallubhai Patel, was assessed as an individual for the year 1953-54. A partnership deed was executed in 1952, merging businesses into a new firm, Messrs. Purshottamdas Dhoribhai and Co. Discrepancies in tobacco stock valuation led to additions in the trading results by the Income-tax Officer. The Appellate Assistant Commissioner reduced the addition, attributing parts of the shortage to different items. The Tribunal upheld the addition, and the assessee sought a direction to reopen the assessment for the previous year. The Tribunal declined, citing jurisdictional limitations. The High Court affirmed the Tribunal's decision, stating that the Tribunal cannot direct actions on matters not part of the appeal, thus affirming the Tribunal's decision on this issue.
Issue 2: Allocation of losses between accounting years
The Tribunal addressed the allocation of losses between accounting years, specifically regarding a shortage of 41 maunds 8 seers. The Tribunal found that the loss occurred in the preceding year, Samvat year 2007, based on the evidence presented. The High Court agreed with the Tribunal's decision, emphasizing the lack of evidence to prove the loss occurred in the current accounting year. Therefore, the Tribunal's decision on this issue was upheld.
Issue 3: Valuation of closing stock for income tax purposes
Regarding the valuation of closing stock for income tax purposes, discrepancies arose in the valuation of tobacco stock by the assessee for the year 1953-54. The Income-tax Officer found variations in selling rates and added an amount to the trading results. The Appellate Assistant Commissioner allowed the assessee to prove the valuation, but the evidence provided was deemed insufficient. The Tribunal and subsequently the High Court upheld the Income-tax Officer's valuation, as there was evidence of varying selling rates and lack of substantial proof from the assessee regarding the market value. The High Court affirmed that there was sufficient evidence for the taxing authorities and the Tribunal to conclude that the closing stock was undervalued. Therefore, the Tribunal's decision on this issue was also upheld.
In conclusion, the High Court affirmed the Tribunal's decisions on all issues, including the valuation of closing stock discrepancies, allocation of losses between accounting years, and the valuation of closing stock for income tax purposes.
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1962 (12) TMI 73
Issues Involved:
1. Binding nature of the agreement between the parties.
2. Validity of Rule 23 under Articles 13 and 14 of the Constitution.
3. Validity of sub-Rule (6) of Rule 23 under the rule-making power conferred by Section 30 of the Act.
Comprehensive, Issue-wise Detailed Analysis:
1. Binding Nature of the Agreement:
The appellant contended that there was no binding contract as the agreements for the seasons 1949-50 and 1950-51 had defects, including the absence of signatures, blanks in the schedule, and missing details. However, the court found that the agreement was accepted and acted upon by both parties. The appellant had moved the Cane Commissioner for enforcement, sent requisitions, and paid for supplies based on the agreement. The court held that the agreement, though not signed by the appellant, was binding as it was acted upon and the terms were in writing, fulfilling the requirement of Section 18(2). The court also noted that the arbitration clause in the agreement was enforceable even without the appellant's signature, as long as the terms were reduced to writing and agreed upon by the parties.
2. Validity of Rule 23 under Articles 13 and 14 of the Constitution:
The appellant argued that Rule 23 was discriminatory as it allowed the Cane Commissioner to choose between deciding disputes himself or referring them to arbitration, leading to unequal treatment. The court examined whether the Cane Commissioner could compel arbitration without the parties' consent and found that arbitration could only occur with the parties' agreement. The court concluded that Rule 23 did not offend Article 14 as it provided for arbitration only if both parties agreed, thus maintaining a single mode of dispute resolution by the Cane Commissioner as the default.
3. Validity of sub-Rule (6) of Rule 23 under the Rule-Making Power Conferred by Section 30 of the Act:
The appellant contended that sub-Rule (6), which provided for an appeal against the arbitrators' award, was beyond the rule-making power of the Provincial Government. The court determined that Section 30(2)(u) of the Act conferred a general power to make rules for resolving disputes, including arbitration, and that sub-Rule (6) was within this power as it facilitated the resolution of disputes by arbitration. The court held that sub-Rule (6) was valid and severable, and thus, the whole of Rule 23 did not fail.
Separate Judgment by Raghubar Dayal, J.:
Justice Raghubar Dayal dissented, arguing that Rule 23 was discriminatory as it gave the Cane Commissioner uncontrolled discretion to choose between deciding disputes himself or referring them to arbitration. He also found that sub-Rule (6) was void as the State Government lacked the power to provide for appeals against arbitrators' awards, and this sub-Rule was not severable from the rest of Rule 23. He concluded that the entire Rule 23 should be struck down.
Conclusion:
The majority opinion held that the agreement was binding, Rule 23 did not violate Article 14, and sub-Rule (6) was within the rule-making power of the Provincial Government. The appeal was dismissed with costs. Justice Raghubar Dayal dissented, finding Rule 23 discriminatory and sub-Rule (6) void, and would have allowed the appeal.
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1962 (12) TMI 72
Issues:
Challenge to the validity of assessment order and demand notice
Jurisdiction of the Income-tax Officer to make the assessment
Validity of penalties in the certificates
Analysis:
The petitioner challenged the assessment order and demand notice issued by the Income-tax Officer, arguing that the order assessing income for five years was invalid and illegal. However, it was noted that the petitioners themselves requested the assessment for those years, and the assessment order was not challenged earlier. The court held that since the assessment order was legal, the demand notice was also valid, as it was a demand for tax payable for all five years. The attached form sent to the petitioners detailed the assessment for each year, addressing any grievance the petitioners may have had on this issue.
Regarding the jurisdiction of the Income-tax Officer who passed the assessment order, it was argued that the officer did not have jurisdiction to assess the petitioners as they were not new assessees. The court interpreted the term "new assessees" to mean those being assessed for the first time after a specific date. However, the petitioners' conduct of inviting the officer to make the assessment without protest disentitled them from challenging the officer's jurisdiction later on. The court cited precedent to support this position, emphasizing that the petitioners had submitted to the officer's jurisdiction without objection.
The petitioner also contended that they could not be made liable to pay penalties as it had been previously decided that the certificates were invalid concerning penalties. However, the court clarified that the earlier invalidation related to different certificates, and the present certificates were not shown to be invalid on any grounds. The demands for tax and penalties by the Union of India were adequately identified in the current certificates, and there was no binding adjudication against them. Ultimately, the court found no merit in the petitioner's arguments and discharged the rule with costs.
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1962 (12) TMI 71
Issues Involved:
1. Dissolution of partnership and winding up of business.
2. Limitation period for filing a suit for accounts and share of profits.
3. Fiduciary duty of the receiver to render accounts.
4. Application of Order 41, Rule 33 of the Code of Civil Procedure.
5. Commencement date for the limitation period.
Issue-Wise Detailed Analysis:
1. Dissolution of Partnership and Winding Up of Business:
The plaintiff, Kundanlal, sought a declaration that the partnership of the Shiv Prasad Banarsi Das Sugar Mills was dissolved on May 13, 1944, and requested the court to dissolve it if it was still in existence. The trial court decreed that the partnership stood dissolved with effect from May 13, 1944, and appointed a commissioner to wind up the affairs of the mills. The High Court upheld the dissolution but dismissed the suit regarding other reliefs. The Supreme Court restored the trial court's decree, confirming the dissolution date as May 13, 1944.
2. Limitation Period for Filing a Suit for Accounts and Share of Profits:
The High Court held that the suit for accounts and share of profits was barred by Article 106 of the Limitation Act. It also held that the claim for the distribution of the dissolved firm's assets was time-barred. The Supreme Court disagreed, stating that the limitation period's commencement date was a mixed question of fact and law. The High Court erred by not allowing the parties to amend their pleadings and by not framing an issue on the limitation point.
3. Fiduciary Duty of the Receiver to Render Accounts:
Kanshi Ram, appointed as a receiver, was argued to have a fiduciary duty to render accounts to the other partners. The Supreme Court noted that the receiver held assets for the benefit of all partners and was bound to render accounts, independently of other considerations. The trial court's decree, which held Kanshi Ram liable to render accounts, was restored.
4. Application of Order 41, Rule 33 of the Code of Civil Procedure:
The High Court invoked Order 41, Rule 33, to disallow the plaintiff's claim decreed by the trial court. The Supreme Court found this inappropriate, as the High Court should have provided an opportunity for the parties to address the limitation issue. The High Court's decision to raise the limitation point for the first time in argument caused prejudice to some parties and was thus set aside.
5. Commencement Date for the Limitation Period:
The High Court held that the limitation period commenced on May 13, 1944, the date when Sheo Prasad filed the suit for dissolution. The Supreme Court clarified that the mere filing of a suit does not amount to a notice of dissolution. The partnership would be deemed dissolved from the date mentioned in the notice or the date of communication of the notice. The High Court lacked material to ascertain the correct date, leading to an erroneous decision on the limitation period.
Conclusion:
The Supreme Court allowed the appeals of Banarsidas and Kundanlal, restoring the trial court's decree, and dismissed the Civil Miscellaneous Petitions. The appeals were decided on merits, and no order as to costs was made.
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1962 (12) TMI 70
Issues Involved:
1. Construction of Sections 6 and 11 of the Probation of Offenders Act, 1958.
2. Applicability of Section 6 to the appellant Ramji.
3. Applicability of Section 6 to the appellant Basist.
4. Discretionary powers of the High Court under Section 11.
5. Determination of the crucial date for reckoning the age of the offender.
Issue-wise Detailed Analysis:
1. Construction of Sections 6 and 11 of the Probation of Offenders Act, 1958:
The appeal primarily concerns the interpretation of Sections 6 and 11 of the Probation of Offenders Act, 1958. Section 6(1) stipulates that courts should not sentence individuals under 21 years of age to imprisonment unless it is deemed undesirable to deal with them under Sections 3 or 4. Section 11 allows appellate and revisional courts to pass orders under the Act, including those under Sections 3 and 4.
2. Applicability of Section 6 to the appellant Ramji:
The Assistant Sessions Judge sentenced Ramji, who was 21 years old at the time of the judgment, to two years of rigorous imprisonment under Section 324 of the Indian Penal Code. The High Court upheld the conviction but reduced the sentence to nine months due to Ramji's tuberculosis. The High Court determined that Section 6(1) did not apply to Ramji as he was over 21 years old at the time of sentencing. The Supreme Court agreed with this interpretation, emphasizing that the age relevant for Section 6(1) is the age at the time of sentencing, not at the time of the offense.
3. Applicability of Section 6 to the appellant Basist:
Basist, who was 19 years old at the time of the offense, was initially sentenced to six years under Section 307 and four years under Section 326 of the Indian Penal Code. The High Court later altered the conviction to Section 324 and sentenced him to two years of rigorous imprisonment. The Supreme Court noted that Basist was under 21 years old at the time of the trial court's judgment, making Section 6(1) applicable to him. The High Court failed to consider this, and thus, the Supreme Court remanded the case to the High Court to apply Section 6(1) properly.
4. Discretionary powers of the High Court under Section 11:
The High Court believed it had an unfettered discretion under Section 11 to pass or refuse orders under the Act. The Supreme Court clarified that the High Court's discretion is not absolute and must be exercised within the limitations and criteria set out in Sections 3, 4, and 6. The Supreme Court emphasized that the High Court must apply the same standards and guidance as the trial courts when exercising its powers under Section 11.
5. Determination of the crucial date for reckoning the age of the offender:
The Supreme Court considered whether the age of the offender should be reckoned at the date of the trial court's judgment or the appellate court's decision. The Court concluded that the crucial date for determining the age is the date when the trial court had to deal with the offender. Since Basist was under 21 years old at the time of the trial court's judgment, Section 6(1) was applicable to him, even if he was over 21 by the time of the appellate court's decision.
Conclusion:
The appeal was allowed in part, specifically concerning the second appellant, Basist. The case was remanded to the High Court to consider the proper order to be passed in Basist's case by applying the provisions of Section 6 of the Probation of Offenders Act, 1958. The Supreme Court affirmed that the High Court must apply the same criteria and limitations as the trial courts when exercising its discretionary powers under Section 11.
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1962 (12) TMI 69
Issues Involved:
1. Jurisdiction of Rent Control Authorities
2. Relationship of Landlord and Tenant
3. Application of Section 15(7) of the Delhi Rent Control Act
4. Condonation of Delay in Filing Appeal
5. Merits of the Eviction Order
Detailed Analysis:
1. Jurisdiction of Rent Control Authorities
The appellant contended that the authorities under the Delhi Rent Control Act had no jurisdiction to entertain the proceedings as there was no relationship of landlord and tenant between the parties. The court held that the Act was enacted to control rents and evictions of tenants, and it postulates a pre-existing relationship of landlord and tenant. The authorities under the Act must determine this relationship when it is disputed. The Rent Controller's jurisdiction is not ousted by a mere denial of this relationship. The court emphasized that the tribunals under the Act have exclusive jurisdiction within the provisions of the Act, and their orders are final and not liable to be questioned in collateral proceedings.
2. Relationship of Landlord and Tenant
The appellant denied being a tenant, asserting that the premises were let to the All India Postal & R.M.S. Union and that he was merely a licensee. The court found that the Rent Controller had prima facie established the landlord-tenant relationship based on rent receipts. The Controller's decision to order the appellant to deposit arrears of rent and subsequently strike out his defense for non-compliance indicated that the appellant was deemed a tenant under the Act. The court noted that if the appellant had denied the relationship, he should have walked out of the proceedings instead of seeking protection under the Act.
3. Application of Section 15(7) of the Delhi Rent Control Act
Section 15(7) allows the Rent Controller to strike out the tenant's defense if they fail to make the required rent payments. The appellant argued that this provision was erroneously applied. The court held that the orders under Section 15(7) were for the benefit of the tenant and that the appellant, by seeking orders under the Act, had invited the Controller to pass those orders. The appellant's failure to comply with the order to deposit arrears justified the striking out of his defense.
4. Condonation of Delay in Filing Appeal
The appellant's appeal to the Rent Control Tribunal was dismissed as time-barred by one day. The court held that the question of condonation of delay is a matter of discretion for the appellate authority and not for the Supreme Court to interfere with. The Tribunal had considered both the delay and the merits of the appeal, finding no grounds for interference with the Rent Controller's orders. Thus, the issue of delay was deemed of academic interest only.
5. Merits of the Eviction Order
The appellant challenged the eviction order on the grounds that the premises were not bonafide required by the respondents and that they already had suitable accommodation. The court found that the Rent Controller and the Rent Control Tribunal had concurrently established the respondents' bonafide need for the premises. Furthermore, the appellant's inconsistent stance-benefiting from the Act while denying the landlord-tenant relationship-undermined his position. The court concluded that the appellant had no merit in his appeal, as the eviction order was justified based on the established facts and legal provisions.
Conclusion
The Supreme Court dismissed the appeal with costs, affirming the jurisdiction of the Rent Control authorities, the established landlord-tenant relationship, the proper application of Section 15(7), the discretionary handling of the delay in appeal, and the merits of the eviction order. The appellant's inconsistent actions and failure to comply with statutory requirements led to the dismissal of his defense and appeal.
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1962 (12) TMI 68
Issues Involved:
1. Interpretation of the provisions relating to acquisition under the Bihar Town Planning & Improvement Trust Act, 1951.
2. Validity of notifications issued by the State Government under Section 4 of the Land Acquisition Act, 1894.
3. Whether the Bihar Act replaces the Land Acquisition Act for acquisitions related to the Improvement Trust.
4. Consistency between the Bihar Act and the Land Acquisition Act.
5. Applicability of the principle "generalia specialibus non derogant".
6. Procedural requirements for land acquisition under the Bihar Act.
Issue-wise Detailed Analysis:
1. Interpretation of the Provisions Relating to Acquisition Under the Bihar Town Planning & Improvement Trust Act, 1951:
The judgment discusses the necessity to examine various provisions of the Bihar Act to determine the legality of the notifications in dispute. Chapter II of the Bihar Act provides for the constitution of the Improvement Trust and vests in it the duty of carrying out the provisions of the Act. Chapter III deals with improvement schemes and specifies the procedures for preparing, publishing, and transmitting notices regarding these schemes. Section 71 of the Bihar Act modifies the Land Acquisition Act for acquiring land for the Trust, incorporating specific modifications outlined in the Schedule.
2. Validity of Notifications Issued by the State Government Under Section 4 of the Land Acquisition Act, 1894:
The appellant argued that the notifications issued by the State Government under Section 4 of the Land Acquisition Act were valid. The High Court had quashed these notifications, but the Supreme Court found that Section 71 of the Bihar Act does not exclude the Land Acquisition Act but makes it applicable with modifications. The notification issued by the State Government was thus deemed valid.
3. Whether the Bihar Act Replaces the Land Acquisition Act for Acquisitions Related to the Improvement Trust:
The respondents contended that land for the Improvement Trust could only be acquired under the Bihar Act and not the Land Acquisition Act, arguing that the former Act replaces the latter. The High Court supported this view, applying the principle "generalia specialibus non derogant," indicating that the specific provisions of the Bihar Act should prevail over the general provisions of the Land Acquisition Act. However, the Supreme Court held that the Bihar Act does not replace the Land Acquisition Act but modifies it for the purpose of acquiring land for the Trust.
4. Consistency Between the Bihar Act and the Land Acquisition Act:
The respondents argued that the Bihar Act and the Land Acquisition Act were inconsistent and could not operate in the same field. The Supreme Court found that the Bihar Act modifies the Land Acquisition Act for acquisitions related to the Trust, indicating that both Acts can operate concurrently with the specified modifications.
5. Applicability of the Principle "Generalia Specialibus Non Derogant":
The High Court applied the principle "generalia specialibus non derogant," which means that general laws do not derogate from special laws. It concluded that the Bihar Act, being a special Act, applied to the exclusion of the general Land Acquisition Act. However, the Supreme Court interpreted that the Bihar Act modifies rather than excludes the Land Acquisition Act, allowing both to operate together with the specified modifications.
6. Procedural Requirements for Land Acquisition Under the Bihar Act:
The Supreme Court emphasized that the Bihar Act provides a detailed procedure for land acquisition, including the preparation of improvement schemes, publication of notices, and consideration of objections. The High Court had held that the Trust must follow this procedure and cannot adopt any other machinery for land acquisition. The Supreme Court acknowledged this but clarified that the modifications to the Land Acquisition Act provided in the Bihar Act should be followed.
Separate Judgments:
The majority judgment allowed the appeals, set aside the High Court's judgment, and remitted the case to the High Court to decide whether the State Government's order was hit by Article 14. The dissenting judgment by Subba Rao, J., disagreed, holding that the Trust could only acquire land in the manner prescribed by the Bihar Act, and the notifications under Section 4 of the Land Acquisition Act were void.
Conclusion:
The Supreme Court's majority view allowed the appeals, set aside the High Court's judgment, and remitted the case for further consideration on the issue of Article 14. The costs were to abide the event, with one hearing fee in the Supreme Court.
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1962 (12) TMI 67
Issues Involved:
1. Constitutional validity of Chapter XX of the U.P. Police Regulations.
2. Violation of fundamental rights under Articles 19(1)(d) and 21 of the Constitution.
3. Legality of police surveillance measures, particularly domiciliary visits.
Issue-Wise Analysis:
1. Constitutional Validity of Chapter XX of the U.P. Police Regulations:
The petitioner challenged the constitutional validity of Chapter XX of the U.P. Police Regulations, arguing that the powers conferred upon police officials violated the rights guaranteed under Articles 19(1)(d) and 21 of the Constitution. The petitioner was subjected to police surveillance, including domiciliary visits, secret picketing, and reporting of movements. The State defended the regulations, claiming they did not infringe on fundamental rights and were reasonable restrictions in the interest of public order.
2. Violation of Fundamental Rights under Articles 19(1)(d) and 21:
The Court examined whether the surveillance measures infringed upon the petitioner's right to move freely throughout India (Article 19(1)(d)) and the right to personal liberty (Article 21). The Court noted that the impugned regulations were not backed by any statutory law but were merely executive instructions. Therefore, if these regulations infringed on the petitioner's fundamental rights, they could not be justified.
3. Legality of Police Surveillance Measures:
The Court analyzed the specific surveillance measures under Regulation 236:
- Secret Picketing (Clause a): The Court found that secret picketing did not materially affect the right to move freely or personal liberty as it involved merely watching and recording visitors to the suspect's house.
- Domiciliary Visits at Night (Clause b): The Court held that domiciliary visits, involving police entering the suspect's house at night, constituted a violation of personal liberty under Article 21. The intrusion into the residence and disturbance of sleep were deemed unconstitutional as there was no law authorizing such actions.
- Other Measures (Clauses c, d, e, f): These measures involved inquiries into the suspect's habits, associations, and movements. The Court concluded that these did not infringe on the right to move freely or personal liberty, as the right to privacy is not a guaranteed right under the Constitution.
Separate Judgments:
Majority Judgment:
The majority opinion held that Regulation 236(b), authorizing domiciliary visits, was unconstitutional and violated Article 21. The petitioner was entitled to a writ of mandamus restraining the State from continuing domiciliary visits. The rest of the petition was dismissed.
Separate Opinion (Subba Rao, J.):
Subba Rao, J. agreed that Regulation 236(b) was unconstitutional but went further to hold that the entire Regulation 236 infringed both Articles 19(1)(d) and 21. He emphasized that the right to personal liberty includes freedom from restrictions on movements and encroachments on private life. The shadowing and surveillance measures imposed psychological restraints, infringing on the petitioner's freedom of movement and personal liberty. Consequently, he would have struck down the entire Regulation 236.
Conclusion:
The Supreme Court partly allowed the writ petition, striking down Regulation 236(b) as unconstitutional and issuing a writ of mandamus to stop domiciliary visits. The rest of the petition was dismissed, with no order as to costs.
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1962 (12) TMI 66
Issues Involved:
1. Whether the sum of Rs. 3,53,863 claimed by the assessee as the cost of the positive prints of the two films is deductible in the assessment in whole or in part independent of amortization.
2. Whether the sum of Rs. 4,000 or any part thereof was in law due to the assessee's lawyers on the basis of the directors' resolution so as to constitute a deduction in the assessment of the year 1957-58.
3. Whether the Income-tax Officer was justified in applying the proviso to section 13 of the Indian Income-tax Act.
Issue-wise Detailed Analysis:
1. Deductibility of Rs. 3,53,863 for Positive Prints:
The assessee, a public limited company engaged in producing and distributing films, claimed the cost of positive prints amounting to Rs. 3,53,863 as a deduction. The Income-tax Officer disallowed this claim, arguing that the cost of preparing the first positive prints before releasing the picture should be merged with the cost of production of the negative and treated as capital expenditure. The Appellate Assistant Commissioner accepted the assessee's contention that the life of positive prints is less than a year and that they should be treated as revenue expenditure. The Tribunal, however, decided that the cost of positive prints should be written off completely after 150 shows and directed the Income-tax Officer to recompute the depreciation on this basis.
Judgment:
The court held that the positive prints, having a life span of about 300 shows, which typically equates to six months, should be treated as stock-in-trade. Since these prints were screened for more than six months during the accounting year, their value at the end of the year should be nil. The court concluded that the assessee's claim for the full allowance of Rs. 3,53,863 was justified. The Tribunal's decision to merge the cost of positives with the negatives and apply the Central Board's circular for amortization was deemed incorrect. The court emphasized that the method of accounting regularly employed by the assessee should not be disregarded unless it fails to reflect the true profits.
2. Deductibility of Rs. 4,000 Paid to Lawyers:
The assessee claimed a total of Rs. 10,000 as remuneration paid to its legal advisers, which included Rs. 4,000 paid on December 12, 1955, and Rs. 6,000 paid in subsequent installments. The Income-tax Officer disallowed the Rs. 4,000, arguing that it did not relate to the accounting year. The Appellate Assistant Commissioner allowed the entire Rs. 10,000, reasoning that the remuneration was for services rendered within the accounting year.
Judgment:
The court found that the sum of Rs. 4,000 paid in December 1955 related to the period from January 1, 1955, to October 1, 1955, which fell outside the accounting year. However, the liability to pay this amount accrued within the accounting year. The court held that the assessee was entitled to claim Rs. 3,000 (for the period from January to October 1955) as a deduction, but not the full Rs. 4,000. Therefore, the assessee could claim an additional Rs. 3,000, making the total allowable deduction Rs. 9,000.
3. Application of Proviso to Section 13:
The assessee challenged the department's right to disregard the method of accounting it had consistently employed. The department contended that the proviso to section 13 was applicable because the true profits could not be deduced from the assessee's method of accounting.
Judgment:
The court noted that the proviso to section 13 allows the department to disregard the assessee's method of accounting only if it fails to reflect the true profits. The Tribunal did not find that the assessee's method failed to reflect the true profits. Given the findings that the positives were screened for six months and their value could be written off after 150 shows, the court concluded that the assessee's method of accounting was appropriate. Therefore, the proviso to section 13 did not apply, and the department's action was unjustified.
Conclusion:
The court answered the questions in favor of the assessee, allowing the full deduction for the cost of positive prints and an additional Rs. 3,000 for legal fees, while rejecting the application of the proviso to section 13 by the Income-tax Officer. The assessee was awarded costs in T.C. No. 119 of 1962, while no costs were ordered in T.C. No. 90 of 1960.
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1962 (12) TMI 65
Issues Involved:
1. Whether the sum of Rs. 44,617 derived from the company's spinning operations is exempt from payment of tax under section 15C of the Income-tax Act for the assessment year 1956-57.
2. Whether the spinning department established by the company in the assessment year 1952-53 qualifies as a newly established industrial undertaking under section 15C.
3. Whether the spinning mill is a distinct industrial undertaking separate from the previously established silk weaving business.
4. Whether the spinning mill constitutes a reconstruction of the existing silk weaving business.
Issue-wise Detailed Analysis:
1. Exemption under Section 15C:
The primary question referred to the court was whether the sum of Rs. 44,617 derived from the company's spinning operations, which commenced on March 24, 1951, is exempt from tax under section 15C of the Income-tax Act for the assessment year 1956-57. The assessee claimed that the spinning department, established in the assessment year 1952-53, was a newly established industrial undertaking and thus entitled to the exemption. The Income-tax Officer, Appellate Assistant Commissioner, and Tribunal all rejected this claim, viewing the spinning operations as part of the textile mill started in 1949, thereby disqualifying it from the exemption for the year in question.
2. Qualification as a Newly Established Industrial Undertaking:
The company argued that the spinning department was a distinct and newly established industrial undertaking. The Tribunal, however, held that the spinning operations were merely a continuation or reconstruction of the existing textile business, which included silk weaving. The Tribunal noted that the company had sought permission to use cotton yarn on the looms initially intended for silk weaving, and the losses from the weaving department were set off against the spinning department's income, indicating a single business entity.
3. Distinction from Silk Weaving Business:
The assessee contended that the spinning mill was entirely separate from the silk weaving business, with different machinery, separate buildings, and no interdependence. The Tribunal, however, observed that there was no separate capital allocation, and major expenses were not distinctly allocated between the two departments. The Tribunal concluded that the spinning mill was not a distinct industrial undertaking but part of the same textile business.
4. Reconstruction of Existing Business:
The Tribunal and lower authorities also considered whether the spinning mill was a reconstruction of the existing silk weaving business. They concluded that the spinning operations were a continuation or reconstruction of the textile business started in 1949. The court, however, disagreed, stating that the spinning mill was a distinct industrial undertaking, not merely a reconstruction of the existing business. The court emphasized that the spinning mill had separate buildings and machinery and operated independently from the weaving mill.
Judgment:
The court concluded that the spinning mill was a distinct industrial undertaking, separate from the silk weaving business. The court rejected the Tribunal's view that the spinning mill was a reconstruction of the existing business. The court held that the spinning mill qualified for the exemption under section 15C of the Income-tax Act for the assessment year 1956-57. The question was answered in favor of the assessee, granting the exemption and awarding costs of Rs. 250 to the assessee.
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1962 (12) TMI 64
Issues Involved:
1. Legislative competence of Parliament to enact a law for compulsory acquisition of State property.
2. Sovereignty of the State of West Bengal.
3. Parliament's entitlement to enact a law for compulsory acquisition of State property if the State is sovereign.
4. Ultra vires status of the Coal Bearing Areas (Acquisition and Development) Act.
5. Relief entitlement of the plaintiff.
6. Applicability of the Coal Bearing Areas (Acquisition and Development) Act to lands vested in or owned by the State of West Bengal.
Issue-wise Detailed Analysis:
1. Legislative Competence of Parliament to Enact a Law for Compulsory Acquisition of State Property:
The Supreme Court examined whether Parliament has the legislative competence to enact a law for the compulsory acquisition of land and other properties vested in or owned by a State. The Court concluded that the legislative power of Parliament is not restricted from acquiring State property, as it is essential for the effective exercise of its legislative powers. The Court noted that the Constitution does not imply any such restriction on Parliament's power under Entry 42 of List III. The Court held that the power to legislate for the acquisition of property vested in the States cannot be denied to Parliament if exercised consistently with the protection afforded by Article 31.
2. Sovereignty of the State of West Bengal:
The Court addressed whether the State of West Bengal is a sovereign authority. It was argued that the States share sovereignty with the Union and that the Constitution does not provide for absolute sovereignty of the States. The Court observed that the Indian Constitution does not envisage the States as sovereign entities independent of the Union. The Constitution provides for a distribution of powers between the Union and the States, with a greater weightage in favor of the Union. The Court concluded that the State of West Bengal is not a sovereign authority in the sense that it is immune from the legislative power of Parliament.
3. Parliament's Entitlement to Enact a Law for Compulsory Acquisition of State Property if the State is Sovereign:
Assuming the State of West Bengal is a sovereign authority, the Court examined whether Parliament is entitled to enact a law for the compulsory acquisition of its lands and properties. The Court reiterated that the Constitution does not support the theory of full sovereignty in the States that would render them immune from the exercise of legislative power by Parliament. The Court held that Parliament has the competence to legislate for the acquisition of State property, even if the State is considered sovereign.
4. Ultra Vires Status of the Coal Bearing Areas (Acquisition and Development) Act:
The Court analyzed whether the Coal Bearing Areas (Acquisition and Development) Act, 1957, or any of its provisions, are ultra vires the legislative competence of Parliament. The Court concluded that the Act is within the legislative competence of Parliament. The Act's provisions for acquiring land or rights over land, including those belonging to a State Government, are valid. The Court rejected the argument that the Act was intended to acquire only the rights of individuals and not those of the States.
5. Relief Entitlement of the Plaintiff:
The Court examined whether the plaintiff (State of West Bengal) is entitled to any relief. Given the findings on the legislative competence of Parliament and the validity of the Act, the Court concluded that the plaintiff is not entitled to any relief. The suit was dismissed with costs.
6. Applicability of the Coal Bearing Areas (Acquisition and Development) Act to Lands Vested in or Owned by the State of West Bengal:
The Court considered whether the Coal Bearing Areas (Acquisition and Development) Act applies to lands vested in or owned by the State of West Bengal. The Court held that the Act applies to such lands. The provisions of the Act, including those for acquiring land or rights over land, encompass property belonging to a State Government. The Court found that the Act's language is comprehensive and unrestricted, covering lands belonging to a State.
Conclusion:
The Supreme Court dismissed the suit filed by the State of West Bengal, holding that Parliament has the legislative competence to enact a law for the compulsory acquisition of State property, and the Coal Bearing Areas (Acquisition and Development) Act, 1957, is valid and applicable to lands vested in or owned by the State of West Bengal. The plaintiff was not entitled to any relief, and the suit was dismissed with costs.
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1962 (12) TMI 63
Issues Involved:
1. Whether the Tribunal was justified in holding that Rs. 40,000 constituted the income of the assessee from undisclosed sources assessable to tax in the assessment year 1949-50.
2. Whether the Tribunal was justified in holding that Rs. 12,230 constituted the income of the assessee from undisclosed sources liable to be assessed in the year of assessment 1950-51.
Issue 1: Rs. 40,000 as Income from Undisclosed Sources for 1949-50
The assessee, a tanner, had a shortage of 7,182 skins in the year ending March 31, 1947. The Income-tax Officer (ITO) did not accept the assessee's explanation for the shortage and added Rs. 27,500 (value of skins) and Rs. 1,000 (inflation of purchase) to the assessee's income for 1947-48. For 1948-49, the ITO added Rs. 23,730 for gross profit deficiency, totaling Rs. 52,230 for both years. The ITO later found that the assessee had lent Rs. 40,000 on a mortgage in 1948 and initiated proceedings under Section 34 of the Indian Income-tax Act, adding Rs. 40,000 to the 1949-50 assessment. The Appellate Assistant Commissioner (AAC) found that the Rs. 40,000 came from the Rs. 52,230 previously added and deleted the addition. However, the Tribunal reversed this, stating the assessee failed to disclose the source. The High Court held that the Rs. 52,230 was real income, not notional, and the department must accept it as the source for the Rs. 40,000 loan unless proven otherwise. The Tribunal's decision was found erroneous.
Issue 2: Rs. 12,230 as Income from Undisclosed Sources for 1950-51
In the 1950-51 assessment, the ITO included Rs. 27,625 as unexplained income. The AAC found only Rs. 12,230 unabsorbed from the Rs. 52,230 should be added. The Tribunal reversed this, but the High Court found no material to support the Tribunal's addition. The Rs. 12,230 was part of the Rs. 52,230 previously assessed as real income. The Tribunal's concept of "intangible additions" was criticized as illogical, and the High Court emphasized that additions are real income, not merely for taxation purposes. The Tribunal's reasoning was deemed faulty, and the High Court held there were no materials for the Rs. 12,230 addition.
Conclusion:
The High Court concluded that there were no materials for the additions of Rs. 40,000 and Rs. 12,230 for the assessment years 1949-50 and 1950-51, respectively. The Tribunal's order was unsustainable, and the questions were answered in favor of the assessee, who was awarded costs.
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1962 (12) TMI 62
Issues:
Interpretation of settlement deed under Travancore-Cochin Agricultural Income-tax Act, 1950.
Analysis:
The judgment pertains to a reference under the Travancore-Cochin Agricultural Income-tax Act, 1950, concerning the revocability of a settlement deed executed by the assessee, Subramania Pillai, covering his agricultural properties. The Commissioner revised the assessment, deeming the settlement revocable under section 9(1) of the Act, making the assessee liable for the income from the settled properties. The key question referred was whether the settlement deed was revocable under the Act.
The court analyzed the provisions of section 9(1) and its proviso, which deem agricultural income arising from settlements or transfers revocable if they allow the settlor to re-transfer assets or reassume power over the income or assets. The judgment distinguished between settlements where the settlor remains the property owner and those involving revocable transfers of the property itself. The proviso broadened the scope of revocable transfers to include any provision allowing the settlor to reassume control indirectly.
The settlement in question allocated properties to the settlor's sons and wife, with a provision for granting stridhanam to the daughter. The crucial clause empowered the settlor to select properties for the daughter's stridhanam if the sons failed to execute the deed, indicating the settlor's authority to reassume power over the assets. The court held that this clause rendered the settlement revocable under the Act.
The judgment drew parallels with the Indian Income-tax Act's provisions and precedent cases to support its interpretation. It rejected the assessee's argument citing a previous case where the settlor had no control, emphasizing the unique circumstances of the present case. Additionally, the court dismissed the application of the third proviso to section 9(1), as the settlement did not meet the conditions for exemption.
The court concluded that the settlement fell within the first proviso of section 9(1) and ruled against the assessee, directing them to bear the department's costs. The judgment highlighted the settlor's power to reassume control as the determining factor in deeming the settlement revocable under the Act, emphasizing the specific clauses in the settlement deed that granted such authority.
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1962 (12) TMI 61
Issues Involved:
1. Validity of trust deeds and settlement deed under Hindu Law.
2. Assessment of income from properties settled by the trust deeds.
3. Inclusion of income from properties inherited by Kannan Chetty.
4. Inclusion of income from properties conveyed to a foster-son.
5. Assessment of mesne profits.
Issue-wise Detailed Analysis:
1. Validity of Trust Deeds and Settlement Deed under Hindu Law:
The Tribunal addressed the validity of the trust deeds and settlement deed executed on July 31, 1956, by Kannan Chetty, his son Namberumal Chetty, and Kannan Chetty's wife, Alamelumangaithayarammal. The Tribunal concluded that these deeds were void and inoperative under Hindu Law. The reasoning was that the deeds attempted to alter the course of devolution of property, which is inherently illegal under Hindu Law. The Tribunal cited that a Hindu father has no right to deal with his sons' interest in the family properties in a manner that alters the ordinary devolution of properties. The deeds postponed the division of properties until the youngest child attained majority, which was against the minors' vested rights. Additionally, the deeds deprived the sons of their right to claim partition and altered the right of survivorship, which is a valuable right under Mitakshara Law. Consequently, the Tribunal held that the provisions of these deeds were void ab initio and destitute of all legal effect.
2. Assessment of Income from Properties Settled by the Trust Deeds:
The Tribunal held that the income from the properties covered by the first trust and the settlement deed should be taxable in the hands of the Hindu undivided family (HUF). The Tribunal reasoned that since the deeds were void, the properties continued to belong to the HUF, and thus, the income derived from these properties should be assessed as the income of the HUF. The Tribunal rejected the argument that the arrangement was beneficial to the minors and should be deemed valid until set aside by a competent court.
3. Inclusion of Income from Properties Inherited by Kannan Chetty:
The Tribunal upheld the inclusion of income from properties inherited by Kannan Chetty from his divided brother, Ethirajulu Chetty. The Tribunal found that these properties were thrown into the common stock of the HUF by Kannan Chetty with the intention of abandoning all his separate claims. Therefore, the income from these properties was correctly included in the assessment of the HUF.
4. Inclusion of Income from Properties Conveyed to a Foster-Son:
The Tribunal addressed the income from No. 8, Waddels Road, which was settled upon the children of Anandakrishna, the foster-son of Kannan Chetty, by the third trust. The Tribunal held that this deed was void as it was opposed to Hindu Law. Consequently, the income from this property was correctly included in the assessment of the HUF.
5. Assessment of Mesne Profits:
The Tribunal dealt with the assessment of a sum of Rs. 17,310 as mesne profits of No. 86, Nyniappa Naicken Street, which was covered by the settlement deed. The Tribunal found that this amount represented rent for the period from March 16, 1952, to the date of the decree. Therefore, it was not right to tax the entire amount in one year. The Tribunal directed the Income-tax Officer to apportion the amount among the various years to which the rents were relatable and assess the same in the respective years under section 34. The assessment for the year under appeal was reduced accordingly.
Judgment Summary:
The High Court addressed the question of whether the income from properties dealt with by the family under the trust deeds and settlement deed dated July 31, 1956, was assessable as the income of the joint family after the date of the said deeds. The Court held that the deeds were void and inoperative under Hindu Law, as they attempted to alter the course of devolution of property and deprived the minor sons of their vested rights. Consequently, the income from the properties covered by the deeds continued to be assessable as the income of the HUF. However, the Court also held that the income from properties inherited by Kannan Chetty and conveyed to the foster-son was correctly included in the assessment of the HUF. Finally, the Court directed the apportionment of mesne profits among the relevant years for accurate assessment. The question was answered partly in favor of the assessee and partly in favor of the department, with no order as to costs.
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1962 (12) TMI 60
Issues Involved:
1. Whether the Tribunal was right in law and had material to hold that the sum of Rs. 25,000 was income from undisclosed sources in the year of assessment 1948-49 and assessable under the Act.
Issue-wise Detailed Analysis:
1. Tribunal's Decision on Rs. 25,000 as Undisclosed Income:
The Tribunal had to determine if Rs. 25,000 contributed by the assessee to the firm of Hastimal Jayantilal & Co. was from an undisclosed source. The assessee claimed he borrowed Rs. 25,000 from Vijayaram Ganeshdas of Bikaner. However, the Income-tax Officer did not accept this explanation, citing the lack of proof and the inability to locate Vijayaram Ganeshdas or his agent, Gourishankar Bagdy. The Tribunal upheld the Income-tax Officer's decision, adding the Rs. 25,000 as income from undisclosed sources.
2. Appellate Assistant Commissioner's Reversal:
The Appellate Assistant Commissioner disagreed with the Income-tax Officer, finding that the officer had approached the issue negatively and had not given due consideration to the assessee's explanations. He deleted the addition of Rs. 25,000, stating that the absence of Gourishankar Bagdy should not lead to adverse inferences against the assessee.
3. Tribunal's Reaffirmation:
Upon the department's appeal, the Tribunal reaffirmed the Income-tax Officer's decision, stating that the assessee failed to prove the origin of the Rs. 25,000 beyond doubt. They noted inconsistencies in the assessee's explanations, particularly regarding the Rs. 10,000 portion of the sum.
4. High Court's Examination:
The High Court noted the difficulty faced by the assessee in explaining a decade-old transaction. They examined the evidence and found that the assessee had provided a reasonable explanation for Rs. 15,000 of the Rs. 25,000. The assessee borrowed Rs. 15,000 from the Punjab National Bank, Coimbatore, against a fixed deposit of Rs. 16,000 at the Punjab National Bank, Jodhpur, which was obtained through a draft from Gourishankar Bagdy.
5. Inconsistencies in Assessee's Explanation for Rs. 10,000:
The High Court found inconsistencies in the assessee's explanation for the remaining Rs. 10,000. Initially, the assessee claimed this amount was deposited with Sagarchand Sujanmull of Phalodi and withdrawn from Sagarchand Sujanmull of Madras. Later, he changed his explanation, stating that Rs. 8,000 was sent to Poonamchand Gulabchand of Bombay. The High Court agreed with the Tribunal that there was no proof that Rs. 8,000 credited to the assessee in the firm's accounts came from the borrowing of Rs. 25,000 from Vijayaram Ganeshdas.
6. Conclusion and Judgment:
The High Court concluded that there were no materials to hold that Rs. 15,000 was income from undisclosed sources, as the assessee provided sufficient evidence for this portion. However, they found materials to support the Tribunal's decision that Rs. 10,000 was from undisclosed sources due to the inconsistencies and lack of proof in the assessee's explanations.
Final Judgment:
The High Court answered the question by stating that there were no materials to hold that Rs. 15,000 was income from undisclosed sources, but there were materials to hold that Rs. 10,000 was income from undisclosed sources. No order as to costs was made.
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1962 (12) TMI 59
Whether a draft-scheme under the Act has to be approved as a whole and the procedure of approving a part of the scheme once and another part later is illegal, and therefore, the approval given to the draft-scheme by the Legal Remembrancer does not result in approving the scheme, as required by law.
Whether it was not open to the Legal Remembracer to review his order dated May 31, 1962 even after the decision of the High Court, and insofar as the Legal Remembrancer did so in obedience to the order of the High Court he abdicated his own judgment, and the approval therefore after such abdication of his own judgment, is no approval in law.
Whether there was discrimination inasmuch as the operators of the twelve partially overlapping routes were left out of the scheme?
Held that:- in the circumstances of the hearing to be given by the Legal Remembrancer, it is enough if he takes evidence of the witnesses whom the objectors bring before him themselves and if he helps them to secure their attendance by issue of summonses. But the fact that the Rules do not provide for coercive processes does not mean in the special circumstances of the hearing before the Legal Remembrancer that there can be no proper hearing without such coercive processes. We are therefore of opinion that the Legal Remembrancer did give a hearing to the objectors after the order of the High Court and that in the circumstances that hearing was a proper and sufficient hearing. The challenge therefore to the validity of the scheme as published on June 16, 1962, on this ground must be rejected.
No ground to uphold the plea of discrimination in the present case, for routes completely covered by the route taken over stand on a different footing from the routes only partially covered. The contention therefore that the final scheme as published on August 31, 1962 is bad because it discriminates in this manner, must be rejected. Appeal dismissed.
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