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Case Laws
Showing 161 to 180 of 1090 Records
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1971 (11) TMI 27
Whether the firm is entitled to continuation of registration - partnership continues after death of a partner - When a partner is replaced by another, as per the partnership deed without the firm being dissolved, there is a change in the constitution of the firm for the purpose of s. 184(7) of Income-tax Act, 1961 therefore, question referred to us is answered in favour of the department and against the assessee
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1971 (11) TMI 26
Madras Agricultural Income Tax Act - revision application before Commissioner -petitioner was within time in filing the revision before the Commissioner, he could agitate the subject-matter on which he failed to raise an issue before the first appellate or the second appellate authorities under the Act. The rule nisi is discharged. The petition is dismissed
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1971 (11) TMI 25
Agreement with the English company to use patented process of manufacture - payment towards royalty is of capital nature not of revenue - acquisition of knowledge in respect of the new product, amount to acquisition of an advantage of an asset for extension of assessee's business
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1971 (11) TMI 24
Petitioner applies under article 226 of the Constitution against recovery proceedings taken by the Income-tax Officer and the Tax Recovery Officer - petitioner says that the impugned recovery proceeding is not sanctioned by any existing recovery certificate respondents contend that the certificates in the present case could be said to have been cancelled and not withdrawn, and, therefore, the action of the Income-tax Officer cannot be referred to section 224(2) - Whether the order can be attributed to sub-section (2) or sub-section (3) of section 224, it plainly appears that the said order was passed by the Income-tax Officer. In our opinion, the Tax Recovery Officer was bound, without anything more, to terminate the recovery proceedings altogether.
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1971 (11) TMI 23
Society established for charitable purposes - exemption granted under section 4(3)(i) mere for the reason that society has been given power to carry on business, exemption cannot be denied because business were intended to carry out its main objects which were charitable in nature
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1971 (11) TMI 22
Issues Involved:
1. Validity of the notice under Rule 73 of the Second Schedule of the Income-tax Act.
2. Requirement of naming the petitioner in the certificate under Section 222 of the Income-tax Act.
3. Jurisdiction of the Tax Recovery Officer to proceed against the petitioner based on the certificate naming only the firm.
4. Applicability of the coercive process under the Second Schedule to individual partners of a firm.
Detailed Analysis:
1. Validity of the notice under Rule 73 of the Second Schedule of the Income-tax Act:
The petitioner argued that the notice issued under Rule 73 is devoid of jurisdiction because he is not a defaulter within the meaning of Rule 1 of the Second Schedule. The court examined the provisions of the Second Schedule and concluded that the Tax Recovery Officer's competence to act under the Schedule is limited to the assessee named in the certificate. The court emphasized that the omission of the assessee named in the certificate to comply with the direction as to payment in accordance with the notice served under Rule 2 is an essential prerequisite for the exercise of the power by the Tax Recovery Officer. The coercive process under Schedule 2 is not to be invoked against any person other than the assessee named in the certificate and except after he has failed and neglected to satisfy the demand before the expiry of 15 days from the date of service of notice.
2. Requirement of naming the petitioner in the certificate under Section 222 of the Income-tax Act:
The petitioner contended that the certificate issued under Section 222 of the Act mentions the name of the firm alone as the defaulter. The court noted that the definition of "defaulter" in Rule 1 is clear and express, stating that it is only the person named in the certificate that can be treated as a defaulter. The court held that the mandatory requirement is that there should be notice to the defaulter under Rule 2 before further action can be taken. The court rejected the doctrine of constructive notice, stating that actual notice to the assessee is required, not constructive notice which may be imputed to him in his capacity as a partner.
3. Jurisdiction of the Tax Recovery Officer to proceed against the petitioner based on the certificate naming only the firm:
The court examined whether a partner can be proceeded against or be detained in civil prison under the Second Schedule on the strength of a certificate that has named the firm alone as the assessee. The court concluded that the Tax Recovery Officer's competence is attributable only to the certificate, which is the foundation of his jurisdiction to proceed against the assessee's person or property. The court held that the coercive process of recovery specified in Schedule 2 can be applied only on the proved default or omission of the person against whom a coercive process is sought. Therefore, the Tax Recovery Officer cannot proceed against the petitioner on the strength of a certificate naming only the firm.
4. Applicability of the coercive process under the Second Schedule to individual partners of a firm:
The court examined the argument that all partners are jointly and severally liable for the tax and that naming the firm in the certificate is tantamount to naming all the partners. The court rejected this argument, stating that the arrest and detention in civil prison can be ordered only on proof of deliberate or wilful or culpable avoidance of the obligation to pay the tax by the individual partner. The court held that the scheme of the enactment is incompatible with the idea that a partner can be subjected to arrest and detention in civil prison on the strength of a certificate which does not name him eo nomine as the assessee.
Conclusion:
The court held that the notice issued under Rule 73 on August 21, 1971, is ultra vires and has to be quashed. The court directed that it is open to the Income-tax Officer to amend the certificate already issued by him, naming the individual partner also as a defaulter. The rule nisi was made absolute, and each party was directed to bear its own costs.
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1971 (11) TMI 21
Rent paid for obtaining lease deduction allowed initially but officer proposed to deny the benefit subsequently due to certain decisions of SC - Whether subsequently the assessment can be reopened it cannot be said with certainty that there is no material on which the Income-tax Officer has acted and this is not a case where the notice was issued without jurisdiction or without statutory authority
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1971 (11) TMI 20
Rebate given to a firm for export - Whether Tribunal is justified in law in directing that export profit rebate has to be allowed to the assessee-firm also in addition to that allowed to the partners - question referred to us has to be answered in the affirmative, that is, against the department and in favour of the assessee - firm and the partners will be entitled to the benefit of rebate under section 2(5)(i)
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1971 (11) TMI 19
Whether the amount was liable to be taxed as deemed profit under section 10(2A) of the Indian Income-tax Act, 1922 - case of the assessee was that section 10(2A) of the Act had no application - sub-section (2A) of section 10 of the Act envisages an actual allowance or deduction and not a notional one and, in so far as there was no actual allowance or deduction in the assessment for any year in question, the sub-section shall have no application to the facts of the case
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1971 (11) TMI 18
Penalty - Finding of fact - if, on the material before it, the Tribunal refused to draw the inference that there was concealment, its finding was purely one of fact on which no reference was permissible - Tribunal was quite justified in rejecting the application of the Commissioner for a reference under section 256(2), on the ground that whether there was concealment or not was a question of fact
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1971 (11) TMI 17
Principle of natural justice - doctrine of natural justice cannot be approached in a doctrinaire spirit, but is purely dependent upon established and proved facts. Violation of the principles of natural justice is never assumed ; but has to be traced to existing and acceptable material, and can never be sustained, nor can it exist, in the abstract - Once the authority has the jurisdiction to act and once the impugned notice flows from such jurisdiction vested in a competent officer, this court cannot interdict him at the threshold and quash the proceedings on the assumption that they are totally devoid of jurisdiction in the eye of law
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1971 (11) TMI 16
The petitioner is Sree Shanmughar Mills, Rajapalayam, represented by the official liquidator, Madras. For the years 1948-49 to 1953-54 the revenue did not accept the books of account of the company and had therefore to assess the company under the best judgment method. - Held that the rule nisi in each of these writ petitions is made absolute and the writ petitions are allowed -
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1971 (11) TMI 15
"Whether, on the facts and in the circumstances of the case, and on a true construction of the deed dated March 22, 1963, the Tribunal was right in holding that the deed does not evidence a transfer otherwise than for adequate consideration within the meaning of section 64(iv) of the Income-tax Act ?" - We hold that the income accruing from the property transferred by the document in question is income which has to be included in the income of the assessee and assessed as such.
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1971 (11) TMI 14
Petitioner is a public and charitable trust - statutory conditions for exemption of accumulation prescribing the time limit, laid down in paragraphs 2 and 4 in Form No. 10 issued under rule 17 whether these are ultra vires as the rule-making authority has exceeded its limit in including in the Form these paragraphs held, yes
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1971 (11) TMI 13
Issues:
1. Whether the petitioner is liable to pay income tax for 29.37 acres of land taken over by the Government under the Madras Land Reforms Act.
2. Interpretation of the proviso to section 10(1) of the Agricultural Income-tax Act regarding exemption from assessment based on land holding.
3. Application of the definition of "to hold" in both the Madras Land Reforms Act and the Agricultural Income-tax Act.
4. Determining ownership and possession of land for taxation purposes under the Land Reforms Act and the Income-tax Act.
Analysis:
The petitioner, an assessee under the Agricultural Income-tax Officer, contested the inclusion of 29.37 acres of land taken over by the Government under the Madras Land Reforms Act in the income tax assessment. The petitioner argued that as per the Land Reforms Act, he was not entitled to hold the excess land after the Act's commencement in 1960. The petitioner's possession of the land did not equate to ownership, a crucial distinction under the Acts, impacting tax liability. The Commissioner upheld the Income-tax Officer's decision based on the proviso to section 10(1) of the Agricultural Income-tax Act, which restricts exemption for land held beyond the ceiling limit, even if not owned for the full financial year. However, the petitioner's possession post-Land Reforms Act commencement did not constitute ownership, affecting tax liability under the Acts.
The Madras Land Reforms Act aimed to limit agricultural land holdings, aligning with constitutional principles. The Act defined "to hold land" as ownership, a term echoed in the Agricultural Income-tax Act. Ownership's legal significance was crucial in determining tax liability post-Land Reforms Act enforcement. The petitioner's inability to hold the excess land as an owner post-1960 impacted tax obligations, emphasizing the legal distinction between possession and ownership under the Acts. The judgment highlighted the legal concept of ownership's universal understanding and its relevance in taxation matters under the Acts.
The interpretation of the proviso to section 10(1) of the Agricultural Income-tax Act was pivotal in assessing the petitioner's tax liability. The proviso restricted exemption for land held beyond the ceiling limit, emphasizing ownership as a determining factor. The petitioner's possession of the excess land post-Land Reforms Act commencement did not confer ownership, affecting tax liability under the Acts. The judgment emphasized the legal distinction between possession and ownership, crucial in determining tax obligations under the Acts.
The judgment concluded that the petitioner's possession of the excess land post-Land Reforms Act commencement did not constitute ownership, impacting tax liability under the Acts. The Income-tax Officer's decision was deemed erroneous, as possession alone did not establish ownership for taxation purposes. The petitioner's application for tax reduction based on the land's status under the Land Reforms Act was upheld, directing the Officer to reconsider the tax amount in line with the legal principles outlined in the judgment. The ruling favored the petitioner, emphasizing the legal distinction between possession and ownership in determining tax liability under the Acts.
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1971 (11) TMI 12
Gift Tax Act, 1958 - whether the gift by a karta of the Hindu undivided family to the coparceners and persons who are not coparceners is void ab initio - Tribunal has taken the view that the gift is void - Tribunal was right in holding that the gift in the instant case was void and the contention of the learned counsel for the department that the gift is voidable cannot be supported either on authority or on principle
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1971 (11) TMI 11
Rebate - industrial undertaking - new factory was set-up by splitting up of the business already in existence - interpretation of section 84 of the Income-tax Act, 1961, which was deleted by the Finance (No. 2) Act, 1967, with effect from the 1st April, 1968 claim for exemption under section 84(1) of Income-tax Act, 1961 is not accepted
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1971 (11) TMI 10
Gift Tax Act, 1958 conversion of proprietor business into firm by taking children as partners control was retained on the business - since test of commercial expediency was not satisfied, assessee is not entitled to claim exemption u/s 5(1)(xiv), by treating it as gift
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1971 (11) TMI 9
Issues:
Whether a sum of Rs. 2 lakhs was rightly excluded from the computation of the assessee's wealth based on a claimed gift to a minor son.
Analysis:
The case involved a Hindu undivided family where a sum of Rs. 2 lakhs was purportedly transferred to the minor son, Tej Prakash, and claimed as a gift to be excluded from the family's wealth. The Wealth-tax Officer initially rejected this claim, stating that the transfer did not legally constitute a gift to the minor. However, the Appellate Tribunal later deemed the transfer as a valid gift, leading to the current reference to the High Court for opinion.
The Tribunal found that on the date of the alleged gift, the available cash balance with the assessee was significantly lower than the claimed gift amount, with no evidence that negotiable assets of equivalent value were gifted. Additionally, the funds were utilized by the family for business purposes, and no interest was paid to the minor donee until years later. The High Court emphasized that the mere book entry transferring the amount did not constitute a valid gift, especially considering the lack of intention to transfer the funds out of the family assets.
Furthermore, the court highlighted the absence of evidence regarding the acceptance of the gift by the minor's guardian, essential for a valid gift transaction. It was noted that the donor and the donee were not separate entities, raising doubts about the legitimacy of the alleged gift. Without proper acceptance and clear intent to transfer ownership, the court concluded that no valid gift had been made by the family to the minor son, Tej Prakash.
Ultimately, based on the facts and circumstances presented, the High Court opined that the sum of Rs. 2 lakhs could not be excluded from the computation of the assessee's wealth. The court ruled against the exclusion of the amount, emphasizing the lack of evidence supporting a genuine gift transaction. The reference was allowed with costs, and the counsel's fee was assessed accordingly.
In conclusion, the High Court's judgment focused on the essential elements of a valid gift, including intention, acceptance, and genuine transfer of ownership, ultimately determining that the claimed transfer did not meet the legal criteria for exclusion from the family's wealth computation.
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1971 (11) TMI 8
Issues: Valuation of property for wealth-tax purposes
Analysis:
The judgment of the court revolves around the valuation of a property for wealth-tax assessment for the years 1957-58 to 1960-61. The property in question comprises 36,936 sq. yards of land in Ahmedabad, which previously housed a cotton mill along with some old buildings. The dispute arose when the Wealth-tax Officer valued the property at eighteen lakhs of rupees, rejecting the partition deed and an agreement indicating a lower value. The Appellate Assistant Commissioner also disregarded the agreements and valued the property at Rs. 13.25 lakhs, considering the land at Rs. 23 per sq. yard. The Tribunal, while acknowledging the expert's valuation of the buildings, rejected their land valuation and upheld the Appellate Assistant Commissioner's total valuation based on a 7.4% yield. However, the Tribunal did not provide a detailed analysis of the valuation methods used.
The court scrutinized the valuation process undertaken by the authorities. It highlighted that under the Wealth-tax Act, the property's market value on the relevant date must be determined based on evidence, and the burden lies on the authorities to ascertain the true value using accepted valuation principles. Various valuation methods, such as separate valuation of land and super-structures or capital value based on rental income, can be employed. In this case, the experts used both methods and arrived at a similar value. The Appellate Assistant Commissioner accepted the expert's building valuation but arbitrarily valued the land at Rs. 23 per sq. yard without providing a rationale or evidence for this decision.
The court further emphasized that while the expert's valuation is not binding, if authorities choose to disregard it, an alternative valuation must be based on concrete evidence. In this instance, the Appellate Assistant Commissioner's valuation lacked justification for valuing the land at Rs. 23 per sq. yard. The Tribunal failed to critically assess the correctness of this valuation and merely upheld it based on the yield percentage, without delving into the valuation methods used or the evidence presented. Consequently, the court found that the Tribunal's affirmation of the Appellate Assistant Commissioner's valuation lacked substantiation and ruled in favor of the assessee, emphasizing the necessity for valuation decisions to be supported by valid reasoning and evidence.
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9911796707
