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Showing 101 to 112 of 112 Records

• 1970 (4) TMI 12
  

  Banking Company - Reserve for Development Rebate - appellant-company had transferred a sum from the profit and loss account to the reserve fund. The appellant claimed allowance by way of development rebate under proviso (b) of s. 10(2)(vib) amounting to ₹ 1,37,836 in the computation of its business income - Assessee's appeal dismissed

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• 1970 (4) TMI 11
  
  Issues Involved:
  1. Entitlement to exemption under section 15C(4) of the Income-tax Act, 1922, for dividends received by shareholders.
  2. Interpretation of section 15C of the Income-tax Act, 1922.
  3. Computation of taxable profits under section 10 of the Income-tax Act, 1922.
  4. Treatment of unabsorbed depreciation in computing taxable profits.
  
  Detailed Analysis:
  
  1. Entitlement to exemption under section 15C(4) of the Income-tax Act, 1922, for dividends received by shareholders:
  The core issue was whether shareholders of Sri Ganapathy Mills Co. Ltd. were entitled to the benefit of section 15C(4) in respect of the dividend income received. The Income-tax Officer rejected the shareholders' claim for exemption, and this decision was upheld by the Income-tax Appellate Tribunal. The High Court of Madras, however, answered the question in the affirmative, leading to the appeal by the Commissioner of Income-tax to the Supreme Court.
  
  2. Interpretation of section 15C of the Income-tax Act, 1922:
  Section 15C(1) provides that tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking as do not exceed six percent per annum on the capital employed. Section 15C(3) mandates that the profits or gains of an industrial undertaking be computed in accordance with the provisions of section 10. Section 15C(4) exempts shareholders from tax on dividends attributable to profits or gains on which the tax is not payable under section 15C(1). The Supreme Court held that for the shareholders to benefit from the exemption under section 15C(4), the company must first qualify for the exemption under section 15C(1).
  
  3. Computation of taxable profits under section 10 of the Income-tax Act, 1922:
  The company had no taxable profits in the relevant assessment years due to the large balance of unabsorbed depreciation. The Supreme Court emphasized that the profits or gains derived from an industrial undertaking within the meaning of section 15C(1) are taxable profits computed in accordance with section 10. The Court clarified that even if a company earns commercial profits, it cannot claim exemption if it has no taxable profits. Consequently, if the company cannot claim the benefit under section 15C(1), the shareholders cannot claim the benefit under section 15C(4).
  
  4. Treatment of unabsorbed depreciation in computing taxable profits:
  The Supreme Court disagreed with the High Court's view that unabsorbed depreciation should not be taken into account in computing the profits of an industrial undertaking under section 10. The Court reiterated that unabsorbed depreciation from previous years must be added to the depreciation for the current year and deemed part of the depreciation allowance for the year of assessment. The Court cited the case of Commissioner of Income-tax v. Jaipuria China Clay Mines (P.) Ltd., which established that unabsorbed depreciation must be set off against the profits from other heads. In the case at hand, the company had no taxable profits in the two relevant years due to the unabsorbed depreciation exceeding the business profits.
  
  Conclusion:
  The Supreme Court concluded that the company had no taxable profits in the relevant years and, therefore, could not claim exemption under section 15C(1). Consequently, the shareholders were not entitled to the benefit of section 15C(4) for the dividends received. The Supreme Court allowed the appeals, overturning the High Court's decision, and ruled that the parties would bear their own costs in both the Supreme Court and the High Court.

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• 1970 (4) TMI 10
  

  Whether the income of the trust properties were not specifically receivable by trustees on behalf of any person - The court shall proceed on the basis that it is `a person` within the meaning of section 2(9) - case clearly falls within the meaning of s. 41(1) - first proviso to that section is inapplicable to the facts of the case - It cannot be said that the income or profits in question are "not specifically receivable by the trustees on behalf of any one person" - Revenue's appeal dismissed

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• 1970 (4) TMI 9
  

  Officer had not filed any affidavit in the proceedings - proceedings recorded by him before issuing the notices have not been produced - Hence, it is not possible to hold that the ITO had any reason to form the belief in question - ITO had no jurisdiction to issue the impugned notices - Assessee's appeal allowed

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• 1970 (4) TMI 8
  

  Income arising to the three minor sons of the assessee by virtue of their admission to the benefits of the partnership of Messrs A should not be included in the total income of the assessee under s. 16(3)(a)(iv) - Revenue's appeal is dismissed

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• 1970 (4) TMI 7
  
  Issues:
  1. Interpretation of a contract for the supply of hessian cloth and the treatment of export duty reduction.
  2. Determination of whether the amount sought by income-tax authorities should be included in the assessee's income for a specific year.
  
  Detailed Analysis:
  1. The case involved an appeal regarding the interpretation of a contract for the supply of hessian cloth and the treatment of export duty reduction. The appellant entered into a contract for the supply of 10,000 tons of hessian cloth with a party in South America. The contract did not specifically provide for any fluctuation in the sale price due to variations in export duty. The income-tax authorities sought to include an amount of Rs. 5,72,081 in the assessee's income for the relevant year. The Tribunal found that the course of dealings between the parties indicated that both parties understood the contract to have a fixed price term without any variation based on export duty changes.
  
  2. The main issue was whether the amount of Rs. 5,72,081 should be treated as income of the assessee for the relevant year. The High Court concluded that the contractual liability did not arise as the assessee disowned the liability by realizing the full price without any deduction for the export duty reduction. The Tribunal's finding that the second set of invoices prepared for accounting purposes were fictitious and created to avoid tax liability was upheld. The High Court also noted that the assessee consistently billed the full contractual price to the buyers even after the decrease in export duty, indicating inflexibility in the pricing term of the contract.
  
  3. The Supreme Court upheld the High Court's decision, emphasizing that the Tribunal's findings were based on the evidence presented. The Court noted that the terms of the contract specified a fixed price without any adjustment for export duty changes. The assessee had consistently invoiced the full price to the buyers and received payment without any demands for the reduction in export duty. Therefore, the amount in question was considered part of the sale price received by the assessee, and no liability to pay the buyers arose. The Court dismissed the appeal and upheld the decision of the High Court, affirming that the amount should be included in the assessee's income for the relevant year.

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• 1970 (4) TMI 6
  
  Issues:
  - Refusal to require the Income-tax Appellate Tribunal to state the case and refer certain questions of law.
  - Deductibility of a sum of Rs. 42,473 as revenue expenditure for the assessment year 1954-55.
  - Justification of the High Court's decision in refusing to direct the Tribunal to state the case and refer the question.
  
  Analysis:
  The case involved an appeal to the Supreme Court from the Calcutta High Court's judgment, which declined to compel the Income-tax Appellate Tribunal to state the case and refer specific legal questions arising from an order related to the assessment year 1954-55. The respondent-company, engaged in mining mica, faced a dispute regarding the renewal of a mining lease. The company claimed a deduction of Rs. 42,473 as revenue expenditure for rent paid during the previous year. The Income-tax Officer initially disallowed the claim, but the Tribunal allowed the entire amount as deductible, considering it a revenue expenditure necessary for the business.
  
  The Commissioner of Income-tax sought to refer the question of whether the sum was of a revenue nature and allowable as a deduction under the Income-tax Act. Both the Tribunal and the High Court rejected the application for reference. The Supreme Court upheld the High Court's decision, emphasizing that the amount paid by the respondent was incurred wholly and exclusively for the purpose of conducting its business. The Court cited precedent to establish that if an expense is found to be for the business's benefit, it qualifies for deduction under the Income-tax Act.
  
  The Court noted that the respondent's liability and entitlement to continue mining operations were contingent on the compromise reached, making the expenditure necessary for business operations. The judgment highlighted that the Tribunal's finding on the expenditure being for the business's purpose was crucial, and as such, the High Court's refusal to direct the Tribunal to refer the question was justified. The Court concluded that the deduction was admissible under the relevant section of the Income-tax Act, affirming the decision to dismiss the appeal and uphold the costs.
  
  In summary, the Supreme Court upheld the decision regarding the deductibility of the expenditure, emphasizing the business necessity and purpose behind the payment. The judgment reinforced the principle that expenses incurred exclusively for business purposes are eligible for deduction under the Income-tax Act, supporting the High Court's refusal to refer the legal question back to the Tribunal.

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• 1970 (4) TMI 5
  

  It was not open to the ITO to go behind the deed and find out, for the purposes of registration under s. 26A - registration under s. 26A of the IT Act, 1922, should not be refused to the appellant firm on the ground that the partnership in question violated the provisions of s. 4 f the Companies Act, 1913 - Assessee's appeal is allowed

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• 1970 (4) TMI 4
  

  Instructions or directions shall be given by the Board so as to interfere with the discretion of the AAC of Wealth-tax in the exercise of his appellate functions. It does not, however, imply that the Board may give any directions or instructions to the WTO or to the Commissioner in exercise of his quasi-judicial function and set aside the order passed by the Commissioner - Assessee's appeal is allowed

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• 1970 (4) TMI 3
  
  Issues:
  1. Validity of the second notice under section 34 of the Income-tax Act issued to the Hindu undivided family.
  2. Inclusion of Rs. 1,10,000 in the assessment of the Hindu undivided family.
  
  Analysis:
  
  The case involved an appeal by special leave from a judgment of the Calcutta High Court in an income-tax reference. The assessee, a Hindu undivided family, had its assessments reopened by the Income-tax Officer for the assessment year 1946-47. The issue arose when high denomination notes were encashed by the family and its individual members. The Income-tax Officer included the amount encashed by the family and the individual members in their respective assessments. Subsequently, a second notice under section 34 was issued to the family to include the amount encashed by the individual members in the family's income. The validity of this notice and the inclusion of Rs. 1,10,000 in the family's assessment were the main points of contention.
  
  The High Court held that the second notice issued under section 34 to the family was invalid. It was found that the Income-tax Officer had all the necessary facts during the first reassessment to include the entire amount in the family's assessment. The failure to do so led to the escapement of income, and issuing a second notice was deemed unnecessary. The High Court's decision was based on the requirement for the assessing authority to have all primary facts for a correct assessment, as established in previous judgments.
  
  The judgment analyzed the provisions of section 34(1)(a) of the Income-tax Act, emphasizing the importance of the assessing authority having reason to believe that income had escaped assessment due to the assessee's failure to disclose material facts. It was highlighted that the duty of disclosing primary facts lies on the assessee, and in this case, the Income-tax Officer had all necessary facts during the initial reassessment. Therefore, issuing a second notice to the family was deemed unjustified and beyond the scope of section 34(1)(a).
  
  In conclusion, the Supreme Court upheld the High Court's decision, stating that the second notice to the family was invalid. The appeal was dismissed, emphasizing that the inclusion of Rs. 1,10,000 in the family's assessment was not in accordance with the law. The judgment highlighted the importance of the assessing authority having all relevant facts for a proper assessment and reiterated the assessee's duty to disclose primary facts for a correct tax determination.

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• 1970 (4) TMI 2
  

  It was not justified in holding that the additions made by the ITO were in accordance with law - additions were arbitrarily made - No reasons were given to reject the accounts - Further, the method adopted for determining the escaped income appears to be highly capricious - Revenue's appeal dismissed

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• 1970 (4) TMI 1
  

  Burden of proof - Apart from the falsity of the explanation given by the assessee, there was cogent material or evidence from which it could be inferred that the assessee had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount was a revenue receipt. Therefore, penalty could not be imposed u/s. 28(1)(c) - Revenue appeal is dismissed

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