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1975 (11) TMI 26 - BOMBAY HIGH COURT
Minor Child, Net Wealth, Wealth Tax ... ... ... ... ..... the minor daughters in the present case have done in return for the creation of the said trusts by the assessee, nor have they suffered any detriment in return for the same. There is, therefore, in my opinion, no consideration, leave alone adequate consideration, moving from the minors in return for the creation of the two trusts by the assesee in the present case. In the result, I hold that the trusts created and declared in the present case were not transfers for adeqaate consideration within the terms of section 4(1)(a)(iii) of the Wealth-tax Act, 1957, and that the property which is the subject-matter of those trusts is liable to be included in the net wealth of the assessee, as on the respective valuation dates, and the question referred to us mast be answered accordingly. S. K. DESAI J.---I agree and have nothing to add. BY THE COURT.---Question answered in the affirmative and in favour of the Commissioner. The assessee to pay the Commissioner s costs of the reference.
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1975 (11) TMI 25 - ANDHRA PRADESH HIGH COURT
Income Tax Act ... ... ... ... ..... ns of section 40(b) of the Act, On the facts of the case, the Tribunal said that the principle laid down in the decision would not apply. In the light of the facts pointed out and found by the Tribunal, it is seen that the investment has all along been that of the family. The partners of the firm were not required to make any capital investment. So the money that was standing in the name of Ramachandraiah, the karta of the family, really belonged to the joint family. When such is the fact, the question that is now sought to be referred does not arise. This case stands on different facts from the cases in Commissioner of Income-tax v. T. Veeraiah and K. Narasimhulu 1977 106 ITR 283 (AP) and R. Cs. Nos. 30 and 31 of 1973 (Additional Commissioner of Income-tax v. K. G. Narayanaiah Chetty and Co. 1977 106 ITR 420 (AP)) dated December 11, 1974. In view of these facts, we do not see that any question of law arises. In the result, the income-tax case is dismissed, but without costs.
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1975 (11) TMI 24 - GUJARAT HIGH COURT
Business Expenditure, Entertainment Expenditure, Income Tax Act ... ... ... ... ..... he Appellate Assistant Commissioner who has found that it was customary for the assessee due to very long-established tradition that farmers who came to deliver the goods, i.e., cotton, groundnuts, rice, pulses, were given meals from the kitchen run by the assessee and if the assessee failed to give this normal courtesy, it apprehended that the farmers might offer their produce to other competitors in the field of the assessee and the assessee would lose the goods. The Appellate Assistant Commissioner has also found that the expenditure was for serving ordinary meals to the employees as well as to the farmer customers and they were not such which entertained or amused the guests since the assessee provided served meals as a bare necessity of the business. In that view of the matter, therefore, these references must be rejected and we answer the questions referred to us in the negative and against the Commissioner, who shall pay costs of both these references to the assesses.
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1975 (11) TMI 23 - BOMBAY HIGH COURT
Adequate Consideration, Deemed Gift, Gift Tax, Market Value ... ... ... ... ..... figures of each particular case. In that view of the matter, I would hold that, even on the footing that the 20th of March, 1958, is a date relevant for the purpose of considering the true market value of the shares and securities in the present case, the present case does not fall within section 4(a) of the Gift-tax Act. In any view of the matter, therefore, I would answer the question referred to us in favour of the assessee. S. K. DESAI J.-I agree. In my opinion, there was a return consequential upon a reduction of capital which would not constitute a transfer of property at all. I would, therefore, hold that the provisions contained in section 4(a) of the Gift-tax Act, 1958, as it stood prior to its amendment by Finance (No. 2) Act, 1971, were not applicable. Accordingly, the question must be answered in favour of the assessee. BY THE COURT.---Question answered in the negative and in favour of the assessee. The Commissioner must pay the assessee s costs of the reference.
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1975 (11) TMI 22 - GUJARAT HIGH COURT
Assessment Notice, Assessment Proceedings, Income Tax Act, Notice Of Reassessment, Original Assessment, Reassessment Proceedings, Supreme Court
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1975 (11) TMI 21 - MADRAS HIGH COURT
Earned Income, Managing Agent ... ... ... ... ..... of the various extenuating circumstances, a levy of penalty of Rs. 5,000 would be adequate and reasonable. The Tribunal has not, however, stated as to what are the extenuating circumstances. But from its order, we can presume that it took into account the circumstance that out of three items of additions aggregating to Rs. 1,20,675, only one item (Rs. 11,505) has been found to be a concealment. The said circumstance cannot be said to be irrelevant or extraneous. Though the Tribunal has proceeded on a wrong interpretation of the provisions of section 28(1)(c) as stated earlier, we are not in a position to say that the Tribunal has not properly exercised its discretion on the facts and circumstances of this case. The result is, though the revenue succeeds in setting aside the view of the Tribunal on the question of law, the reduction of penalty to Rs. 5,000 in the circumstances was not improper or unjustified. The reference is answered accordingly against the revenue. No costs.
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1975 (11) TMI 20 - GUJARAT HIGH COURT
Business Expenditure, Capital Expenditure, Litigation Expenses, Mesne Profits ... ... ... ... ..... rs. Therefore, the mere fact that for the time being these deposits were allowed to continue in the name of the individual members of the family of each of the assessees in the account of the firm shows nothing to suggest that there was partnership. In view of this, we are of the opinion that the view taken by the Tribunal on this controversial issue is correct. We, therefore, hold that the findings of the Tribunal that the relations subsisting between each of the assessees, his wife and sons is that of co-owners with regard to the assessees share in the firm of Gujarat Automobiles, is correct in law, and that there was no sub-partnership between any of the assessees and the remaining members of his family. We, therefore, answer both the questions, which are referred to us, in the affirmative, i.e., in favour of the assessees and against the revenue. The revenue shall bear its own costs and the costs of the assessees in this reference. References are accordingly disposed of.
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1975 (11) TMI 19 - BOMBAY HIGH COURT
Earned Income, Managing Agent ... ... ... ... ..... erests, may fall short of the net wealth of the trusts, as was pointed out in the unreported judgment of the Gujarat High Court, dated 30th August, 1974, in the case of Commissioner of Wealth-tax v. Arundhati Balkrishna Trust (since reported in 1975 101 ITR 626 (Guj)), but that is because what is to be taxed, so far as the remaindermen s interests are concerned, is the present value of their right to receive the corpus of the trust funds at an uncertain future date. I would, therefore, answer this reference in favour of the assessee. S. K. DESAI J.---I agree and have nothing to add. BY THE COURT.---The question referred to us is answered as follows On the facts and in the circumstances of this case, the assessment on the trustees should be made under section 21(1) of the Wealth-tax Act, 1957, both in respect of the life interests as well as in respect of the remaindermen s interests under the trust in question. The Commissioner must pay the assessee s costs of the reference.
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1975 (11) TMI 18 - CALCUTTA HIGH COURT
Capital Asset, Depreciation And Development Rebate, Grant Of Depreciation ... ... ... ... ..... ncorporates the reason, that is to say, to facilitate the investigation. Therefore, in my opinion, the net result of these two orders indicate that the reason for transfer was to facilitate the investigation. In my opinion such a reason was properly recorded at the time of the transfer order. It, therefore, cannot be suggested that the condition precedent for the transfer was not complied with. The petitioner-company belongs to a group of companies. Therefore, to facilitate investigation of this case transfer was necessary. There is nothing on record to indicate that the impugned order was passed mala fide. In the premises, this contention also cannot be accepted. All the contentions urged in support of this application, therefore, fail. The application is dismissed. The rule nisi is discharged. Interim order, if any, is vacated. There will be no order as to costs. In view of the records produced before me, I am of opinion that stay of operation of this order is not merited.
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1975 (11) TMI 17 - MADRAS HIGH COURT
Capital Asset, Depreciation And Development Rebate, Grant Of Depreciation ... ... ... ... ..... ed before the Tribunal showing the break-up figures of the pre-production expenses sought to be capitalised. As we have already pointed out, the Appellate Assistant Commissioner, while disposing of the appeal, directed the Income-tax Officer to look into the various items and exclude such of those items which would have been incurred even if no machinery had been erected. We think that the Appellate Assistant Commissioner meant by this statement only to say that only those items which were not relatable for bringing the asset into existence and to put them into working condition alone will have to be excluded and all the other items will have to be included. That direction still stands and the Tribunal had not modified the same. We accordingly answer the reference technically in the affirmative but subject to the direction of the Appellate Assistant Commissioner regarding the actual figures to be included. The assessees will be entitled to their costs. Counsel s fee Rs. 250 .
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1975 (11) TMI 16 - GUJARAT HIGH COURT
Civil Court, Income Tax, The Contract, True Nature ... ... ... ... ..... , Thobhandas, as found by the income-tax authorities to Vasantlal of Vasant and Company, who was held to be benamidar of Popatlal, would amount to application of the income of Thobhandas who should be really held liable to pay tax since no legally enforceable obligation was ever created by the assessee, Thobhandas, in favour of the assessee, Popatlal, or his benamidar, Vasantlal. In that view of the matter, therefore, the Tribunal was clearly in error and not justified in the facts and circumstances of the case in holding that it was Popatlal who was liable to be assessed for the income accrued and earned under the P group contract. The result is that we answer the question referred to us in these references in the negative and in favour of the assessee, Popatlal, and against the assessee, Thobhandas. The Commissioner of Income-tax shall pay costs to Popatlal in Income-tax Reference No. 208 of 1974. There should be no order as to costs in Income-tax Reference No. 45 of 1974.
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1975 (11) TMI 15 - PATNA HIGH COURT
Business Expenditure, Capital Expenditure, Litigation Expenses, Mesne Profits ... ... ... ... ..... ed to renew the lease of the petitioner-company, and, therefore, the assessee had to file a suit for creation and for completion of its title to the capital. That title suit had not been filed for the preservation of the business or for the protection of the assets of the petitioner company. That being the position, on the facts and in the circumstances of the instant case, the Tribunal was justified in holding that there was a capital element in the 50 of the litigation expenses referable to the kyanite suit filed by the assessee-company. I may state here that before the Tribunal it was conceded on behalf of the assessee that the apportionment of the 50 basis was proper. For the reasons stated above, I would answer the question of law framed in the three cases in the affirmative and in favour of the revenue and against the assessee-company. The references are answered accordingly. In the circumstances, the parties are directed to bear their own costs. S. K. JHA J.--I agree.
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1975 (11) TMI 14 - CALCUTTA HIGH COURT
Total Income ... ... ... ... ..... table object contemplated by the trust cannot be said to confer a right to reassume power within the first proviso. Otherwise a settlor could never name himself a sole trustee. It seems to us that the latter part of the proviso contemplates a provision which would enable the settlor to take the income or assets outside the provisions of the trust deed ........ In the deed before us we cannot find any clause which provides for retransfer either directly or indirectly of the assets or the income of the trust back to the settlor. It also appears to us in the light of the law laid down by the Supreme Court that none of the other clauses in the deed including clause 2 can be stretched to hold that the same gave to the settlor a right to reassume power directly or indirectly over the income or the assets of the trust. In that view of the matter we answer the question referred to us in the affirmative and in favour of the assessee. There will be no order as to costs. DEB J.-I agree.
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1975 (11) TMI 13 - GUJARAT HIGH COURT
Industrial Undertaking ... ... ... ... ..... ramme of installation and construction. In view of these conclusions it must necessarily follow that the mere fact that the company started the production of cellulose pulp which was an intermediate product in its cellulose pulp project on March 18, 1961, does not mean that the company had begun to produce or manufacture articles in the asssessment year 1961-62. It was only from June 15, 1961, when production of C.M.C. was started by this industrial undertaking that it can be said that this particular industrial undertaking of the assessee-company had begun to manufacture of produce articles and that event took place in the assessment year 1962-63. That being the case, in the year of assessment 1966-67, relief under section 84 was clearly available tothe assessee company. In view of this conclusion we answer the question referred to us in the negative, that is, in favour of the assessee and against the revenue. The revenue will pay the costs of this reference to the assessee.
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1975 (11) TMI 12 - CALCUTTA HIGH COURT
Earned Income, Managing Agent ... ... ... ... ..... e circular, in our opinion, refer to the aforesaid time prescribed in section 184(7)(ii) of the Act. The Income-tax Officer has no power to extend the time fixed by section 184(7)(ii) of the Act which enjoins the firm to furnish a declaration along with its return of income for the assessment year concerned. The furnishing of the said declaration along with the said return, in our opinion, is mandatory. The Income-tax Officer must act in terms of the circular and he has no power under the circular to give an opportunity to the firm to make an application for registration, for the firm has not furnished the said declaration along with its return of income for the assessment year concerned. In this view of the matter, the contentions of Mr. Mullick must fail and we return our answer to the question in the affirmative and against the assessee. Having considered the facts and circumstances of the case, we do not propose to make any order as to costs. DIPAK KUMAR SEN J.--I agree.
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1975 (11) TMI 11 - ORISSA HIGH COURT
Act Of 1922, From Other Sources ... ... ... ... ..... w that the decisions referred to above are available to be relied upon in interpreting the corresponding position under the new Act. Section 12(2) of the 1922 Act in essence corresponds to the provisions of section 57(iii) of the new Act. We are of the view that the reasonings given in the Bombay decision referred to above which have been followed by the Allahabad, Madhya Pradesh and Madras High Courts in the cases referred to above represent the correct state of law and, therefore, even if no profit is earned from the shares by way of dividend, the deduction of interest paid on the loans invested for acquisition of shares is deductible as an expense. Our answer to the question referred, therefore, shall be On the facts and in the circumstances of the case, the interest on moneys borrowed for purchase of shares should be allowed as a deduction even though the shares had not yielded any dividend in the relevant accounting years. We make no order as to costs. PANDA J.--I agree.
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1975 (11) TMI 10 - ALLAHABAD HIGH COURT
Account Books, Assessment Year, High Court, Mercantile System ... ... ... ... ..... . Sub-clause (ii) of clause (b) permits the allowance of any such provision for the previous year relevant to the assessment year commencing on or after the 1st day of April, 1973, but before the 1st day of April, 1976. The assessment year in question is clearly governed by this exception. This clause, no doubt, provides that the provision should be made in accordance with the actuarial valuation of ascertainable liability and the assessee should create an approved gratuity fund. It lays down some further conditions, but all those conditions have to be fulfilled in future. Sub-section (7), therefore, creates no bar so far as the present case is concerned. For the reasons stated above, the petition is allowed. The order of the Income-tax Officer, dated 5th March, 1974, passed under section 141A of the Act is quashed. He is directed to pass a fresh order under section 141A in accordance with the law and the observations made hereinabove. The petitioner is entitled to the costs.
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1975 (11) TMI 9 - GUJARAT HIGH COURT
Accumulated Profits, Tax On Undistributed Income ... ... ... ... ..... ors and, consequently, therefore, a fortiori the Income-tax Officer would not be justified in directing the capital appreciation to be treated as a part of the fund available for distribution of dividend. We, therefore, decline to answer the question in the absence of the relevant facts following the course adopted by the Supreme Court in Commissioner of Income-tax v. Indian Molasses Co. P. Ltd. 1970 78 ITR 474 (SC). We leave it to the Tribunal to determine that question on the proper facts being investigated and ascertained. The result is that we answer question No. 1 in the negative and against the assessee. We decline to answer question No. 2 and leave it to the Tribunal to determine the same on the facts being investigated and ascertained. Question No. 3, as stated above, is not pressed and, therefore, need not be answered. Having regard to the nature of the questions referred to us, in the facts and in the circumstances of the case, there should be no order as to costs.
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1975 (11) TMI 8 - BOMBAY HIGH COURT
Industrial Undertaking ... ... ... ... ..... w Great Insurance Co. Ltd. 1973 90 ITR 348(Bom) as also of the Calcutta High Court in CIT v. Darbhanga Marketing Co. Ltd. 1971 80 ITR 72. In the latter case the department had desired to deduct from the dividend income, in respect of which deduction was claimed, an amount of Rs. 21,326, which was said to be the interest paid to various parties on moneys borrowed in connection with investment in shares. The contention of the department in the Bombay case 1973 90 ITR 348 was that proportionate management expenses which were attributable as dividend income bad to be deducted from the dividend income before granting to the assessee the deduction claimed in respect thereof. The department s contentions in both the cases were rejected by the High Court concerned. Lastly, it may be mentioned that the submission as was formulated in this court by Mr. Joshi is not reflected in the question which is sought to be referred to us. In the result, the rule will stand discharged with costs.
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1975 (11) TMI 7 - CALCUTTA HIGH COURT
Assessment Order, Assessment Year, Income From Undisclosed Sources ... ... ... ... ..... .T. authorities to arbitrarily and capriciously depart from the findings arrived at in past years. If they do so we will certainly interfere in appropriate cases when the matters come to us. But that is not to say that the I.T. authorities can never depart from their previous findings. If new facts come to light or if an ITO finds that his predecessor failed to take into consideration some material facts though available he would certainly be entitled to arrive at his own decision unhampered by the decision of predecessor, of course, after giving due weight to what was said by him. We respectfully agree with the above decision and accordingly the submissions of Dr.Pal must fail. Dr. Pal did not press question No. 2 before us and, therefore, we decline to answer it. In this view of the matter, we return our answer to question No. 1 in the affirmative and against the assessee. In the facts and circumstance of the case, we make no order as to costs. DIPAK KUMAR SEN J.--I agree.
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