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Case Laws
Showing 141 to 160 of 699 Records
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1966 (10) TMI 47
Whether the receipt in question was a revenue receipt from a venture in the nature of trade?
Held that:- Under section 4(3)(vii) receipts which are of a casual and non-recurring nature are not liable to be included in the computation of the total income of the assessee ; but the rule in express terms does not apply to capital gains, receipts arising from business or the exercise of a profession or vocation and receipts by way of addition to the remuneration of an employee. On the finding recorded by the Tribunal, the receipt arose from the business of the assessees, and is not exempt under section 4(3)(vii). Appeal dismissed
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1966 (10) TMI 46
Whether such delivery constituted sale by operation of law as a result of which the assessee ceased to be the owner of the coffee, the moment it handed over the produce to the Coffee Board?
Held that:- This court held that, under the relevant provisions of the Act, as soon as the producer of coffee handed over the produce to the Coffee Board, it ceased to be the owner and income accrued to him at that point of time. That case does not Jay down the proposition that income accrues to a producer of agricultural produce before the date of disposal, use or sale.
For the years 1955-56 and 1956-57, the appellant did not submit returns of income, but applied to compound the tax under section 65 of the Act, and paid the tax determined at the rates specified in Part II of the Act. Therefrom it cannot be inferred that the produce which was sold by him in the year of account to which these appeals relate had suffered tax in the earlier years. It has to be proved that the crop sold by the appellant related to the years in respect of which he had applied to compound the tax: and on that part of the case there is no evidence. Appeal dismissed.
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1966 (10) TMI 45
Whether, on the facts and in the circumstances of the case, the taxing of the entire interest earned on the fixed deposits made out of the profits earned in Pudukottai by the assessee's branches in the Pudukottai branch of the Bank of Madurai is correct ?
Held that:- The Income-tax authorities were right in holding that the entire interest earned on fixed deposits was taxable. The question referred to the High Court by the appellate Tribunal must be answered in favour of the Income-tax Department and against the respective assessee-companies and these appeals must be allowed
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1966 (10) TMI 44
Whether, on the facts and in the circumstances of the case, the property at No. 34, Mahatma Gandhi Road, Bangalore, was correctly included in the estate of the deceased as property passing or deemed to pass on his death under section 10 of the Act?
Held that:- The insertion of the second proviso to the section must be taken to have been made deliberately by Parliament to be effective from the date of the amendment. We, therefore, see no reason for holding that the earlier provision in section 10 should be interpreted with reference to the language of the amendment brought about by the Finance Act of 1965. We accordingly reject the argument of Mr. Srinivasan on this point.
The question was examined by the Board which found that the property was purchased entirely out of the funds of, the deceased, that for the purpose of income-tax the deceased had declared the entire property as his own, and that the income therefrom was exclusively assessed in his hands. On these facts, the Board held that, though the property stood in the joint names of the deceased and his wife, she was merely a name-lender and the entire property belonged to. the deceased and was rightly included in his estate for the purpose of estate duty. In view of this finding of fact it is not possible to accept the argument of the appellant that only half the share of the property should be taken for the purpose of estate duty assessment. Appeal dismissed.
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1966 (10) TMI 43
Whether the Roza properties were held in trust or under a legal obligation wholly for a religious purpose?
Held that:- Upon the facts found by the Appellate Tribunal we are of opinion that the Roza properties were held for a wholly religious purpose of a public character and therefore the income of the Roza properties was exempt from assessment under section 4(3)(i) of the Act. The appellant is entitled to exemption from being taxed on the ground that the income was derived from property held under a legal obligation wholly for a religious purpose. Decided in favour of the assessee
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1966 (10) TMI 42
Whether on a proper construction of the partnership deed dated March 19, 1950, the firm sought to be registered for the assessment year 1953-54 can be said to have been constituted under an instrument of partnership specifying the individual shares of the partners as required by section 26A of the Act ?
Held that:- The firm was entitled to be registered and that registration could not be refused merely because the deed of partnership set out in paragraph 8 therein the collective share of the yarn shop as 6 annas 9 pies, for in the preamble the division of the shares of profits and losses among the three members of the yarn shop and those admitted to the benefits of the partnership was clearly indicated. It was, however, pointed out that the yarn shop as such was not introduced as a partner and the agreement was in truth between the three major members out of those who constituted the yarn shop and four outsiders. Each of them had signed the application and the covenants of the partnership agreement bind the partners individually. The indication in the deed of partnership that three of them held qua the yarn shop a certain relation did not affect their status as partners of the appellant-firm individually. The principle laid down in this case applies also to the present case and, for the reasons already expressed, we hold that the assessee-firm was entitled to be registered under section 26A of the Act for the assessment year 1953-54 and the question referred to the High Court must be answered in the affirmative and in favour of the assessee-firm. Appeal allowed.
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1966 (10) TMI 41
Whether the aforesaid asset of ₹ 1,43,727 is exempt under section 5(1)(xxi) read with the second proviso thereunder of the Wealth-tax Act ?
Held that:- In the Wealth-tax Act, assessment year has been defined to mean the year for which tax is chargeable under section 3 of that Act. Since the Act came into force on 1st April, 1957, the financial year 1957-58 was the first assessment year for which tax became chargeable, and, consequently, for purposes of the second proviso to section 5(1)(xxi), the assessment year following the commencement of operations for establishment of the unit in the case of any company which commenced the operations any time before the 1st April, 1957, will be the assessment year 1957-58. Prior to the year 1957-58, there was no assessment year as defined under the Act, and, consequently, the first assessment year for which exemption could be claimed was this assessment year 1957-58. The respondent which had commenced operations for establishment of its new unit prior to 1st April, 1957, was rightly allowed exemption in respect of the amount that had been invested by them up to the relevant valuation date. The answer returned by the High Court was, therefore, correct. Appeal dismissed.
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1966 (10) TMI 40
Whether, on the facts and circumstances of the case, in computing the net wealth of the assessee under section 7(2) read with section 2(m) of the Wealth-tax Act, the liability for income-tax and business profits tax could be allowed as a deduction ?
Whether the liability in the sum of ₹ 25,02,675 which arose as a result of the awards dated 28th October, 1948, 28th November, 1956, and 17th October, 1954, before the valuation date or any part thereof is allowable as a deduction in determining the net wealth of the assessee under section 7(2) read with section 2(m) of the Wealth-tax Act ?
Held that:- Liability to pay income-tax was a present liability though the tax became payable after it was quantified in accordance with ascertainable data : there was therefore a perfected debt at any rate on the last day of the accounting year and not a contingent liability, and the amount of the provision for payment of income-tax in respect of the year of account was a " debt owed " within the meaning of section 2(m) on the valuation date and was as such deductible in computing the net wealth. The view expressed by the High Court on the second question, in so, far as it relates to provision for income-tax, cannot therefore be sustained and that part of the question should be answered in the affirmative.
The true function of section 7(2)(a) of the Wealth-tax Act was not appreciated. Section 7 does not deal with the computation of net wealth. It deals with the computation of the aggregate value of the assets. Under section 7 the Wealth-tax Officer is competent, where the assessee is carrying on business of which accounts are maintained regularly, to determine the net value of the assets of the business as a whole. But in doing so he determines the value of the assets of the business as a whole, and not the net wealth of the business. Appeal partly allowed.
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1966 (10) TMI 39
Whether the assessment on Viswanathan and Narayanan on a half share of the income of the estate of S.N.A.S. Chockalingam Chettiar is valid on a proper construction of the will dated 2nd February, 1943 ?
Held that:- There is no ambiguity in the terms of the will. The will gives the estate to the grandsons who were in existence and the other male children who may be born after the date of the execution of the will. Legal possession of the legatees was not deferred, and it is not open to the court to speculate whether the testator could have contemplated the birth of any male children to Meenakshi during his lifetime. The High Court was, therefore, right in holding that the estate belonged only to the two grandsons of the testator--Narayanan and Viswanathan--and that they were properly assessed to tax in respect of the income therefrom. Appeal dismissed.
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1966 (10) TMI 38
Whether the interest receipt constitutes income ?
Whether it is exempt under section 4(3)(vii) of the Income-tax Act as a receipt of a casual and non-recurring nature ?
Held that:- the interest paid to the assessee under the decree of the Supreme Court of Ceylon on the amount of estate duty directed to be refunded was income liable to be taxed under the Act.
When the action was commenced by way of a petition in the District Court of Ceylon, it was well within the contemplation and anticipation of the persons representing the estate that a successful termination of the action would not merely result in a decree for the tax illegally collected, but would also make the Crown liable to pay interest on that amount from the date of the petition till the date of the payment. The receipt of interest in the present case by virtue of the decree of the Supreme Court of Ceylon bears no semblance, therefore, to a receipt of a casual character. It is not therefore possible to accept the argument of the appellant that the receipt of interest obtained under the decree of the Supreme Court of Ceylon was of a casual or non-recurring nature. Thus reject the submission of the appellant on this aspect of the case. Appeal dismissed
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1966 (10) TMI 37
Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the assessee-company was one in which the public are substantially interested within the meaning of section 23A of the Indian Income-tax Act?
Held that:- The report had evidentiary value and could be taken into account. Undoubtedly the Report had to be brought to the notice of the company, and the company had to be given an opportunity to make its representation against the report and to tender evidence against the truth of the recitals contained therein. It is not suggested that this opportunity was not given. It was for the Tribunal to determine having regard to ordinary human experience whether it may be safely taken that the members of the Kedia family must have acted together as a controlling block. That enquiry has not been made, and the case has been decided on the application of a test which is erroneous. We are, therefore, unable on the statement of case to answer the question referred.
We, accordingly, set aside the order passed by the High Court and direct that the Tribunal do submit a supplementary statement of the case under section 66(4) of the Income-tax Act, 1922, because in our view the statement of the case already referred to is not sufficient to enable determination of the case raised thereby. The Tribunal may make such additions or alterations in the statement of the case in the light of the observations made in the course of this judgment. The Tribunal will submit the supplementary statement of the case to the High Court. The High Court will then proceed to determine the question according to law. The costs of this hearing will be costs in the proceedings before the High Court. Appeal allowed.
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1966 (10) TMI 36
Whether, on the facts and in the circumstances of the case, the assessments made on the assessee as on a Hindu undivided family consisting of the three sons of Sir Chinubhai Madhavlal, viz., " Udayan, Kirtidev and Achyut and the wife of Sir Chinubhai Madhavlal, viz., Lady Tanumati, were correctly so made ?
Held that:- When an order recognising the total disruption of a Hindu family has been passed under section 25A of the Indian Income-tax Act, 1922, and an order of assessment is made on the basis of such an order, it is not open to the Income-tax Officer to take proceedings for reassessment under section 34 of the Act ignoring the earlier order under section 25A of the Act on the ground that he has received information that the order under section 25A was obtained by misrepresentation. The proper course for the Income-tax Officer to adopt in such a case is to move the Commissioner of Income-tax to take action under section 33B of the Act to set aside the order under section 25A.
We agree with the High Court of Punjab that section 34 of the Indian Income-tax Act confers no general power of reviewing an order passed under section 25A(1), which is in its very nature effective for all subsequent years. Appeal allowed.
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1966 (10) TMI 35
Whether the estimate of the income of the assessee confirmed by the Income-tax Appellate Tribunal rests upon irrelevant considerations and the estimate is not made in accordance with law ?
Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in sustaining both the additions of ₹ 41,142 as income from business and ₹ 7,000 as cash credits, and whether such addition does not result in double taxation ?
Held that:- Once the books of account of the assessees were rejected and the rate of gross profit earned by them was found unreliable, it was open to the Income-tax Officer to estimate the gross profit at a rate at which profit was earned in similar business by other merchants. We are unable to hold that the reasons recorded by the Tribunal in support of its order levying tax on profits computed on estimated turnover of ₹ 12 lakhs at the rate of 6.5 % were " irrelevant ".
The criticism made by the High Court that the Tribunal had " failed to perform its duty in merely affirming the conclusion of the Appellate Assistant Commissioner " is apparently unmerited. On the merits of the claim for exclusion of the amount of ₹ 7,000, there is no question of law which could be said to arise out of the order of the Tribunal. The assessees had credited Sampangappa with two sums of ₹ 6,000 and ₹ 1,000 in the months of November and December, 1950, respectively. It was clear that Sampangappa had not advanced at the material time any amount to the assessees. The explanation of the assessees was, therefore, untrue.
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1966 (10) TMI 34
Whether the assessee is entitled to both parts of the relief contemplated under section 25(3) of the 1922 Act in respect of the foreign business at Penang, Ipoh and Kambar?
Whether the assessee was entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from house properties owned by the foreign firm which was discontinued in the year of account?
Held that:- The High Court was in error in holding that the foreign business of the assessee was not charged under the provisions of the 1918 Act. The first question must, therefore, be answered in favour of the assessee and it must be held that the assessee is entitled to both parts of the relief contemplated under section 25(3) of the 1922 Act in respect of the foreign businesses at Penang, Ipoh and Kambar.
The assessee is entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from the house properties owned by the foreign firm which was discontinued in the year of account. Appeal allowed.
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1966 (10) TMI 33
Whether the profit of the bank on account of fluctuation of exchange arose in the course of trading operations of the bank or whether it was incidental to any such trading operation?
Held that:- The money changed its character of " stock-in-trade ". when it was " blocked " and " sterilised " and the increment in its value owing to the exchange fluctuation must be treated as a capital receipt. It has also been found by the Appellate Tribunal that the said amount of ₹ 3,97,221 was not utilised for internal banking operations within Pakistan and it is hence not possible to draw an inference that the bank realised any profit in the carrying out of its business. We accordingly hold that Mr. Hazarnavis is unable to make good his argument on this aspect of the case and the High Court was right in reaching the conclusion that the exchange difference of ₹ 1,70,746 was not assessable to income-tax. Appeal dismissed.
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1966 (10) TMI 32
Whether, on the facts and in the circumstances of the case, the Deputy Commissioner of Agricultural Income-tax was right in holding that the applicants were liable to be assessed to agricultural income-tax on the entire income from the Dubarry Group of Estates for the agricultural season 1950-51?
Held that:- With regard to the crops, which had already been harvested, the High Court has held that they do not constitute the agricultural income of the assessee. In returning this answer, the High Court was perfectly correct. From those crops, the income accrued to the respondent because he had purchased the ready harvested crops. Income in respect of those crops was not, therefore, derived by the respondent by any agricultural operations carried on by the respondent, or by performance by the respondent of any process ordinarily employed by a cultivator to render the produce raised or received by him fit to be taken to the market, or by the sale by the respondent of produce raised or received by it. The crops, which had already been harvested, were raised and removed from the land by the vendor from whom the respondent purchased these crops. The sale price received by the vendor might have been treated as agricultural income of the vendor who had raised the crops and sold these harvested crops to the respondent. In no case, could this income received by the respondent by sale of harvested crops purchased by it in that condition be treated as agricultural income received by the respondent. The appeal dismissed.
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1966 (10) TMI 31
Whether on a true interpretation of the various provisions of the Indian Income-tax Act, 1922, the Tribunal was correct in holding that speculation losses of the respondent-firm (assessee-firm) for the assessment years 1958-59 and 1959-60 should be set off against its speculation profit of ₹ 6,19,784 in its assessment for the assessment year 1960-61?
Held that:- Losses in speculative business are not to be taken into account when computing the total income, except to the extent to which they can be set off against profits from other speculative business. The first proviso, thus, clearly limits the applicability of the principal clause of section 24(1) ; and, when applied, it governs the manner in which the total income of the assessee is to be computed. In the case before us, the Income-tax Officer was clearly right in the assessment years 1958-59 and 1959-60 in not setting off the losses in the speculative business against the income earned in those years either from property or from ready business in kappas.
The only interpretation that can be placed on the words " any such loss " in this part of the second proviso is that this expression refers to the loss as determined for purposes of the principal clause of section 24(1) read with the first proviso, and, thus, does not comprise within it loss incurred in speculative business referred to in the first proviso. The fact that proviso (c) to section 24(2) envisages the existence of loss which has not been apportioned between the partners clearly strengthens our view that the second proviso to section 24(1) does not cover loss in speculative business, and, consequently, does not permit that loss to be apportioned between the partners. Thus, section 24(2) also leads to the same conclusion which we have arrived at above on the interpretation of the language of section 24(1).Appeal dismissed.
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1966 (10) TMI 30
Whether, on the facts of this case, an order under section 23A for the assessment year 1949-50 was validly made in the case of this company to which the provisions of the Public Companies (Limitation of Dividends) Ordinance, 1948, applied on the date of the annual general meeting but to which the Act replacing the Ordinance ceased to apply within the period of 6 months referred to in section 23A(1) ?
Held that:- In the first place, the repeal of the Ordinance under section 13 of the 1949 Act is immaterial, for, as we have already stated, section 23A has created a fiction of distribution of the undistributed income as dividend and the section further states that it would be deemed as if it was distributed on the date of the annual general meeting. Since the notional distribution contemplated by section 23A of the Act is as if the notional distribution took place at the date of the annual general meeting, it is the law which prevailed as on the date of the annual general meeting which has to be taken into account in considering the issue as to the legal validity of the order made by the Income-tax Officer. In the second place, Mr. S. T. Desai is not right in his contention that the effect of section 13 of the 1949 Act is to obliterate the Ordinance completely from the statute book. Appeal dismissed.
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1966 (10) TMI 29
Whether, on the facts and in the circumstances of the case, the sum of ₹ 75,000 or any part thereof could be treated as dividend under section 2(6A)(c) of the Indian Income-tax Act, 1922 ?
Held that:- We discharge the answer recorded by the High Court, and record the answer that "that part of ₹ 75,000 which bears the same ratio to ₹ 75,000 which the accumulated profits at the date of liquidation bore to the total assets of the company immediately before liquidation is dividend ". In the present case the Tribunal has not determined what part of ₹ 75,000 represents accumulated profits. But on the view we have taken of the true meaning of section 2(6A)(c) of the Act, the Tribunal was bound to do so. Appeal allowed in part
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1966 (10) TMI 28
Whether, on the facts and circumstances of this case, the non-registration of the relinquishment deed can invalidate the transfer of the business assets to the new partnership ?
Can the registration application be rejected merely on the ground that the business assets were not legally transferred to the new partnership ?
Held that:- The deed of relinquishment, in this case, was in respect of the individual interest of the three Singhania Brothers in the assets of the partnership firm in favour of the Kamla Town Trust, and, consequently, did not require registration, even though the assets of the partnership firm included immovable property, and was valid without registration. As a result of this deed, all the assets of the partnership vested in the new partners of the firm.
A deed of relinquishment, or a deed of gift, differs from a deed of partition in which it is not possible to hold that the partition is valid in respect of some properties and not in respect of others, because rights of persons being partitioned are adjusted with reference to the properties subject to partition as a whole. In the case before us, therefore, the deed of relinquishment was valid at least in respect of movable properties, and the partnership seeking registration, thus, became owner of all the movable assets of the partnership in addition to having contributed a sum of ₹ 50,000 as capital investment in it. The Kamla Town Trust and Jhabbarmal Saraf constituted the partnership under a deed of partnership, which was properly executed, and, in these circumstances, the partnership that came into existence was clearly valid in law. There is, therefore, no force in this appeal
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