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Showing 101 to 104 of 104 Records

• 1980 (5) TMI 4
  
  Issues Involved:
  1. Whether the Department was justified in taxing the sum of Rs. 42,53,148 as revenue profit.
  2. The nature of the difference between the book value of trading assets and the price paid.
  3. The applicability of share premiums as taxable income.
  
  Summary:
  
  Issue 1: Taxation of Rs. 42,53,148 as Revenue Profit
  The primary question was whether the Department was justified in taxing Rs. 42,53,148, representing the difference between the book value of the trading assets and the price paid to the predecessor, as revenue profit in the hands of the assessee-company for the assessment year 1959-60. The Income-tax Appellate Tribunal found that the book value of the assets was not inflated and the surplus received by the company was treated as a premium, forming a capital reserve. The Tribunal upheld the order of the AAC, holding that Rs. 42,53,148 were not income that could be taxed.
  
  Issue 2: Nature of the Difference Between Book Value and Price Paid
  The assessee contended that the sum of Rs. 42,53,148 represented capital and could not be treated as income since there was no sale of any stock-in-trade. The Tribunal found that the assets were shown in the books of the assessee at the same value as in the books of the predecessor, indicating no inflation of trading assets. The difference was treated as a premium, which is a capital reserve created on the valuation of the new business as a whole.
  
  Issue 3: Applicability of Share Premiums as Taxable Income
  The Department argued that share premiums being profits would be liable to income-tax, citing Bharat Fire and General Insurance Ltd. v. CIT [1964] 53 ITR 108 (SC). However, the court distinguished this case, noting that the Supreme Court did not decide whether premiums received on the issue of shares were capital gains. The court agreed with the Gujarat High Court's observation in CIT v. Spunpipe and Construction Co. Ltd. [1965] 55 ITR 68, that the difference between the book value of assets and the price paid could not be regarded as revenue profit. The court concluded that the share premiums were not trading profits and thus not taxable as income.
  
  Conclusion:
  The court answered the question in favor of the assessee, holding that the Department was not justified in taxing the sum of Rs. 42,53,148 as revenue profits for the assessment year 1959-60. The difference between the book value of the trading assets and the price paid was treated as share premiums, which are capital in nature and not liable to income-tax.

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• 1980 (5) TMI 3
  
  The Supreme Court dismissed the appeal by special leave in the case of Commissioner of Income-Tax, Madras Versus Andhra Chamber of Commerce. The court held that the objects of the Andhra Chamber of Commerce fell within the charitable purpose category of "advancement of any other object of general public utility" and its income was exempt from tax under section 11(1) of the Income Tax Act. The appeal and related petitions were all dismissed.

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• 1980 (5) TMI 2
  
  Issues:
  - Whether a smuggler is entitled to a deduction under section 10(1) of the Indian Income-tax Act, 1922, on account of the confiscation of currency notes employed in the smuggling activity?
  
  Analysis:
  The case involved the assessment of an individual, the respondent, who was apprehended while attempting to smuggle currency notes across the border. The Income Tax Officer (ITO) assessed the individual's income from undisclosed sources, determining a portion of the seized amount as income. The respondent claimed a deduction under section 10(1) of the Indian Income-tax Act, arguing that the entire sum of confiscated currency notes should be considered a loss incurred in the smuggling business. The Income-tax Appellate Tribunal upheld the claim for deduction, considering the smuggling activity as a regular business operation. The matter was then referred to the High Court to determine if the loss arising from the confiscation of currency notes was an allowable deduction under the Act.
  
  The High Court answered in the affirmative, stating that the confiscation of currency notes was a loss directly related to the smuggling business and thus deductible. The revenue appealed this decision, arguing that the deduction should not be allowed as the smuggling activity was illegal. However, the Supreme Court upheld the High Court's decision, emphasizing that a loss incurred in carrying on an illegal business must be deducted before computing taxable profits. The Court referred to previous judgments to support its decision, distinguishing cases where losses arising from illegal activities were not allowed as deductions due to the nature of the business being lawful.
  
  The Court concluded that in the case of smuggling activities, the confiscation of currency notes was a loss directly linked to the business and hence deductible under section 10(1) of the Act. Therefore, the respondent was entitled to the deduction of the full amount confiscated. The appeal by the revenue was dismissed, affirming the High Court's decision on the matter.

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• 1980 (5) TMI 1
  

  Jute Manufacturer- Amount paid by the assessee for purchase of loom hours - claim for deduction under s. 10(2)(xv) - whether a particular expenditure incurred by the assessee is of capital or revenue nature - held that impugned expenditure is in the nature of revenue expenditure

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