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Showing 101 to 117 of 117 Records

• 1977 (4) TMI 17
  
  The High Court of Allahabad dismissed the application under sub-section (2) of section 256 of the Income-tax Act, 1961. The Tribunal had discretion to register a firm for the assessment year 1968-69. The Tribunal revised the Income-tax Officer's decision, exercising its own discretion. The Tribunal had sufficient material to make its decision. The application was dismissed, and each party was directed to bear their own costs.

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• 1977 (4) TMI 16
  
  Issues Involved:
  1. Permissibility of deduction under section 37(1) of the Income-tax Act, 1961, for research expenses.
  2. Inclusion of the value of capital work-in-progress in the computation of capital employed for relief under section 84(1) of the Income-tax Act, 1961.
  3. Entitlement to relief under section 84 of the Income-tax Act, 1961, for profits from the wire mill unit used as raw material in the electrode factory.
  
  Detailed Analysis:
  
  Issue 1: Permissibility of Deduction for Research Expenses
  The first issue revolves around whether the sum of Rs. 3,40,053 paid by the assessee to M/s. British Oxygen Ltd. qualifies as a permissible deduction under section 37(1) of the Income-tax Act, 1961. This question has been previously addressed in Income-tax Reference No. 78 of 1970 in the case of the same assessee (Commissioner of Income-tax v. Indian Oxygen Ltd. [1978] 112 ITR 1025 (Cal)). Following that precedent, the court answered the question in the affirmative and in favor of the assessee.
  
  Issue 2: Inclusion of Capital Work-in-Progress in Computation of Capital Employed
  The second issue concerns whether the sum of Rs. 2,96,259 representing the value of capital work-in-progress at the beginning of the previous year should be included in the computation of the capital employed for the purpose of working out the relief under section 84(1) of the Income-tax Act, 1961.
  
  Section 84(1) of the Income-tax Act, 1961, stipulates that income-tax shall not be payable by an assessee on profits derived from any industrial undertaking to which this section applies, as long as it does not exceed six percent per annum on the capital employed in the undertaking, computed in the prescribed manner. Rule 19 of the Income-tax Rules, 1962, elaborates on the computation of capital employed, categorizing it into assets acquired by purchase (both entitled and not entitled to depreciation), debts due to the business, and other assets.
  
  The Tribunal accepted the assessee's contention that the proviso to rule 19(1) applies only to assets acquired within the computation period, necessitating the computation of average cost and relevance of actual user of the asset. If an asset existed throughout the computation period, it should be included in the capital employed. The court, agreeing with the Tribunal, held that the moment capital is utilized for acquiring any asset for business purposes, it becomes employed in the business, regardless of its actual use. This view aligns with the majority opinion in the case of Birmingham Small Arms Co. Ltd. [1951] 2 All ER 296 (HL) and the Madras High Court's decision in Jayaram Mills Ltd. [1959] 35 ITR 651. Consequently, the court answered the question in the affirmative and in favor of the assessee.
  
  Issue 3: Entitlement to Relief for Profits from Wire Mill Unit
  The third issue pertains to whether the assessee is entitled to relief under section 84 of the Income-tax Act, 1961, for profits from the wire mill unit, considering that its products were used as raw material in the manufacture of electrodes at the electrode factory. This question is covered by the Supreme Court's decision in Textile Machinery Corporation Ltd. v. Commissioner of Income-tax [1977] 107 ITR 195. Following this judgment, the court answered the question in the negative and in favor of the assessee.
  
  Conclusion:
  The court's judgment addressed three key issues:
  
  1. The deduction for research expenses under section 37(1) was affirmed in favor of the assessee.
  2. The inclusion of capital work-in-progress in the computation of capital employed under section 84(1) was also affirmed in favor of the assessee.
  3. The relief under section 84 for profits from the wire mill unit was granted, with the court ruling in favor of the assessee based on the Supreme Court's precedent.
  
  In conclusion, all questions were answered in favor of the assessee, and there was no order as to costs.

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• 1977 (4) TMI 15
  
  Issues Involved:
  
  1. Whether the trust is wholly for charitable purposes and eligible for exemption under section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955.
  2. Whether the income of the trust should be assessed in the hands of the trustees in a representative capacity under section 8(1)(a) of the Tamil Nadu Agricultural Income-tax Act, 1955.
  
  Detailed Analysis:
  
  1. Charitable Purpose and Exemption under Section 4(b):
  
  The primary issue was whether the trust was wholly for charitable purposes, thus qualifying for exemption under section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955. The trust deed, created by two Hanifa Mahomedans in 1893, outlined that the income from the trust property was to be used for specific charitable activities, with any surplus divided among the heirs. The Privy Council had previously determined that the trust's primary purpose was charitable, but also noted that part of the income was designated for the maintenance of the grantor's family.
  
  The court concluded that the trust could not be considered wholly for charitable purposes because:
  - The trust deed specified that one-third of the income was to be invested in immovable property to augment the trust, not directly for charitable purposes.
  - The Supreme Court's decision in Abdul Sathar Haji Moosa Sait Dharmastapanam v. Commissioner of Agricultural Income-tax [1973] 91 ITR 5 (SC) supported this view, as it held that a trust could not be wholly charitable if part of the income was earmarked for augmenting the corpus.
  
  Thus, the claim for exemption as if the trust was wholly for charitable purposes failed. However, the court acknowledged that the trust was eligible for partial exemption for the income applied for charitable purposes.
  
  2. Assessment in Representative Capacity under Section 8(1)(a):
  
  The second issue was whether the income should be assessed in the hands of the trustees in a representative capacity under section 8(1)(a) of the Tamil Nadu Agricultural Income-tax Act, 1955. This section applies when income is received on behalf of beneficiaries.
  
  The court noted that:
  - The District Munsif had identified 26 legal heirs entitled to specific shares in the trust income, which later increased to 36 sharers.
  - The Supreme Court's decision in Commissioner of Income-tax v. Managing Trustees, Nagore Durgha [1965] 57 ITR 321 (SC) was relevant. In that case, the Supreme Court held that trustees receiving income on behalf of beneficiaries in definite shares should be assessed in a representative capacity.
  
  The court determined that the income was received on behalf of the beneficiaries, and the shares of the beneficiaries were ascertained and clearly defined. Consequently, the assessment should be made in the hands of the trustees in a representative capacity, not as a single unit of assessment.
  
  The court remanded the matter to the Agricultural Income-tax Officer to work out the shares and make separate assessments accordingly.
  
  Conclusion:
  
  The tax revision petition was allowed in part. The court held that the trust could not be considered wholly for charitable purposes and was eligible for partial exemption for the income applied for charitable purposes. Additionally, the income should be assessed in the hands of the trustees in a representative capacity, with separate assessments for each beneficiary. There was no order as to costs.

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• 1977 (4) TMI 14
  
  Issues Involved:
  1. Validity of the transfer order by the Central Board of Direct Taxes (CBDT) u/s 127 of the Income-tax Act, 1961.
  2. Jurisdiction of the court to issue directions for assessments barred by limitation u/s 153 of the Income-tax Act, 1961.
  
  Summary:
  
  1. Validity of the Transfer Order:
  The petitioner-appellant, an assessee under the Income-tax Act, 1961, challenged the CBDT's order dated December 23, 1972, which transferred its case from the Income-tax Officer, "A" Ward, Karimganj, to the Income-tax Officer, Central Circle XXXIII, Calcutta. The appellant contended that the order did not contain any reasons for the transfer as required by law. The rule was contested and subsequently discharged by the impugned order under appeal. However, the learned Advocate-General conceded that, in light of the Supreme Court's decision in Ajantha Industries v. Central Board of Direct Taxes [1976] 102 ITR 281 (SC), which mandated the recording and communication of reasons for such transfers, the impugned order was invalid. Consequently, the appeal was allowed, and the transfer order dated December 23, 1972, was quashed.
  
  2. Jurisdiction to Issue Directions for Assessments Barred by Limitation:
  The learned Advocate-General argued that the court should issue directions u/s 153(3) of the Act to enable the original Income-tax Officer to make assessments for the years 1970-71, 1972-73, 1973-74, and 1974-75, which would otherwise be barred by limitation. The court examined the relevant provisions of section 153, noting that sub-sections (1) and (2) provide time limits for assessments, while sub-section (3) allows for assessments to be completed at any time in consequence of or to give effect to any finding or direction contained in an order of any court in a proceeding otherwise than by way of appeal or reference under the Act. The court held that it had the jurisdiction to pass appropriate directions in the interest of justice and national interest, as otherwise, taxes payable for those years would be irrecoverable for no fault of the revenue.
  
  The court rejected the contention that sub-section (3) of section 153 is a mere proviso to sub-sections (1) and (2), stating that it confers plenary powers on the appropriate authority to pass directions for assessments, reassessments, or recomputations at any time. The court also dismissed the argument that the intended assessments had become barred by limitation, noting that sub-section (3) expressly excludes the operation of the earlier sub-sections in such cases.
  
  Conclusion:
  The appeal was allowed, and the impugned transfer order dated December 23, 1972, was set aside. The court directed the Income-tax Officer, "A" Ward, Karimganj, to make assessments for the years 1970-71, 1972-73, 1973-74, and 1974-75. There was no order for costs in the appeal.
  
  G. N. RAY J.: I agree.

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• 1977 (4) TMI 13
  
  Issues:
  1. Application of the provisions for calculating penalty under section 18(1)(a) of the Wealth-tax Act, 1957.
  2. Determination of the period of default for belated filing of wealth-tax return.
  
  Analysis:
  The judgment involves two wealth-tax assessees, a husband and wife, who faced penalty for delayed submission of wealth-tax returns for the assessment year 1968-69. The central issues revolve around the application of the law for penalty calculation and the determination of the default period for late filing of returns. The assessees, residents of Pondicherry, were served notices to file wealth tax returns by June 30, 1968, but submitted them only on October 29, 1969, citing health issues and unfamiliarity with tax laws as reasons for the delay.
  
  The Wealth-tax Officer initiated penalty proceedings under section 18(1)(a) of the Wealth-tax Act, calculating penalties based on the full 15-month delay from the due date. The Appellate Assistant Commissioner upheld the penalties, leading to further appeal to the Appellate Tribunal. The Tribunal addressed two key questions: the applicable law for penalty calculation and the correct period of default. It ruled that the law in force at the time of default should apply, directing the Officer to re-calculate penalties based on the pre-amendment provision.
  
  Regarding the default period, the Tribunal considered the delay in income-tax return filing as a reasonable cause for the wealth-tax return delay. The department challenged this approach, arguing that the income-tax delay should not excuse the wealth-tax delay. However, the Tribunal found the income-tax liability crucial for wealth-tax return preparation and deemed the delay justifiable. It concluded that the penalty period should start from the income-tax return filing date, not the initial default date.
  
  The judgment aligns with a prior decision emphasizing the law applicable at the default time for penalty calculation. It underscores the interrelation between income-tax and wealth-tax liabilities, recognizing income-tax delays as valid reasons for wealth-tax return delays. Ultimately, the Tribunal's decision was upheld, affirming that the delay period for penalty calculation should commence from the income-tax return filing date.

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• 1977 (4) TMI 12
  
  Issues involved: Determination of whether the land in question qualifies as agricultural land for exemption under section 2(e)(i) of the Wealth-tax Act, 1957.
  
  Summary:
  The case involved a dispute regarding the classification of a piece of land in Paldi, Ahmedabad, purchased in 1946, as agricultural land for wealth tax assessment. The assessee claimed exemption based on the land being described as agricultural in the sale deed. However, the Wealth-tax Officer included the land's value in the net wealth without providing reasons. The Appellate Assistant Commissioner sided with the assessee, but the Tribunal overturned the decision based on evidence and surrounding developments.
  
  The Tribunal's decision was challenged, arguing that the tests applied were incorrect and citing relevant precedents. The court analyzed the nature and use of the land, noting agricultural activities from 1950-51 to 1960-61, fallow periods, and cultivation in 1969-70 and 1970-71. The land was situated in a developed area with housing colonies, affecting its classification. Precedents highlighted the importance of actual land use over owner intentions and the impact of surrounding developments on land classification.
  
  Considering the evidence and circumstances, the court upheld the Tribunal's decision, concluding that the land did not qualify as agricultural land for exemption under the Act. The change in land use over time, surrounding developments, and the assessee's intentions indicated a shift away from agricultural use. The reference was answered in favor of the revenue, with costs awarded against the assessee.

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• 1977 (4) TMI 11
  
  Issues Involved:
  1. Entitlement to claim interest as a deduction.
  2. Timing of the liability for payment of interest.
  3. Ascertainability of the quantum of interest.
  
  Summary of Judgment:
  
  Issue 1: Entitlement to Claim Interest as a Deduction
  - The court examined whether the assessee was entitled to claim Rs. 75,83,183 as interest payable on loans as a deduction from its income for the assessment year 1957-58.
  - The assessee followed the mercantile system of accounting and claimed the interest as an allowable deduction in the financial year 1956-57.
  - The Income-tax Officer disallowed Rs. 57,75,365, allowing only Rs. 18,07,819 for the year 1956-57.
  - The Appellate Assistant Commissioner allowed the entire amount, stating the liability was determined during the assessment year.
  - The Tribunal directed further examination, leading to this reference.
  
  Issue 2: Timing of the Liability for Payment of Interest
  - The court considered whether the liability arose only on May 14, 1957, when the State Government informed the assessee of the interest rates.
  - The correspondence between the assessee and the Government indicated ongoing negotiations and no settled rate of interest until May 14, 1957.
  - The court found that the liability remained unascertained and contingent until the Government's final decision communicated on May 14, 1957.
  
  Issue 3: Ascertainability of the Quantum of Interest
  - The court examined whether the quantum of interest payable became ascertainable only on May 14, 1957.
  - The Government's letter dated February 28, 1952, proposed rates, but the assessee did not accept these terms, leading to continued negotiations.
  - The court concluded that the interest liability crystallized and became enforceable only on May 14, 1957, when the Government's decision was communicated.
  
  Conclusion:
  - The court answered all questions in the affirmative and in favor of the assessee.
  - The assessee was entitled to claim the entire amount of Rs. 75,80,183 as a deduction for the assessment year 1957-58.
  - The liability for payment of interest arose and became ascertainable only on May 14, 1957.
  - No order as to costs was made.

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• 1977 (4) TMI 10
  
  Issues:
  1. Entitlement to obsolescence allowance for an old kiln for the assessment year 1970-71.
  2. Maintainability of the reference application by the Appellate Tribunal for two questions of law.
  
  Analysis:
  The case involved a dispute regarding the entitlement to obsolescence allowance for an old kiln for the assessment year 1970-71. The assessee had initially claimed a deduction for kiln building repairs, which was denied by the ITO as capital expenditure. However, the AAC allowed the deduction as current repairs under s. 31(1) of the Income-tax Act. The Appellate Tribunal upheld the ITO's view on capital expenditure but directed the grant of obsolescence allowance under s. 32(1)(iii) for the old kiln. The issue arose when the ITO found that the assessee had not written off the amount in the books, a requirement for claiming obsolescence allowance. The Tribunal rejected a subsequent miscellaneous petition by the revenue, leading to a reference application questioning the entitlement to obsolescence allowance. The Appellate Tribunal rejected the reference application, leading to the present case challenging the maintainability of the reference application.
  
  The primary issue revolved around the interpretation of the provisions of the Income-tax Act, specifically s. 254(1) and (2), concerning the powers of the Appellate Tribunal to pass orders and amend them within a specified period. The Appellate Tribunal's order directing obsolescence allowance was passed under s. 254(1). The subsequent rejection of the miscellaneous petition under s. 254(2) did not amend the original order, rendering the reference application on entitlement to obsolescence allowance not arising from the subsequent order. The court agreed with the Tribunal that the question of law did not arise from the subsequent order, making the reference application not maintainable based on the provisions of the Income-tax Act.
  
  Regarding the second issue of the maintainability of the second question for reference, the court emphasized that the second question was not part of the initial reference application before the Appellate Tribunal. Citing precedent, the court highlighted that the High Court could not direct the Tribunal to refer a question that was not raised before the Tribunal. The court noted that the second question, being unrelated to the original reference application, could not be directed for reference to the High Court. Therefore, the court dismissed the income-tax case, considering both questions, and issues raised therein, as not maintainable for reference.

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• 1977 (4) TMI 9
  
  Issues:
  1. Whether the assessee was entitled to close its accounts on November 5, 1962, for the assessment year 1963-64 without obtaining the ITO's consent as per s. 3(4) of the I.T. Act, 1961?
  
  Analysis:
  The case involved a registered firm engaged in the manufacture and sale of gold and silver jewelry. The firm filed a return for the accounting year from November 5, 1961, to November 5, 1962. The issue arose when the ITO objected to the firm closing its accounts on November 5, 1962, instead of on Diwali day, which fell on October 26, 1962, as per the partnership deed. The ITO assessed the firm only up to October 26, 1962, and completed the assessment. The AAC rejected the firm's contention, stating that the firm could not deviate from the partnership deed's terms. However, the Tribunal noted that the firm consistently closed its accounts on a day different from Diwali day, and the I.T. department had assessed it accordingly over the years. The Tribunal concluded that the firm had not altered the accounting year to gain an advantage, and hence, did not need the ITO's consent to close its accounts on November 5, 1962.
  
  The High Court referred to Section 3 of the I.T. Act, which defines the "previous year" and provides options for fixing the financial year. Sub-section (4) restricts the assessee from varying the previous year without the ITO's consent once an option has been exercised or the assessee has been assessed. However, in this case, the Tribunal's findings indicated that the firm consistently closed its accounts around Diwali day, not precisely on Diwali day as per the partnership deed. The firm had been assessed accordingly by the I.T. department without exception. Therefore, the High Court held that the firm had effectively exercised its option to close its accounts around Diwali day, and as it had been consistently assessed based on this practice, the ITO's consent was not required to close the accounts on November 5, 1962. The court answered the question in the affirmative, in favor of the assessee, allowing it to close its accounts without the ITO's consent.
  
  In conclusion, the High Court ruled in favor of the assessee, stating that it was entitled to close its accounts on November 5, 1962, for the assessment year 1963-64 without obtaining the ITO's consent as per Section 3(4) of the I.T. Act, 1961. The court awarded costs to the assessee, including advocate's fee.

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• 1977 (4) TMI 8
  
  Issues Involved:
  1. Taxability of power subsidy received by the assessee.
  2. Deductibility of expenditure incurred for constructing a railway overbridge as business expenditure.
  3. Allowability of depreciation on roads and bridges.
  
  Issue-wise Detailed Analysis:
  
  1. Taxability of Power Subsidy:
  The primary issue was whether the amounts of Rs. 1,54,561 and Rs. 51,821 received from the Government of Andhra Pradesh as power subsidy for the assessment years 1966-67 and 1967-68, respectively, were taxable under the Income-tax Act, 1961. The assessee argued that these sums were not taxable as they were in the nature of a windfall and casual income. However, the Income-tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) held that the subsidy was a revenue receipt and taxable. The High Court agreed with the lower authorities, stating that the subsidy was granted as part of a well-defined government policy to supply electricity at concessional rates to certain industries. The court concluded that the subsidy amounted to a reduction in electricity charges and was directly connected to the business operations of the assessee. Therefore, it was deemed as profits and gains of business under Section 41(1) of the Income-tax Act, 1961, and chargeable to income-tax.
  
  2. Deductibility of Expenditure on Railway Overbridge:
  The second issue concerned the deductibility of Rs. 66,684 paid by the assessee to the Railways for constructing an overbridge at an unmanned level crossing. The ITO had disallowed this expenditure, considering it a capital expenditure, as it resulted in an asset of enduring nature. However, the Tribunal allowed the deduction, viewing it as an expenditure incurred for the safety and efficiency of the business operations. The High Court upheld the Tribunal's decision, referencing the Supreme Court's ruling in Lakshmiji Sugar Mills Co. P. Ltd. v. CIT, which allowed similar deductions for expenditures made for business efficiency and safety. The court reasoned that the construction of the overbridge was essential for the safety of the employees and vehicles, thereby facilitating the business operations. Hence, the expenditure was considered revenue in nature and deductible.
  
  3. Allowability of Depreciation on Roads and Bridges:
  The third issue was whether the assessee was entitled to depreciation on roads and bridges. The ITO and AAC disallowed the claim, arguing that roads do not qualify as depreciable assets. However, the Tribunal directed the ITO to grant depreciation based on the nature of the roads. The High Court supported the Tribunal's view, stating that roads constructed within the factory premises involved construction and should be treated as part of the building. The court noted that roads, like buildings, depreciate over time depending on the materials used. Therefore, the assessee was entitled to claim depreciation on roads as per the Income-tax Rules.
  
  Conclusion:
  The High Court answered the questions as follows:
  1. The amounts received as power subsidy are taxable under the Income-tax Act, 1961.
  2. The expenditure incurred for constructing the railway overbridge is deductible as business expenditure.
  3. The assessee is entitled to claim depreciation on roads and bridges.
  
  In summary, the High Court affirmed the taxability of the power subsidy, allowed the deduction for the expenditure on the railway overbridge, and permitted depreciation on roads and bridges, thereby providing a comprehensive resolution to the issues raised.

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• 1977 (4) TMI 7
  
  Issues:
  Challenge to notice under section 274 read with section 271 of the Income Tax Act, 1961 based on lack of satisfaction by the Income Tax Officer regarding concealment of income or furnishing inaccurate particulars.
  
  Analysis:
  The judgment by T. K. Basu J. pertains to a challenge against a notice issued under section 274 read with section 271 of the Income Tax Act, 1961. The crux of the matter lies in the requirement that before such a notice can be validly issued, the Income Tax Officer (ITO) must be satisfied during the assessment proceedings that the assessee has concealed income or furnished inaccurate particulars. This principle was established in previous judgments like Stadmed (P.) Ltd. and Turner Morrison and Company Limited v. IAC of Income-tax. The petitioner contended that there was no recorded satisfaction by the ITO in the assessment proceedings regarding concealment or inaccurate particulars.
  
  The petitioner's advocate highlighted the order of assessment and argued that it did not reflect the ITO's satisfaction regarding concealment or inaccurate particulars. The affidavit-in-opposition filed by the ITO also did not indicate such satisfaction during the assessment proceedings. The judge noted that the satisfaction of the ITO can be arrived at before or after the assessment proceedings but must be evident from the assessment records, which was lacking in this case.
  
  Reference was made to a decision by Sabyasachi Mukherji J. in M/s. Becker Gray & Co. Ltd. v. ITO, which was deemed irrelevant to the present case as it did not address the key issue of satisfaction by the ITO. Additionally, the judgment in CIT v. S. V. Angidi Chettiar was found inapplicable as it pertained to a different context. The judge ultimately held in favor of the petitioner, ruling that the notice was invalid due to the absence of recorded satisfaction by the ITO regarding concealment or inaccurate particulars.
  
  As a result, the application succeeded, and a writ of mandamus was issued to recall and withdraw the impugned notice. The respondents were directed to refrain from enforcing the notice, with liberty to proceed according to law. No costs were awarded, and the operation of the order was stayed for six weeks, subject to further extension from the appellate court.

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• 1977 (4) TMI 6
  
  The petition to quash proceedings in C.C. No. 5674 of 1976 was dismissed by the High Court of Madras. The case involves alleged offences under various sections of the Indian Penal Code and the Income-tax Act. The complaint is independent of the assessment order by the Income-tax Department. The court found a prima facie case against the petitioners and ruled that there was no basis to quash the proceedings.

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• 1977 (4) TMI 5
  
  Issues Involved:
  1. Validity of the notice dated 9th January 1962 issued by the Assistant Controller.
  2. Imposition of penalty on the appellant for non-compliance with the notice.
  
  Issue-Wise Detailed Analysis:
  
  1. Validity of the Notice Dated 9th January 1962:
  The first issue concerns whether the notice dated 9th January 1962 issued by the Assistant Controller to the appellant was valid. The notice required the appellant to pay the rent due to the estate of the deceased to the Assistant Controller. The appellant argued that the notice was invalid because the rent was payable to the lessors, not respondents Nos. 3 and 4, who were named as accountable persons in the notice.
  
  The court analyzed the relevant provisions of the Estate Duty Act, 1953, and the Indian Income-tax Act, 1922. It was noted that the lessors were accountable persons as they took possession of the leased premises, which were part of the estate of the deceased. The lessors were liable to pay the estate duty of Rs. 1,40,090.20, limited to the extent of the leased premises. The court held that the notice was valid as it required the appellant to pay the rent due to the estate of the deceased, which could be described as an amount due to the estate of the deceased. The appellant was thus obligated to pay the rent to the Assistant Controller.
  
  2. Imposition of Penalty on the Appellant:
  The second issue concerns whether any penalty could be levied on the appellant for contravention of the notice dated 9th January 1962. The court examined the provisions of section 73, sub-section (5) of the Estate Duty Act, 1953, read with section 46(1) and section 46(5A) of the Indian Income-tax Act, 1922.
  
  The court noted that penalty under sub-section (1) of section 46 can be imposed only on an assessee in default. The garnishee (appellant) does not become an assessee as defined in section 2, sub-section (2) of the Act. The Act does not contain any provision deeming a defaulting garnishee as an assessee in default. Therefore, no penalty could be imposed on the appellant under section 73, sub-section (5) of the Estate Duty Act, 1953, read with section 46(1) of the Act of 1922. The court quashed and set aside the order dated 25th March 1964, imposing a penalty of Rs. 3,000 on the appellant.
  
  Conclusion:
  The court concluded that the notice dated 9th January 1962 was valid and the appellant was bound to comply with it and pay the rent to the Assistant Controller. However, the imposition of a penalty of Rs. 3,000 on the appellant was outside the power of the Assistant Controller and was quashed. The appeal was allowed in part, with no order as to costs.

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• 1977 (4) TMI 4
  

  Partnership Deed - When commission is paid to an employee, whether it is necessary that the employee should have rendered extra services - in order to claim the deduction under s. 36(1)(ii), it is not necessary that the commission should have been paid under a contractual obligation - Assessee's appeal is allowed

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• 1977 (4) TMI 3
  

  Section 2(6A)(e) of 1922 Act, would be attracted at the time of advance of loan being made to the shareholder except for the specific provisions in s. 12(1B) - legislature has deliberately not made the subsistence of the loan on the date of the previous year a prerequisite for raising the statutory provisions - Therefore, even though the loan was not outstanding as of the year end, it should be treated as deemed dividend - Assessee's appeal is dismissed

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• 1977 (4) TMI 2
  

  Foreign Company - Income Accruing or Arising in India - supply of technical information and know-how, technical management etc. - business connection - fee could not be gained to have accrued or arisen in India. Since it has not been established that some of the operations were carried out in India, in respect of which the income is sought to be assessed - Assessee's appeal allowed

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• 1977 (4) TMI 1
  

  Diversion by Overriding Title - land taken on lease - effect of the condition in lease that 50% of the unearned increase in the value to be paid to the lessor at the time of transfer on the valuation of leasehold interest - market value of the interest where it is not encumbered by the lease deed should be reduced by 50% of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date - Revenue's appeal dismissed

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