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Showing 481 to 500 of 699 Records
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1966 (4) TMI 60
Issues:
1. Disallowance of deductions claimed by registered dealers under the Bengal Finance (Sales Tax) Act, 1941.
2. Disagreement over the cancellation of registration certificate of a purchasing dealer with retrospective effect.
3. Jurisdiction of Assessing Authorities under the Act.
4. Validity of declarations and impact on the selling dealer.
5. Consideration of the Chief Commissioner's observations on retrospective cancellation of registration.
6. Impugned order's validity and potential implications on sales tax evasion.
Analysis:
The petitioners, registered dealers under the Bengal Finance (Sales Tax) Act, 1941, filed returns for the financial year 1957-58, claiming deductions for sales to Messrs. L.C. Trading Company. The Sales Tax Officer disallowed the deductions citing the cancellation of L.C. Trading Company's registration certificate with retrospective effect. The petitioners challenged this disallowance, arguing that a selling dealer's right to claim deductions should not be affected by subsequent cancellation of a purchasing dealer's registration. The cancellation was based on the discontinuation of business by L.C. Trading Company in 1956, raising questions about the validity and timing of the cancellation.
The jurisdiction of Assessing Authorities under the Act was questioned, with the petitioners contending that retrospective cancellation of registration certificates should not be allowed. The court considered whether the declarations provided by L.C. Trading Company were valid at the time of sale and emphasized that the selling dealer should not be penalized for subsequent invalidations by tax authorities. The judgment highlighted the potential hardship and absurdity of retrospective cancellations, as noted by the Chief Commissioner in a separate case.
The court ruled in favor of the petitioners, quashing the disallowance of deductions for sales to L.C. Trading Company. It held that the impugned order was invalid in disallowing the claimed deductions based on the retrospective cancellation of the purchasing dealer's registration. The judgment did not impede further investigation by Assessing Authorities into the validity of declarations or potential tax evasion, emphasizing the need for proper proceedings to address such concerns.
In conclusion, the writ petition was allowed, and the disallowance of deductions for sales to L.C. Trading Company was struck down, highlighting the importance of upholding the selling dealer's rights in such tax matters.
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1966 (4) TMI 59
When a purchasing dealer in one State furnishes in Form 'C' prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form 'B' prescribed under rule 5(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 is it open to the Sales Tax Authority under the Central Sales Tax Act to deny to the selling dealer the benefit of concessional rates under section 8(1) of the Central Sales Tax Act, 1956?
Held that:- Appeal dismissed. Observation of the High Court that the selling dealer may not enquire whether the requirement is not within the certificate of registration of the purchasing dealer is not accurate. But whether the goods specified in the registration certificate in Form 'B' can be used for the purpose is not for the selling dealer to determine. That is a matter which has already been determined by the notified authority issuing the certificate of registration.
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1966 (4) TMI 51
Issues:
Violation of section 269(2) of the Companies Act - Contravention by acting as managing director without Central Government approval.
Analysis:
The judgment pertains to an appeal against an order of acquittal passed by the Sessions Judge in a case involving an alleged contravention of section 269(2) of the Companies Act. The complainant accused the respondent of acting as a managing director without the necessary approval from the Central Government, following his reappointment by the shareholders. The Magistrate initially found the accused guilty and imposed a fine, but the Sessions Judge acquitted the accused, leading to the current appeal.
The primary issue revolved around the interpretation of section 269(2) of the Companies Act, which mandates Central Government approval for the reappointment of a managing director in certain circumstances. The complainant argued that there was an implied prohibition against acting as a managing director before approval, but the court disagreed. The court held that the section only affects the effectiveness of reappointment, not the act of functioning as a managing director. Without a specific statutory prohibition, the accused could not be deemed to have committed an offense under this section.
Furthermore, the complainant contended that the accused could be penalized under section 629A of the Act, even without a direct prohibition in section 269(2). However, the court rejected this argument, emphasizing that section 629A applies only in cases of contraventions with specified penalties. Since section 269(2) lacks a clear direction or prohibition, section 629A does not apply, and the accused cannot be penalized under it.
The judgment also highlighted the requirement for the company in question to be a public company or a private company subsidiary of a public company for section 269(2) to be applicable. However, even if this condition was met, the court found that no case was established against the accused, leading to his rightful acquittal by the Sessions Judge. Ultimately, the appeal was dismissed, affirming the acquittal of the accused.
In conclusion, the court upheld the acquittal of the accused, emphasizing that the alleged contravention of section 269(2) did not constitute an offense due to the absence of a specific statutory prohibition against acting as a managing director without Central Government approval. The judgment provides a detailed analysis of the legal provisions and clarifies the scope of liability under the Companies Act in such circumstances.
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1966 (4) TMI 42
Issues:
Compulsory winding up of the company based on quasi-partnership, consideration of bankruptcy as a ground for winding up, distribution of profits among directors, application of Partnership Act, 1890, and the trustee in bankruptcy's lack of confidence in other directors.
Analysis:
The judgment involves a petition for the compulsory winding up of a company based on quasi-partnership principles. The petitioner, acting as the trustee in bankruptcy, sought winding up due to alleged unfair distribution of profits among directors. The court considered the company as a quasi-partnership, emphasizing the importance of the company's articles in determining the rights of the parties. The court referred to past cases like Yenidje Tobacco Co. Ltd. and highlighted the need to analyze the contractual rights of the parties as per the articles of association.
The court examined the impact of bankruptcy on the company's status, noting that bankruptcy did not automatically lead to winding up but rather vested the bankrupt member's interest in the trustee in bankruptcy. The judgment emphasized that the event of bankruptcy was covered by the company's transmission articles, regulating the rights of the trustee. The court rejected the argument that bankruptcy alone justified winding up the company, highlighting the specific provisions governing bankruptcy in the company's articles.
Regarding the distribution of profits, the court analyzed the informal arrangements among the directors and the trustee in bankruptcy's lack of confidence in other directors. The court referred to the Partnership Act, 1890, in assessing whether the actions of the directors constituted a breach of partnership agreement. However, the court found no unfairness in the profit distribution arrangement and noted that the trustee in bankruptcy's quasi-partnership relation ceased upon the bankrupt's resignation as a director.
Despite expressing regret over the directors' actions, the court concluded that there was no legal basis for making a winding-up order. The judgment highlighted the importance of respecting the trustee in bankruptcy's rights as a minority shareholder and suggested potential recourse through a petition based on oppression if those rights were not honored. The court dismissed the petition and ordered costs against the bankrupt petitioner, emphasizing the trustee in bankruptcy's rights as a minority shareholder and potential avenues for further legal action if necessary.
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1966 (4) TMI 41
Issues Involved:
1. Whether respondent No. 1 company made any default or caused unnecessary delay in entering the Corporation's name in its register of members.
2. Whether the proper remedy for the Corporation was to file an appeal under section 111 of the Companies Act.
3. Compliance with section 108 of the Companies Act for the transfer of shares by the Corporation.
Issue-Wise Detailed Analysis:
1. Default or Delay in Registering the Corporation's Name:
The primary issue was whether respondent No. 1 company defaulted or delayed in entering the Corporation's name in its register of members. The Corporation claimed ownership of 15,790 shares, which vested in it under section 7 of the Life Insurance Corporation Act, 1956. Despite several attempts and correspondence, respondent No. 1 company refused to register the shares in the Corporation's name. The court concluded that respondent No. 1 company indeed caused unnecessary delay and defaulted in entering the Corporation's name, thereby justifying the need for rectification under section 155 of the Companies Act.
2. Proper Remedy Under Section 111:
Respondent No. 1 company argued that the Corporation should have filed an appeal under section 111 of the Companies Act instead of a petition under section 155. The court rejected this argument, stating that the jurisdiction under section 155 is independent of section 111. The Corporation had initially filed an appeal under section 111 but abandoned it due to a suit filed by respondent No. 1 company in the Calcutta High Court. The court held that it was not necessary for the Corporation to file another appeal under section 111 after the dismissal of the suit and that the petition under section 155 was appropriate.
3. Compliance with Section 108:
Respondent No. 1 company contended that the Corporation did not comply with section 108 of the Companies Act, which requires a duly stamped and executed instrument of transfer. The court noted that the shares vested in the Corporation by operation of law, not by an act of parties, and thus, section 108 did not apply. The court emphasized that the second proviso to section 108(1) allows for the registration of shares transmitted by operation of law without the need for a stamped instrument of transfer. The court found that the Corporation's case fell under this proviso, and respondent No. 1 company's refusal to register the shares was unjustified.
Conclusion:
The court allowed the petition and directed respondent No. 1 company to rectify its register of members by entering the Corporation's name in respect of the shares and deleting the names of respondents Nos. 2 and 3. The court also directed respondent No. 1 company to file the notice of rectification with the Registrar of Companies, Calcutta, within 30 days. Additionally, the court ordered respondent No. 1 company to pay the Corporation's costs, quantified at Rs. 250, due to the unnecessary delay caused.
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1966 (4) TMI 40
Issues Involved
1. Whether the contract was ultra vires the plaintiff company.
2. Whether the defendants could raise the ultra vires defense.
3. Whether the chairman acted on behalf of the plaintiff company.
Detailed Analysis
Issue 1: Whether the contract was ultra vires the plaintiff company
The plaintiff company, a private company limited by shares, engaged in a contract to introduce a financier to the defendants for a commission of lb20,000. The defendants argued that the contract was ultra vires the plaintiff company, as it was not authorized by the objects clause in the company's memorandum of association. The court examined clause 3 of the memorandum, which included sub-clauses (a), (b), (c), (q), and (u). Sub-clause (c) allowed the company to "carry on any other trade or business whatsoever which can, in the opinion of the board of directors, be advantageously carried on by the company in connection with or as ancillary to any of the above businesses or the general business of the company." The court concluded that the contract was intra vires under sub-clauses (c), (q), and (u), as it was ancillary to the company's general business and advantageous in the opinion of the chairman, who had delegated authority.
Issue 2: Whether the defendants could raise the ultra vires defense
The defendants raised the ultra vires defense at the last moment, arguing that the contract was void as it was beyond the company's powers. The court found that since the contract was intra vires, the question of whether the defense could be raised did not arise. The court noted that the authorities cited by the defendants, such as Ashbury Railway Carriage & Iron Co. Ltd. v. Riche, were not applicable as the contract was within the company's powers. The court emphasized that the opinion of the directors, if bona fide, was sufficient to decide the matter.
Issue 3: Whether the chairman acted on behalf of the plaintiff company
The defendants argued that the chairman acted on his own behalf and not on behalf of the plaintiff company. The court found this argument untenable, as the chairman was authorized by a resolution of the board of directors to conduct the administration of the company's business. The chairman's actions and letters were consistent with acting on behalf of the company. The court concluded that the contract was made with the plaintiff company through the chairman, who had the necessary authority.
Conclusion
The court allowed the appeal, deciding in favor of the plaintiff company. The contract was intra vires and within the company's powers under its memorandum of association. The ultra vires defense raised by the defendants was not applicable, and the chairman acted on behalf of the plaintiff company in entering the contract. The court did not find it necessary to address the question of whether the ultra vires defense could be raised if the contract had been ultra vires, as the contract was found to be intra vires.
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1966 (4) TMI 19
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the reassessment proceedings under section 17(b) of the Wealth-tax Act were not validly initiated and in setting aside the same ?
Held that:- In the present case the Wealth-tax Officer issued notices before that decision was known to him and the question is whether, in the circumstances, in view of the later decisions of the High Courts to which we have referred, a question of law arose or not. The language of section 17(b) of the Act is pari materia with the language of section 34(1)(b) of the Income-tax Act and therefore the decisions under section 34(1)(b), ibid., would be relevant in construing the scope and effect of section 17(b) of the Act. There does appear to be divergence of opinion among the High Courts as to the meaning of the word " information " in section 34(1)(b) of the Income-tax Act, and in view of that divergence we are of opinion that a question of law did arise in the present case as to the interpretation of the word " information " in section 17(b) of the Act and should have been referred by the Tribunal.
We therefore allow the appeals, set aside the order of the High Court and direct the Tribunal to state a case referring the question of law arising in these cases in the form suggested by the appellant. The Tribunal will be free to decide whether to refer the matter to the High Court under section 27(1) or to this court under section 27(3A) of the Act
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1966 (4) TMI 18
Whether the dividend income of ₹ 11,09,332 received from the Binod Mills was chargeable under the War Profits Tax Ordinance ?
Held that:- There is no doubt that Ordinance 2002 did purport to add this Explanation to rule 3(2) but it seems to us that if we look at the language of the Explanation it was meant to be an Explanation not only to rule 3(2) but to rule 3(1) also. First, the words " the income from investments to be included in the profits of the business under the provisions of this rule " are comprehensive and include income from investments both under rule 3(1) and rule 3(2). Secondly, there is no reason why any distinction should have been made between investments mentioned in rule 3(1) and investments mentioned in rule 3(2). Rule 3(1) is general and deals with all investments from profits of all businesses and would include investments mentioned in rule 3(2). Rule 3(2) deals with investments of a certain business, i.e., business which consists wholly or mainly in the dealing in or holding of investments. We have not been able to appreciate why, if Mr. Shroff is right, it was necessary to distinguish between income from investments mentioned in rule 3(1) and income from investments mentioned in rule 3(2). At any rate, the language of the Explanation is quite clear and it seems to us that by the words " in rule 3(2) of the First Schedule to the Ordinance, the following shall be added " what was really meant was to add the Explanation below rule 3(2). Appeal dismissed
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1966 (4) TMI 17
Issues:
1. Validity of seizing and adjusting deposited moneys by the Collector of Customs.
2. Interpretation of relevant sections of the Customs Act, 1962 regarding duty levies and recovery.
3. Application of section 147 in determining the liability of agents in duty recovery.
4. Comparison of provisions under the Customs Act, 1962 with the Sea Customs Act, 1878.
5. Availability of alternative remedies and the court's jurisdiction in issuing writs.
Analysis:
Issue 1: Validity of seizing and adjusting deposited moneys
The petitioners filed two writ petitions challenging the Collector of Customs' action of seizing and adjusting deposited moneys towards a time-barred claim. The first petition sought a Writ of Prohibition, while the second petition requested a Writ of Certiorari to quash the order. The court noted the actions taken by the Collector and the subsequent filing of the petitions due to the adjustment of the amount.
Issue 2: Interpretation of Customs Act provisions
The court analyzed the relevant sections of the Customs Act, 1962, particularly Section 12, 28, and 147. It highlighted that duty levies can only be made by authority of law, and the procedure for recovery of unpaid duty is outlined in Section 28. The court emphasized the necessity of serving notices within six months from the relevant date for duty recovery, as prescribed by the Act.
Issue 3: Application of section 147 in agent liability
Section 147 of the Act addresses the liability of agents in duty recovery. The court explained that recovery from an agent is permissible only if the duty cannot be recovered from the owner, importer, or exporter. However, such recovery must adhere to the provisions of Section 28, ensuring due process in collecting unpaid duties.
Issue 4: Comparison with Sea Customs Act, 1878
The court referred to Section 39 of the old Sea Customs Act, 1878, to draw parallels with the current provisions. It discussed the liability to pay customs duty and the bar of limitation for duty recovery. Citing a Bombay High Court decision, the court affirmed that both the liability and the remedy for unpaid duty become extinguished after the specified period.
Issue 5: Alternative remedies and court jurisdiction
While acknowledging the availability of alternative remedies, the court asserted its jurisdiction to issue writs in cases of unjustified and illegal actions. Despite the lack of exhaustion of alternative remedies, the court deemed the adjustment of the amount as unjustified and allowed the writ petition, setting aside the Collector's order and granting costs to the petitioners.
In conclusion, the court upheld the petitioners' challenge against the Collector's actions, emphasizing the importance of procedural compliance and the limitations on duty recovery under the Customs Act. The judgment highlighted the need for adherence to statutory provisions and the court's authority to intervene in cases of unjust actions, ultimately ruling in favor of the petitioners in the second writ petition.
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1966 (4) TMI 16
ITO demanded advance payment of income-tax u/s 18A - assessee contend that the sum of Rs. 7,415-5-0 out of the amount which the company was entitled to receive as refund was adjusted by the ITO towards the payment of advance tax - ITO levied interest for default in payment of advance tax - held that interest charged on balance due after adjustment of refund was justified
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1966 (4) TMI 15
Basic ingredients of speculative transactions are that the contracts are to be periodically or ultimately settled, and, the settlement would be otherwise than by actual delivery or transfer of commodity - there is no finding that there was any settlement of the contracts of purchase and sale and therefore one of the vital limbs of Expln. 2 to s. 24(1) of the IT Act is not found -transaction cannot brought within the mischief of a speculative transaction.
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1966 (4) TMI 14
Assessee agreed to pay office allowance to managing agents - amount shown in balance-sheet as trading liability the money due to agents in previous year - later agents agreed to forego the amount - this amount was shown in assessee`s books as miscellaneous receipts - remission of previous liability is not a trading receipt and cannot be included in total income
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1966 (4) TMI 13
Issues:
- Whether the assessee was entitled to claim a sum of Rs. 8,324 as a bad debt for the assessment year 1959-60?
- Whether the debt concerned is a bad debt?
- If so, at what point of time did it become a bad debt?
Analysis:
The case involved a dispute regarding the claim of a sum of Rs. 8,324 as a bad debt for the assessment year 1959-60 by the assessee-company, United Industrial Corporation (Agencies) Private Ltd., Hyderabad. The debt in question arose from transactions with Messrs. Chinoy Challani and Co., where a substantial amount became due from the debtor to the assessee. The debtor expressed inability to pay due to financial circumstances, leading to a settlement offer of Rs. 249-4-4, which the assessee accepted and wrote off the remaining amount as bad debt in its accounts.
The Income-tax Officer initially disallowed the claim of bad debt, citing lack of legal action taken by the assessee and the debt being time-barred. The Appellate Assistant Commissioner partially allowed the claim, acknowledging a portion of the debt as bad. The Tribunal, however, dismissed the appeal on grounds including failure to write off the debt despite indications of irrecoverability and lack of evidence of recovery hopes between 1956 and 1958.
The main legal questions revolved around whether the debt was indeed a bad debt and when it became irrecoverable. The courts emphasized that determining bad debt status and timing are factual inquiries, not purely legal matters. The relevant provisions of the Income-tax Act, specifically section 10(2)(xi), were crucial in assessing the allowance for bad and doubtful debts, with conditions specifying the irrecoverability of debts in the relevant accounting year.
Citing precedents, the courts highlighted that the status of a debt as bad and the timing of its irrecoverability are fact-specific inquiries, requiring consideration of all relevant circumstances. The Tribunal's findings, based on evidence including correspondence indicating financial difficulties of the debtor, were deemed sufficient to support the conclusion that the debt had become bad within the relevant accounting year.
In conclusion, the court answered the questions in the negative, favoring the department, and awarded costs to the same. The decision underscored the factual nature of determining bad debts and the importance of evidence and circumstances in such assessments, emphasizing the need for honest judgment by the assessee regarding debt status and recoverability.
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1966 (4) TMI 12
Issues:
Interpretation of section 23A of the Indian Income-tax Act regarding the distribution of dividends among shareholders for the assessment year 1954-55.
Analysis:
The judgment involved a banking company's appeal regarding the Income-tax Appellate Tribunal's decision to deem a certain amount as distributed dividends among shareholders for the assessment year 1954-55 under section 23A of the Indian Income-tax Act. The Tribunal considered the accumulated profits of the three preceding years to determine the reasonableness of not declaring dividends for the year 1953. However, the High Court held that section 23A only requires consideration of the profit of the specific previous year, not the cumulative profits of preceding years. The Court emphasized that the commercial profit for the specific year should be the basis for assessing the need for dividend distribution, as highlighted in previous Supreme Court judgments.
The Court clarified that the Income-tax Officer's assessment under section 23A should focus on the company's commercial profit for the particular previous year and losses from preceding years. The judgment highlighted that the reasonableness of dividend distribution should be judged based on business considerations, such as past losses, present profits, and future financial requirements. The Court noted that the Tribunal erred in considering the accumulated profits of previous years to justify deeming dividends distributed for the year in question.
Furthermore, the Court addressed the deduction of amounts transferred to the reserve fund under section 17 of the Banking Companies Act from the accounting profit before determining dividend distribution. It explained that the statutory requirement to transfer a portion of profits to the reserve fund should be considered before assessing the net profit available for dividends. The Court also rejected the argument that the capital structure of the company, or the potential dividend amounts for specific shareholders, should influence the decision under section 23A.
Ultimately, the High Court ruled in favor of the assessee, stating that the Income-tax Appellate Tribunal was not justified in deeming any profit as distributed dividends among shareholders for the assessment year 1954-55. The Court emphasized the importance of considering the overall financial position of the company before applying section 23A. The judgment concluded by disposing of the reference in favor of the assessee and awarding costs against the Commissioner of Income-tax, Bihar and Orissa.
In a separate opinion, Justice S. N. P. Singh agreed with the decision to answer the question in favor of the assessee, supporting the main judgment's analysis and conclusion.
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1966 (4) TMI 11
Whenever any fund, however small, is found available for distribution as dividend, its non-distribution will amount to an unreasonable Act on the part of the company - provisions of s. 23A of the IT Act have not been properly applied according to law to the assessee-company by the Appellate Tribunal
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1966 (4) TMI 10
Change in constitution of firm - expression "on behalf of" as used in s. 21 of the WT Act was not synonymous with the expression "for the benefit of" - That a trustee does not hold the trust property on behalf of the beneficiary, but he holds that only for their benefit. Therefore trustee was not assessable u/s 21
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1966 (4) TMI 9
Application filed under s. 26A for registration of a partnership - Where the Appellate Tribunal in appeal finds that the petition of the assessee under section 26A was invalid, whether the Tribunal had jurisdiction to dismiss the assessee's application on this ground
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1966 (4) TMI 8
Interest On Securities - held that personal and private income of the assessee which has been brought to tax under the Patiala IT Act, 2001 was exempt because he was the Ruler of the former Faridkot State - assessee was not liable to pay income-tax on the amount of interest on Govt. securities
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1966 (4) TMI 7
It was not open to the petitioner to have waited till after the attachment order, etc., had been issued for filing objections as contemplated by cl. (vi) of s. 226(3) of the Income Tax Act, 1961 Act - Once he sent his objections earlier which were not supported by an affidavit which were rejected and the attachment proceedings were taken, it was too late for the petitioner to take advantage of the provisions contained in cl. (vi)
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1966 (4) TMI 6
Petitioner, a public company incorporated in the former State of Bhopal, prays that the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment) Order, 1962, be declared ultra vires, inoperative, seeks a writ of certiorari for quashing assessments of income-tax made on it and, as also the assessments made
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9911796707
