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Showing 221 to 240 of 3414 Records
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1990 (12) TMI 71
The High Court of Madhya Pradesh rejected an application under section 256 of the Income-tax Act, 1961, regarding the taxability of sales tax subsidy received by the assessee from the Madhya Pradesh Government. The court cited a previous case where it was held that such subsidies were not taxable as revenue receipts but as incentives for capital investment. Therefore, the application was rejected.
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1990 (12) TMI 70
Issues:
1. Proper service of notice under section 6(2) of the Act to a minor.
2. Failure to appoint a court guardian for representation of the minor during proceedings before the Competent Authority.
Detailed Analysis:
Issue 1:
The judgment involves two connected appeals against the same order of the Competent Authority, Madras, dated February 16, 1990. The first appellant, Kalyanasundaram, was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, and received a notice under section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, regarding certain properties. The properties were ostensibly owned by his minor son, Sethuraman, who was served a notice under section 6(2) through Kalyanasundaram. However, Kalyanasundaram refused to accept the notice, leading to a dispute about proper service on the minor. The Competent Authority proceeded to forfeit the properties without ensuring proper service on Sethuraman, the minor. The court held that the failure to serve a notice under section 6(2) to the minor was fatal to the proceedings, and the order of the Competent Authority was set aside on this ground.
Issue 2:
The judgment further delves into the Competent Authority's failure to appoint a court guardian for the representation of the minor, Sethuraman, during the proceedings. Despite Sethuraman becoming a major during the pendency of the case, he did not participate in the proceedings. The court emphasized that in such situations, it was incumbent upon the Competent Authority to make appropriate arrangements for proper representation on behalf of the minor, either through the natural guardian or by appointing a court guardian. The failure to appoint a court guardian or ensure proper representation for the minor was deemed a serious lapse, leading to the setting aside of the Competent Authority's order. The court directed the Competent Authority to decide the matter afresh, with both appellants required to appear before the authority on a specified date for further proceedings.
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1990 (12) TMI 69
The High Court of Allahabad directed the Tribunal to state three questions for its opinion under section 256(2) of the Income-tax Act. The questions relate to the justification of carrying forward depreciation losses, the interpretation of specific provisions of the Income-tax Act, and the allowance of unabsorbed depreciation for a firm or its partners. The income-tax application was allowed.
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1990 (12) TMI 68
The High Court of Allahabad ruled that the gross dividend, not the net dividend after deductions, was deductible from the total income of the assessee for computing chargeable profits under the Companies (Profits) Surtax Act, 1964. The judgment was delivered by B. P. JEEVAN REDDY C. J. The court answered the question in favor of the Revenue and against the assessee, citing the Distributors (Baroda) P. Ltd. v. Union of India case.
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1990 (12) TMI 67
The High Court of Allahabad allowed the Income Tax Appeal in part and directed the Tribunal to consider a specific question regarding the jurisdiction of the Commissioner of Income-tax (Appeals) under section 263 of the Income-tax Act, 1961. The question to be considered is whether the Commissioner's directions limit the Commissioner of Income-tax (Appeals) when dealing with appeals against orders of the Income-tax Officer under section 143(3) of the Act.
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1990 (12) TMI 66
The High Court of Allahabad allowed the income-tax appeal, directing the Tribunal to include a third question regarding the applicability of section 43B of the Income-tax Act, 1961. The Tribunal had referred two questions but omitted the third question, which was deemed relevant to the issue at hand. The appeal was allowed with no costs. (Case citation: 1990 (12) TMI 66 - Allahabad High Court)
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1990 (12) TMI 65
The High Court of Allahabad ruled in favor of the assessee regarding questions (i), (ii), and (iii) under section 256(1) of the Income-tax Act, 1961. Questions (iv) and (v) were left unanswered. The decision was influenced by a previous judgment in CIT v. Jananamandal Ltd. [1989] 180 ITR 420.
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1990 (12) TMI 64
The High Court of Allahabad dismissed a writ petition challenging an order of the Commissioner of Income-tax under section 264 of the Income-tax Act. The petitioner, a partnership firm, filed the return late citing illness of an employee. The Commissioner rejected the request to waive interest, finding that there was ample time to file the return. The court found no merit in the petition and dismissed it without costs.
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1990 (12) TMI 63
The High Court of Allahabad ruled in a case involving the Income-tax Act, 1961. The court found in favor of the Revenue, stating that the additions made by the Income-tax Officer were legally correct. The Tribunal's decision to delete the additions was overturned. The case involved a registered firm with five partners, and the disallowed interest payments to two partners were upheld. The judgment was delivered by B. P. Jeevan Reddy C. J. and V. N. Mehrotra.
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1990 (12) TMI 62
Issues:
Interpretation of Wealth-tax Act - Treatment of unexplained credit entries as assets in partnership firm valuation.
Analysis:
The judgment pertains to three cases with identical facts involving partners in a partnership firm, M/s. Chhittermal Ramdayal, Agra. The main issue raised under section 27(3) of the Wealth-tax Act is whether the addition made by the Wealth-tax Officer for sustained cash credit as part of the assessee's wealth, treating them as assets, was correct. The court examined the valuation of the Hindu undivided family's share in the firm, which included unexplained hundi loans treated as income of the firm. The Appellate Assistant Commissioner accepted the genuineness of the disputed cash credits, subject to future income-tax assessments. Both the assessees and the Revenue filed appeals, leading to the Tribunal's order on the matter.
The Tribunal's decision was based on the genuineness of the credit entries in the firm's books. It considered the creditors' conflicting statements and the issuance of cheques to them. The Revenue argued that bogus credit entries should be deemed as firm assets, while the assessee contended that unproven entries do not constitute firm wealth without evidence of funds at partners' disposal. The valuation of a partner's interest in a firm is governed by Wealth-tax Rules and section 4(1)(b) of the Act, involving the determination of the firm's net wealth and deduction of partners' capital contributions.
The court rejected the argument that unproven credit entries automatically become firm assets, emphasizing the need for funds to be at partners' disposal. It cited a Kerala High Court decision to support the principle that unexplained income in one year does not necessarily constitute wealth in subsequent years. The judgment clarified that while the unexplained credit entries were justified as assets for the assessment year 1964-65, further assessment for subsequent years would depend on the Tribunal's evaluation based on the observations provided. The court directed the Tribunal to consider whether unexplained entries from one year could be considered firm wealth in subsequent years for valuation purposes.
In conclusion, the court upheld the Wealth-tax Officer's additions for unexplained credit entries in the assessment year 1964-65, while leaving the decision for subsequent years to the Tribunal based on the provided guidance.
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1990 (12) TMI 61
Issues Involved:
The judgment involves the issue of whether the liability incurred by the assessee for development expenses in the assessment years 1972-73 and 1973-74 was a contingent liability or a liability in praesenti, impacting the deduction of such expenses under the Income-tax Act, 1961.
Summary:
In the case before the High Court of Allahabad, the assessee, a private limited company engaged in colonisation business in Agra, undertook the development of a colony named "Vibhav Nagar" during the assessment years 1972-73 and 1973-74. The company had deposited sums with the Municipal Committee for development work to be carried out by them, in addition to debiting amounts for development expenses to be undertaken by the company itself.
The Income-tax Officer disallowed the estimated liability for development expenses, stating that it was a contingent liability and not incurred by the assessee. However, the Appellate Assistant Commissioner upheld the disallowance, contrary to a similar claim allowed in a previous year. The Tribunal, considering the case akin to the precedent of Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC), ruled in favor of the assessee, as the expenses were debited only for plots sold in the relevant year, maintaining accounts on a mercantile basis.
The judgment clarifies that under similar circumstances as the Supreme Court decision, the liability for development expenses was not contingent but a liability in praesenti, allowing the deduction of Rs. 14,998 and Rs. 1,04,156 for the respective assessment years 1972-73 and 1973-74. The Tribunal's decision was upheld, favoring the assessee and rejecting the Revenue's appeal.
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1990 (12) TMI 60
Issues:
1. Whether two separate assessments should be made for two distinct periods.
2. Whether the assessee-firm should be considered as reconstituted under section 187(2)(a) of the Income-tax Act, 1961.
Analysis:
The case involved a partnership firm with five partners, where significant changes occurred during the assessment year 1972-73. Following the death of a partner and the retirement of three others on November 1, 1971, leaving only one partner, the firm underwent changes. On the same day, the remaining partner admitted two new partners, and the business continued. The firm maintained two sets of accounts for the periods April 1, 1971, to October 31, 1971, and November 1, 1971, to March 31, 1972. The Income-tax Officer initially made one assessment for the entire year, considering it a reconstitution of the firm and enhancing the income. The assessee contended that separate assessments should be made for the two distinct periods, which was accepted by the Appellate Assistant Commissioner but challenged by the Department.
The key issue before the court was to determine whether the changes in the firm constituted a reconstitution or a succession of one firm by another on November 1, 1971. The court emphasized the provisions of section 187(2) of the Income-tax Act, which define a change in the constitution of a firm. The section specifies that if partners cease to be partners or new partners are admitted, and some of the existing partners continue after the change, it constitutes a reconstitution. The court referred to a previous judgment to support its decision, highlighting that in similar circumstances, it was considered a case of reconstitution.
Ultimately, the court ruled in favor of the Revenue and against the assessee, concluding that the changes in the firm constituted a reconstitution as per the provisions of section 187(2)(a) of the Income-tax Act. The judgment highlighted the importance of the legal definition of reconstitution in determining the tax implications of changes in a partnership firm.
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1990 (12) TMI 59
The High Court of Allahabad ruled in favor of the assessee in a tax penalty case, citing a previous decision that the Inspecting Assistant Commissioner must have jurisdiction both when initiating penalty proceedings and when passing final orders. The court held that the Tribunal was correct in law in this case.
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1990 (12) TMI 58
The High Court of Allahabad held that expenditure on providing food to customers cannot be disallowed as entertainment expenditure under section 37(2B) of the Income-tax Act, 1961. The decision is based on a previous court ruling. Expenditure on providing food to staff is considered admissible under section 37 of the Act. The Tribunal may address any staff-related expenditure in its final orders under section 260 of the Act.
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1990 (12) TMI 57
Issues Involved:
1. Entitlement to allowance of business loss incurred in dacoity.
2. Treatment of a sum as unexplained investment.
3. Jurisdiction to impose penalty under section 271(1)(c) post deletion of section 274(2).
4. Applicability of the Explanation to section 271(1)(c) in penalty proceedings.
Issue-wise Detailed Analysis:
1. Entitlement to Allowance of Business Loss Incurred in Dacoity
The primary issue in Income-tax Reference No. 104 of 1983 was whether the assessee was entitled to claim a business loss of Rs. 35,000 due to a dacoity. The assessee firm, dealing in gold and silver ornaments and coins, claimed that their munim, Hari Narain Prasad, was robbed of silver bars and coins. The Income-tax Officer disbelieved the story of the loss, citing discrepancies in the statements and lack of corroborative evidence. The Tribunal upheld this view, noting that the assessee's books did not support the claim and that the transactions were outside the account books. The High Court agreed with the Tribunal, stating that the findings were based on relevant material and not vitiated by any irrelevant or inadmissible considerations.
2. Treatment of a Sum as Unexplained Investment
The second issue in Income-tax Reference No. 104 of 1983 was whether the Tribunal was correct in treating Rs. 15,000 as an unexplained investment. The assessee claimed this amount was paid to an advocate, R. N. Mani, for silver coins handed over for sale. The Tribunal disbelieved this claim, noting the absence of receipts and the improbability of the transaction given the falling silver prices. The High Court upheld this finding, stating that it was based on substantial evidence and not vitiated by any misdirection in law.
3. Jurisdiction to Impose Penalty under Section 271(1)(c) Post Deletion of Section 274(2)
In Income-tax Reference No. 290 of 1981, the issue was whether the Income-tax Officer had jurisdiction to impose a penalty under section 271(1)(c) after the deletion of section 274(2) from the Act. The Tribunal held that the deletion did not affect the jurisdiction as the matter was referred to the Inspecting Assistant Commissioner before the deletion. The High Court agreed, noting that the deletion of section 274(2) did not retroactively affect cases already referred.
4. Applicability of the Explanation to Section 271(1)(c) in Penalty Proceedings
The Tribunal also addressed whether the Explanation to section 271(1)(c) was applicable, which created a presumption of concealment if the returned income was less than 80% of the assessed income. The Tribunal found that the assessee failed to rebut this presumption. The High Court upheld this finding, noting that the Explanation was applicable to the assessment years during which it was in force and that the Tribunal's finding was not perverse or legally misdirected.
Conclusion
The High Court answered all questions against the assessee and in favor of the Revenue. For the business loss and unexplained investment issues, the Tribunal's findings were upheld as they were based on relevant and substantial evidence. Regarding the penalty proceedings, the jurisdiction of the Income-tax Officer and the applicability of the Explanation to section 271(1)(c) were affirmed, with the High Court finding no misdirection in law or perversity in the Tribunal's conclusions.
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1990 (12) TMI 56
Issues Involved:
The issues involved in the judgment are the challenge to notices issued by income tax authorities under section 143(2) of the Income-tax Act, the interpretation of section 143(1)(a)(i) regarding assessment procedures, the implications of an intimation deemed as a notice of demand under section 156, and the legality of the provisions of section 143(1)(a)(i) in relation to natural justice principles.
Interpretation of Section 143(1)(a)(i):
The petitioners challenged the notices issued under section 143(2) of the Income-tax Act, arguing that the intimation sent to them under section 143(1)(a)(i) after due assessment based on their returns should preclude further proceedings akin to reassessment under sections 147 and 148. However, the court held that the provision of section 143(1)(a)(i) is "Without prejudice" to subsection (2), preserving the authority's right to proceed with assessment under section 143(2) despite the intimation of tax payable. The court emphasized that the purpose of deeming the intimation as a notice of demand under section 156 is to apply the machinery provision of tax recovery, without limiting the authority's power to conduct assessments under section 143(2).
Implications of Deemed Notice of Demand:
The court rejected the argument that the intimation under section 143(1)(a)(i) should conclude assessment proceedings, subject only to reopening under section 147, emphasizing that the intimation being deemed as a notice of demand under section 156 does not restrict the authority from proceeding under section 143(2) for a regular assessment. The court clarified that the intimation's purpose is to make tax recovery provisions applicable and does not limit the authority's assessment powers.
Legality of Section 143(1)(a)(i) in Relation to Natural Justice:
Regarding the contention that section 143(1)(a)(i) is ultra vires due to contravening natural justice principles by not providing an opportunity to address adverse consequences before issuing the intimation, the court reasoned that the intimation is based on the assessee's own return. Only apparent arithmetical errors or clear adjustments can be made at this stage, without adjudicating on debatable issues. The court dismissed this argument, stating that the intimation process does not violate natural justice principles as it is limited to correcting evident errors based on the information accompanying the return.
In conclusion, the court dismissed the petition based on the above interpretations and reasoning, upholding the authority's right to proceed with assessments under section 143(2) despite the intimation of tax payable under section 143(1)(a)(i).
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1990 (12) TMI 55
Issues:
1. Interpretation of section 155(3) of the Income-tax Act, 1961 regarding rectification of income-tax assessment orders.
2. Applicability of section 155(3) in a case where excess profits tax liability was allowed as a deduction but later quashed by the court.
3. Understanding the term "payable" versus "liable" in the context of income-tax proceedings.
4. Interpretation of the term "modified" in section 155(3) concerning changes in excess profits tax liability.
5. Whether a writ proceeding falls under the category of "any other proceeding" as mentioned in section 155(3).
Detailed Analysis:
1. The judgment by the High Court of Allahabad dealt with the interpretation of section 155(3) of the Income-tax Act, 1961, which allows for the rectification of income-tax assessment orders in specific situations.
2. In this case, the issue was whether section 155(3) applied when excess profits tax liability, initially allowed as a deduction, was later challenged and quashed by the court.
3. The court analyzed the difference between "payable" and "liable" in the context of tax proceedings, emphasizing that the word "payable" in section 155(3) referred to the actual amount due for payment, not just the existence of a liability.
4. Regarding the term "modified" in section 155(3), the court rejected the argument that it only encompassed variations in tax liability, stating that total withdrawal or cancellation of tax liability also fell under the definition of "modified."
5. The court also addressed the inclusion of writ proceedings as "any other proceeding" under section 155(3), concluding that a writ proceeding did fall within the scope of the phrase.
In conclusion, the High Court ruled in favor of the Revenue, holding that section 155(3) did not apply in the case where excess profits tax liability was quashed, as the tax became not payable. The court emphasized the need for a reasonable interpretation of the provision based on its underlying objective and language, rather than strict construction in a taxing statute.
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1990 (12) TMI 54
The High Court of Allahabad ruled in favor of the Revenue and against the assessee in a case involving the assessment of a partnership firm for the year 1973-74. The court held that two separate assessments should have been made due to a change in the firm's constitution. The decision was based on the provisions of section 187(2) of the Income Tax Act, 1961. (Case citation: 1990 (12) TMI 54 - ALLAHABAD High Court)
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1990 (12) TMI 53
The High Court of Allahabad ruled that 'Rasoi' expenses of Rs. 13,394 were disallowable under section 37(2B) of the Income-tax Act, 1961, based on the Full Bench decision in Phool Chand Gajanand v. CIT [1989] 177 ITR 265.
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1990 (12) TMI 52
Issues: Detention under COFEPOSA Act, Competent Authority's notice under SFEM Act, Forfeiture of properties under SFEM Act, Source of investment for specific properties, Appeal against forfeiture order.
In this case, the appellant was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, making him an affected person under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act. The Competent Authority issued a notice under the SFEM Act regarding various properties owned by the appellant. The Authority was satisfied with the source of investment for most properties but initiated proceedings under section 7 of the Act for three specific properties. The appellant contested the forfeiture of these properties, arguing that his income from agricultural land and a sum received from his brother in Singapore were legitimate sources for the property purchases. The appellant provided evidence of his agricultural income through sale receipts and a bank passbook showing the receipt of funds from his brother. However, the bank could not confirm if the funds were from Singapore due to missing records. Despite this, the appellant had disclosed the property purchase to the income tax authorities, and it was accepted during assessment. The absence of contrary evidence led the court to conclude that the funds for the property purchase were from legal sources. Consequently, the court allowed the appeal, setting aside the Competent Authority's forfeiture order.
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