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Showing 261 to 280 of 3414 Records
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1990 (12) TMI 31
Issues:
Assessment of gratuity liability deduction under section 40A(7) of the Income-tax Act, 1961 for the assessment year 1973-74.
Analysis:
The case involved the assessee, a registered firm, claiming a deduction of Rs. 1,96,402 towards gratuity liability during the assessment year 1973-74. The Income-tax Officer allowed only Rs. 30,328 of the claim, disallowing the rest. The Appellate Assistant Commissioner upheld the disallowance, stating that gratuity liability can only be allowed if conditions under section 40A(7) of the Income-tax Act are met. The Tribunal affirmed the decision, stating that only the incremental liability relevant to the assessment year can be deducted. The key issue was whether the disallowance of the gratuity claim by the assessee was proper.
Under section 40A(7) of the Income-tax Act, no deduction is allowed for any provision made by the assessee for gratuity payment unless specific conditions are met. Two exceptions are provided under section 40A(7)(b), allowing deductions for contributions to an approved gratuity fund or for gratuity payable during the previous year. The second exception permits deductions for provisions made as per actuarial valuation, subject to certain conditions. In this case, the assessee had not based the provision for gratuity on actuarial valuation, failing to meet the required conditions.
The assessee had created a gratuity trust and handed over funds to the trust, but as the provision for gratuity was not based on actuarial valuation, the deduction could only be for the incremental liability relevant to the assessment year. The allowable deduction for the assessment year 1973-74 was determined to be Rs. 30,328, not the claimed amount of Rs. 1,96,402. The Tribunal's decision to disallow the excess deduction was upheld, and the question was answered in favor of the Revenue, entitling them to costs.
In conclusion, the judgment clarified the conditions under which deductions for gratuity liability can be claimed under section 40A(7) of the Income-tax Act, emphasizing the importance of actuarial valuation and meeting specific requirements for such deductions. The decision highlighted the need for meticulous compliance with statutory provisions to claim deductions accurately.
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1990 (12) TMI 30
Issues:
1. Refusal to entertain ground of appeal under section 80J of the Income-tax Act.
2. Entitlement of the assessee to claim under section 80J of the Income-tax Act.
3. Justification of passing an ex parte order by the Tribunal.
Analysis:
Issue 1: The Tribunal's refusal to entertain the ground under section 80J of the Income-tax Act was challenged. The Tribunal based its decision on the ground that the claim was not raised before the Appellate Assistant Commissioner. The court examined the jurisdiction of the Tribunal to allow new grounds to be raised. It was argued that if there are materials and evidence to support the claim, the Tribunal should entertain such grounds. The court referred to the Supreme Court's decision in CIT v. Mahalakshmi Textile Mills Ltd., stating that the Tribunal is not restricted to questions raised before departmental authorities and can consider all questions related to the assessment of the assessee. The court held that the Tribunal erred in refusing to entertain the ground solely because it was not raised before the Appellate Assistant Commissioner, as per the law laid down by the Supreme Court.
Issue 2: The court did not delve into the question of whether the assessee was entitled to the claim under section 80J of the Income-tax Act as the primary issue of the Tribunal's refusal to entertain the ground was resolved in favor of the assessee. Therefore, no opinion was given on this issue.
Issue 3: The Tribunal's decision to pass an ex parte order was not the primary focus of the court's analysis as the main issue revolved around the refusal to entertain the ground under section 80J. Since the court found in favor of the assessee on the primary issue, it was not necessary to address the justification of the Tribunal's ex parte order. Consequently, no opinion was provided on this issue, and the court refrained from entering into further considerations.
In conclusion, the court ruled in favor of the assessee on the issue of the Tribunal's refusal to entertain the ground under section 80J of the Income-tax Act. The court emphasized that the Tribunal has the jurisdiction to consider all questions related to the assessment of the assessee, as established by the Supreme Court's precedent. As a result, the questions regarding the entitlement of the assessee to the claim under section 80J and the justification of the Tribunal's ex parte order were not addressed.
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1990 (12) TMI 29
Issues Involved:
1. Entitlement to relief u/s 80-I of the Income-tax Act, 1961.
2. Entitlement to higher development rebate.
3. Entitlement to full depreciation on motor cars.
Summary:
Issue 1: Entitlement to Relief u/s 80-I
The assessee, a private limited company, claimed relief u/s 80-I of the Income-tax Act, 1961, for the manufacture of gears, which are listed in Schedule VI. The Income-tax Officer denied this relief, arguing that the assessee's primary business was the manufacture and sale of cranes and winches, not listed in Schedule VI. The Appellate Assistant Commissioner and the Tribunal, however, held that the assessee was entitled to relief u/s 80-I for the profits attributable to the manufacture of gears, even if these gears were used in the production of cranes and winches. The High Court upheld this view, stating that the manufacture of gears, whether sold as such or used in other products, qualifies for relief u/s 80-I. The court referenced CIT v. Standard Motor Products of India Ltd. [1981] 131 ITR 300 (Mad) to support this interpretation. The first question was answered in the affirmative and against the Revenue.
Issue 2: Entitlement to Higher Development Rebate
The assessee claimed a higher development rebate for machinery used exclusively in the manufacture of gears, listed in Schedule V. The Income-tax Officer denied this, but the Appellate Assistant Commissioner and the Tribunal allowed it, provided the assessee could establish exclusive use of the machinery for gears. The High Court affirmed this, stating that the assessee is entitled to a higher development rebate if it can prove the exclusive use of the machinery for manufacturing gears. The second question was answered in the affirmative and against the Revenue.
Issue 3: Entitlement to Full Depreciation on Motor Cars
The assessee claimed full depreciation on motor cars used for both business and non-business purposes. The Income-tax Officer disallowed one-fifth of the depreciation, which the Appellate Assistant Commissioner reduced to one-sixth. The Tribunal allowed full depreciation, referencing section 38(2) of the Act. The High Court found that the cars were used for mixed purposes and that section 38(2) should apply, which restricts depreciation to a fair proportionate part. The Tribunal erred in applying rule 5 of the Income-tax Rules, which pertains to section 32, not section 38(2). The court cited CIT v. Sobharam Jokhiram [1960] 39 ITR 299 (Pat), Waterfall Estates Ltd. v. CIT [1981] 131 ITR 223 (Mad), and CIT v. K. L. Bhasin and Co. [1986] 158 ITR 623 (Pat) to support this. The third question was answered in the negative and in favor of the Revenue.
Conclusion:
The High Court ruled partially in favor of the assessee on the first two issues and in favor of the Revenue on the third issue. No order as to costs was made due to the partial success of both parties.
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1990 (12) TMI 28
Issues Involved:
1. Justification of reopening the assessment under section 147(b) of the Income-tax Act, 1961, on the ground of mere change of opinion.
2. Satisfaction of conditions for reopening the assessment under section 147(b) of the said Act.
3. Confirmation of the order of the Commissioner of Income-tax (Appeals) canceling the assessment framed under section 143(3)/148 of the said Act.
Issue-wise Detailed Analysis:
1. Justification of Reopening the Assessment under Section 147(b) on the Ground of Mere Change of Opinion:
The Tribunal held that the Income-tax Officer reopened the assessment based on a mere change of opinion. The original assessment was completed under section 143(3) on October 3, 1981, where the cash subsidy of Rs. 15,62,293 was treated as non-taxable, and weighted deduction under section 35B was allowed based on previous orders and directions. The successor Income-tax Officer reopened the assessment under section 147(b) on March 23, 1985, asserting that the cash subsidy received was taxable and that weighted deduction under section 35B was not admissible on certain items. The Tribunal concluded that reopening the assessment on these grounds constituted a mere change of opinion and was not valid.
2. Satisfaction of Conditions for Reopening the Assessment under Section 147(b):
The Tribunal found that the conditions for reopening the assessment under section 147(b) were not satisfied. The Commissioner of Income-tax (Appeals) concluded that the reopening was done without any change in circumstances, either in law or on facts, and was based on a mere change of opinion by the successor Income-tax Officer. The Tribunal supported this view, stating that the Income-tax Officer had not ascertained the true nature of the cash subsidy or the terms and conditions under which it was received. The Tribunal emphasized that the decision of the Calcutta High Court in Jeewanlal (1929) Ltd. [1983] 142 ITR 448 could not justify the belief that income had escaped assessment without proper factual ascertainment.
3. Confirmation of the Order of the Commissioner of Income-tax (Appeals) Canceling the Assessment Framed under Section 143(3)/148:
The Tribunal confirmed the order of the Commissioner of Income-tax (Appeals), which canceled the assessment framed under section 143(3)/148. The Tribunal noted that the reopening of the assessment was based on the same set of materials without any new information. The Tribunal held that the Income-tax Officer's belief that income had escaped assessment was not based on any fresh information but was a result of a change of view. The Tribunal also highlighted that the cash subsidy was received from a non-governmental organization, and there was no established nexus or connection with the assessee's business activity.
High Court's Judgment:
The High Court disagreed with the Tribunal's conclusions, stating that the Tribunal misdirected itself in law. The High Court emphasized that the jurisdiction of the Income-tax Officer to reassess income arises if he has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment. The High Court noted that the information leading to the reopening of the assessment, such as the Special Bench decision of the Tribunal and the decision in Jeewanlal (1929) Ltd. [1983] 142 ITR 448, constituted sufficient grounds for the Income-tax Officer to believe that income had escaped assessment. The High Court concluded that the conditions for reopening the assessment under section 147(b) were satisfied and answered all the questions in favor of the Revenue. There was no order as to costs.
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1990 (12) TMI 27
Issues involved:
The judgment involves the interpretation of whether the assessee had set up a new industrial unit eligible for relief u/s 80J of the Income-tax Act, 1961.
Summary:
Assessment Years 1977-78 and 1978-79:
- The assessee, a limited company, claimed deduction u/s 80J for the assessment years in question, which was initially rejected by the Income-tax Officer.
- The Commissioner of Income-tax (Appeals) allowed the deduction, which was further affirmed by the Tribunal.
- The Tribunal found that the assessee had made substantial investments in modernization and expansion projects, installed new machinery, and increased production, establishing a new unit with a separate identity capable of producing specific products.
Requisites for Deduction u/s 80J:
- The Supreme Court's decision in Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 laid down the requirements for entitlement to deduction u/s 80J, including substantial fresh capital investment, employment of labor, production of articles, earning profits attributable to the new unit, and a distinct identity of the industrial unit.
- The Tribunal's findings aligned with these requisites, confirming the assessee's eligibility for benefits u/s 80J.
Common Management and Books of Account:
- The objection raised by the Revenue regarding common management, shared power sources, and common books of account was dismissed as insufficient to deny the deduction.
- The Karnataka High Court and other High Courts have held that common management or shared accounts do not negate the separate identity of units for claiming relief u/s 80J.
Conclusion:
- The Tribunal's decision that the assessee had set up a new industrial unit eligible for relief u/s 80J was upheld by the High Court, answering the question in favor of the assessee.
- The judgment was transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, Patna Bench, without any costs awarded.
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1990 (12) TMI 26
The Kerala High Court dismissed the petition of the "karta" of an undivided family regarding income-tax assessment for the year 1972-73 on the acquisition of agricultural lands, stating that capital gains tax is applicable even on agricultural lands based on previous court decisions. The petition was found to be without merit, and no costs were awarded. (Case citation: 1990 (12) TMI 26 - KERALA High Court)
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1990 (12) TMI 25
Issues:
- Interpretation of the Benami Transactions (Prohibition) Act, 1988
- Applicability of Section 4 of the Act to pending suits
- Exception under Section 3(2) of the Act for property purchased in the name of wife or unmarried daughter
- Retroactive nature of Section 4 of the Act
Interpretation of the Benami Transactions (Prohibition) Act, 1988:
The case involved a dispute over a property purchased by the father of the plaintiff-respondent in the name of his wife, alleged to be a benami transaction. The defendant-appellant purchased the property from the wife. The trial court decreed the suit in favor of the plaintiff, declaring him the sole owner. The appellant appealed, citing the Benami Transactions (Prohibition) Act, 1988, which prohibits suits to recover benami property. The appellant relied on a Supreme Court decision stating that the Act applies retroactively to past transactions, rendering suits to recover benami property unenforceable.
Applicability of Section 4 of the Act to pending suits:
The judgment analyzed the retroactive nature of Section 4 of the Act, which nullifies suits to enforce rights in benami property. The court considered the pendency of the appeal at the time the Act came into force and concluded that the suit by the plaintiff-respondent was not maintainable under Section 4. The court emphasized that the Act applies to pending suits and appeals arising from such suits, as per the Supreme Court's interpretation.
Exception under Section 3(2) of the Act for property purchased in the name of wife or unmarried daughter:
The respondent argued that an exception under Section 3(2) of the Act allows property purchase in the name of the wife or unmarried daughter. However, the court dismissed this argument, stating that even if the property is purchased in the wife's name, it remains a benami transaction as defined by the Act. The court clarified that this exception does not negate the prohibition under Section 4(1) of the Act, which bars suits to recover such property.
Retroactive nature of Section 4 of the Act:
The judgment highlighted the retrospective operation of Section 4 of the Act, which disqualifies the right to recover benami property. The court emphasized that this section eliminates the real owner's right to recover the property from the benamidar, as established by the Supreme Court. The court concluded that the Act is a disabling statute affecting all real owners equally, rendering their rights unenforceable.
In conclusion, the court allowed the appeal, set aside the trial court's judgment, and dismissed the suit filed by the plaintiff-respondent based on the application of the Benami Transactions (Prohibition) Act, 1988.
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1990 (12) TMI 24
Issues:
1. Whether the Income-tax Appellate Tribunal was justified in holding that the income for two periods cannot be clubbed together, and separate assessments should be made for the two periods?
Analysis:
The case involved a partnership firm where one of the partners passed away, leading to the constitution of a new firm. The primary issue was whether the income for the two periods should be clubbed together or assessed separately. The Income-tax Officer had initially clubbed the income of both periods, leading to an appeal by the assessee. The Tribunal ruled that the income for the two periods cannot be clubbed and separate assessments should be made for each period. The Tribunal based its decision on the dissolution of the first firm upon the death of the partner and the subsequent constitution of a new firm. The Income-tax Officer had also granted fresh registration to the newly constituted firm, treating them as separate legal entities. The court referenced the Supreme Court's decision in Wazid Ali Abid Ali v. CIT, which established the principle that income for different periods cannot be clubbed in cases of firm reconstitution. Additionally, the court disagreed with the Full Bench of the Madhya Pradesh High Court's decision in Girdharilal Nannelal v. CIT, emphasizing that the Income-tax Act governs matters related to income assessment for firms. The court also cited the Delhi High Court's decision in CIT v. Sant Lal Arvind Kumar, supporting the concept of separate assessments in cases of firm succession due to partner changes.
In conclusion, the court upheld the Tribunal's decision, ruling in favor of the assessee and against the Department. The judgment emphasized the legal principles governing firm reconstitution and the necessity for separate assessments in such cases. The court directed the transmission of the judgment to the Assistant Registrar of the Income-tax Appellate Tribunal, Patna Bench, in accordance with the provisions of the Income-tax Act.
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1990 (12) TMI 23
Issues:
- Whether the Tribunal was justified in canceling the penalty under section 271(1)(c) of the Income-tax Act for the assessment years 1964-65, 1965-66, and 1966-67?
- Can the Tribunal examine the question of levy of penalty on merits when the assessment proceedings have been remitted to the Appellate Assistant Commissioner for de novo consideration?
Analysis:
The case involved tax references under section 256(2) of the Income-tax Act, 1961, where the Tribunal had to decide whether canceling the penalty under section 271(1)(c) for the assessment years 1964-65, 1965-66, and 1966-67 was justified. The assessee, a company deriving income from managing agency and dividends, had claimed certain losses and expenses which were disallowed by the Income-tax Officer. Additionally, the assessee introduced bogus hundi credits, leading to penalty proceedings under section 271(1)(c) of the Act.
During the penalty proceedings, it was found that the assessee had concealed income particulars, and the Inspecting Assistant Commissioner levied penalties for the respective assessment years. However, on appeal, the Tribunal concluded that the penalty was not justified as the hundi credits were genuine and produced before the authorities. The Tribunal also considered that penalty proceedings should be based on the conclusions of the assessments to be made after remittance to the Appellate Assistant Commissioner.
The Revenue contended that the Tribunal should not have canceled the penalty as the assessment proceedings were remitted for de novo consideration. The court agreed with the Revenue, stating that penalty proceedings should align with the assessment conclusions post-remittance. The court cited previous judgments emphasizing that penalty considerations should be tied to the assessment outcomes. The Tribunal erred in canceling the penalty prematurely, and the court ruled in favor of the Revenue.
The court highlighted that the Tribunal's cancellation of the penalty was incorrect, and the questions were answered in the negative, favoring the Revenue. It was noted that depending on the pending assessment proceedings, the Revenue could initiate penalty proceedings if warranted. The court awarded costs to the Revenue and emphasized the finality of orders unless disturbed by a lawful process.
In conclusion, the Tribunal's premature cancellation of the penalty was deemed incorrect, and the court ruled in favor of the Revenue, emphasizing the need for penalty considerations to align with assessment outcomes post-remittance.
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1990 (12) TMI 22
Issues Involved:
1. Validity of service of notices under section 147(a) of the Income-tax Act, 1961, and section 34(1)(a) of the Indian Income-tax Act, 1922.
2. Validity of reassessment orders if the service of notices is deemed invalid.
Issue-wise Detailed Analysis:
1. Validity of Service of Notices:
The primary question was whether the notices under section 147(a) of the Income-tax Act, 1961, and section 34(1)(a) of the Indian Income-tax Act, 1922, were validly served upon the assessee-Hindu undivided family (HUF). The assessee, represented by its karta, contended that the notices were not served in the manner prescribed by section 282 of the Act and that the service upon the interim receiver was unauthorized.
The court noted that the interim receivers were appointed by the District Judge, Saharanpur, to administer the properties of the assessee-HUF due to insolvency proceedings. The notices for the assessment years 1952-53 to 1955-56 were served on the interim official receiver, Dehradun, on January 8, 1960, and for the assessment year 1949-50, the notice was served on March 3, 1966. The interim receiver filed returns for the relevant years, which were later followed by returns filed by the karta.
The Tribunal found that the interim receivers were in possession and administration of the properties of the assessee-HUF and that the notices were passed on to the assessee. The assessee did not initially object to the service of notices and filed returns in response. The Tribunal concluded that the service of notices on the interim receiver was valid and that the assessee was aware of the notices.
2. Validity of Reassessment Orders:
If the service of notices was deemed invalid, the reassessment orders for the years 1949-50, 1952-53 to 1955-56 would be void. The court emphasized that service of notice is a condition precedent to a valid reassessment, as established by the Supreme Court in CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 and a Full Bench decision of the Allahabad High Court in Laxmi Narain Anand Prakash v. CST [1980] 46 STC 71.
The court examined whether the service of notices on the interim receiver constituted valid service on the assessee. Section 282 of the Income-tax Act, 1961, prescribes the mode of service of notice, allowing service either by post or as if it were a summons issued by a court under the Code of Civil Procedure. The court held that the interim receivers, appointed with full powers of administration, were competent to receive notices on behalf of the assessee-HUF. The Tribunal's findings that the notices were passed on to the assessee and that the assessee filed returns in response further supported the validity of the service.
The court rejected the assessee's contention that the interim receiver was appointed only with respect to the banking business of a partnership firm, Mansa Ram and Sons, and not the assessee-HUF. The court relied on the Tribunal's consistent findings that the interim receivers were appointed in respect of the business and properties of the assessee-HUF.
The court also addressed the argument that if the service of notices was proper, the assessment should have been made upon the receivers as representative-assessee under section 160 of the 1961 Act. The court clarified that the notices were addressed to the HUF, not the receivers, and that the income of the assessment years concerned was not received by the receivers, making section 160 inapplicable.
Conclusion:
The court answered the first question in the affirmative, holding that the service of notices on the interim receiver was valid, thus in favor of the Revenue and against the assessee. Consequently, the second question regarding the validity of reassessment orders did not arise. The reference was answered accordingly, with no costs awarded.
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1990 (12) TMI 21
Issues:
1. Interpretation of section 80J of the Income-tax Act, 1961 regarding exclusion of borrowed capital and current liabilities in computation of capital employed.
2. Allowance of deduction under section 80J at the full rate of 6% of capital employed in a fertiliser project.
3. Exclusion of medical expenses reimbursed to employees from disallowance under section 40(a)(v)/40(c) of the Income-tax Act, 1961.
4. Disallowance of interest paid to the bank in assessment.
5. Disallowance of depreciation claim for scientific research assets.
6. Treatment of process warehouses, inter-plant connecting roads, and roads leading to the factory as part of plant and machinery for development rebate and depreciation.
Analysis:
1. The High Court referred to the Supreme Court decision in Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 to answer questions related to the interpretation of section 80J. The exclusion of borrowed capital and current liabilities in the computation of capital employed was deemed incorrect, following the Supreme Court decision.
2. The High Court relied on the decision in CIT v. Oyster Packagers (P.) Ltd. [1985] 152 ITR 471 to conclude that the deduction under section 80J should be allowed at the full rate of 6% of the capital employed in the fertiliser project, favoring the assessee.
3. The court referred to the decision in Indian Leaf Tobacco Development Co. Ltd. v. CIT [1982] 137 ITR 827 to support the exclusion of medical expenses reimbursed to employees from disallowance under section 40(a)(v)/40(c) of the Income-tax Act, 1961, in favor of the assessee.
4. Following the decision in Woolcombers of India Ltd. v. CIT [1982] 134 ITR 219 (Cal), the court ruled against the disallowance of Rs. 1,63,514 out of interest paid to the bank in the assessment, favoring the assessee.
5. The court addressed the disallowance of depreciation claim for scientific research assets, emphasizing the provisions of section 35(1)(iv) and 35(2)(iv) of the Income-tax Act. It was held that no further depreciation was admissible on assets used for scientific research, and the claim was disallowed in favor of the Revenue.
6. The court considered the treatment of process warehouses, inter-plant connecting roads, and roads leading to the factory as part of plant and machinery for development rebate and depreciation. It was concluded that these assets should be treated as part of the factory building, allowing depreciation but disallowing development rebate.
Judges' Opinions:
- Justice Ajit K. Sengupta delivered the judgment on issues related to sections 80J, 40(a)(v)/40(c), interest disallowance, and depreciation claim for scientific research assets.
- Justice Bhagabati Prasad Banerjee concurred with the decision on the treatment of assets as part of the factory building for depreciation and development rebate.
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1990 (12) TMI 20
The High Court of Punjab and Haryana disposed of multiple Criminal Writ Petitions seeking quashment of proceedings by the Income-tax Department under sections 276, 277 of the Income-tax Act, 1961. The court found that the trial court had not applied its mind to the facts and circumstances while summoning the accused-petitioners, leading to the quashing of the summoning order. The trial court was directed to pass a fresh order after due application of mind. The accused petitioners can raise their defenses before the trial court. The decision was supported by a previous court ruling in Pran Nath v. Chief Judicial Magistrate.
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1990 (12) TMI 19
Issues:
- Whether the rectification order dated September 10, 1985, was barred by limitation?
Comprehensive Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1979-80. The primary issue was whether the rectification order dated September 10, 1985, was barred by limitation. The Income-tax Officer had initially allowed weighted deduction under section 35B on various items of expenditure, including bank interest and packing expenses. However, in the rectification order, the Income-tax Officer withdrew the weighted deduction on bank interest and packing expenses, citing excess deduction under section 40(c). The Commissioner of Income-tax (Appeals) upheld the rectification order regarding section 40(c) but canceled it concerning the weighted deduction under section 35B. Both parties then appealed to the Tribunal.
In the Tribunal, the assessee contended that the rectification order was time-barred, relying on the law in force during the assessment year 1979-80. The Department argued that the amended section 154(7) governed the limitation period, allowing the rectification order to be within the extended time limit. The Tribunal rejected the assessee's contention, stating that the rectification order was not barred by limitation.
The High Court analyzed the law of limitation, emphasizing that the amended section 154(7) dictated the time frame for rectification. The court noted that the rectification order dated September 10, 1985, fell within the four-year period from the end of the financial year in which the original assessment order was passed. Referring to the Supreme Court decision in S. Sankappa v. ITO [1968] 68 ITR 760, the court highlighted that rectification proceedings are part of the assessment process. The court concluded that the rectification order was well within the limitation period under the amended law.
Ultimately, the High Court answered the reference question in the negative, favoring the Revenue. The judgment was a unanimous decision, with both judges concurring. No costs were awarded in the case.
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1990 (12) TMI 18
Issues Involved:
1. Computation of quantum of penalty u/s 273(1)(b) of the Income-tax Act, 1961.
2. Consideration of tax deductible at source u/s 194 and 195 in computing "assessed tax" u/s 215(5).
Summary:
Issue 1: Computation of Quantum of Penalty u/s 273(1)(b)
The primary issue was determining how the quantum of penalty u/s 273(1)(b) should be computed. The Income-tax Officer (ITO) found that the assessee did not file the statement of advance tax nor paid advance tax during the relevant accounting year. Consequently, the ITO initiated penal proceedings u/s 273(2)(c) and imposed a minimum penalty of Rs. 4,439, being 10% of the shortfall of Rs. 44,390. The Commissioner of Income-tax (Appeals) confirmed the penalty but corrected the applicable section to 273(1)(b). The Tribunal directed the ITO to recompute the penalty by considering the tax deductible at source u/s 194 and 195.
Issue 2: Consideration of Tax Deductible at Source u/s 194 and 195 in Computing "Assessed Tax" u/s 215(5)
The Tribunal held that for determining the quantum of penalty u/s 273(1)(b), the tax deductible at source u/s 194 and 195 must be considered in computing the "assessed tax" as defined u/s 215(5). The Revenue contended that only the tax actually deducted at source should be considered, not merely deductible. The court clarified that the term "tax deductible" means tax actually deducted at source. The Tribunal's direction to recompute the penalty was found unnecessary as the ITO had already given credit for the tax deducted at source.
Conclusion:
1. The court held that tax deductible at source and deducted within the financial year u/s 194 and 195 must be considered in computing the "assessed tax" u/s 215(5).
2. The court found that the ITO had correctly computed the penalty after allowing credit for the tax deducted at source, thus answering the second question in the negative.
There was no order as to costs.
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1990 (12) TMI 17
The High Court of Rajasthan heard a petition under section 256(2) of the Income-tax Act, 1961. Referring to a previous judgment in the case of Rama Bai v. CIT [1990] 181 ITR 400 (SC), the court decided not to call for the statement of facts or frame any questions. The court focused solely on the application under section 256(2) and did not pass any orders related to submissions made by the parties for a different year. (Case Citation: 1990 (12) TMI 17 - RAJASTHAN High Court)
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1990 (12) TMI 16
The High Court of Karnataka ruled against the Revenue in a case regarding the disallowance of an investment allowance claim under section 32A of the Income-tax Act. The court referred to a previous decision and answered the question in the negative. (Case citation: 1990 (12) TMI 16 - KARNATAKA High Court)
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1990 (12) TMI 15
The High Court of Andhra Pradesh dismissed an appeal by the Income-tax Appellate Tribunal regarding the disallowance of a provision for payment of cess to the Agricultural Market Committee. The court held that the fee paid to the Committee was allowable under section 43B of the Income-tax Act based on a previous decision.
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1990 (12) TMI 14
The High Court of Andhra Pradesh upheld the Tribunal's decision to continue the registration of a firm despite one partner signing in dual capacity. The decision was based on previous rulings and the Commissioner of Income-tax's grant of relief. The appeal was dismissed. (Citation: 1990 (12) TMI 14 - ANDHRA PRADESH High Court)
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1990 (12) TMI 13
The High Court of Madras ruled that a provision for gratuity should be treated as a liability and not as a reserve for finding out the break-up value of shares held by the assessee in certain companies for the assessment years 1972-73 and 1973-74. This decision was based on a previous case and upheld by the Supreme Court. The judgment was in favor of the assessee, with no costs awarded.
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1990 (12) TMI 12
Issues Involved:
The judgment involves the interpretation of provisions u/s 35B(1)(b)(iii) and u/s 35B(1)(b)(ix) of the Income-tax Act, 1961, and the applicability of rule 6AA of the Income-tax Rules, 1962, for the assessment year 1980-81.
Interpretation of Section 35B(1)(b)(iii):
The Commissioner of Income-tax challenged the weighted deduction allowed on warehouse charges under section 35B(1)(b)(iii) for the assessment year 1980-81. The High Court held that if warehouse charges were incurred for storing goods before their sale, they qualify as expenses for distribution and supply outside India, making them eligible for weighted deduction under this section.
Applicability of Rule 6AA:
The Tribunal determined the applicability of rule 6AA introduced on August 1, 1981, for the assessment year 1980-81. The High Court ruled that rule 6AA cannot have retrospective effect and, therefore, the benefit of sub-clause (ix) of section 35B(1)(b) is not available for assessments completed before the introduction of the rule.
Decision and Conclusion:
The High Court answered the first question affirmatively, allowing the weighted deduction on warehousing expenses u/s 35B(1)(b)(iii) for the assessee. However, the second question regarding the applicability of rule 6AA was answered negatively, denying the benefit of sub-clause (ix) of section 35B(1)(b) for the same assessment year. The judgment was delivered by Judges Bhagabati Prasad Banerjee and Ajit Kumar Sengupta of the High Court of Calcutta.
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9911796707
