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1979 (1) TMI 80 - GUJARAT HIGH COURT
Attributable To, Industrial Undertaking, Previous Year, Relief From Income Tax ... ... ... ... ..... d from the averments in the petition itself that in the year in question, namely, the year ending 31st March, 1978, being the previous year relevant to the assessment year 1978-79, the Sulzer plant, which is the new undertaking in question, had no assessable profits and gains. Hence, the benefit of s. 80K cannot be granted in respect of the relevant amount of capital employed in the Sulzer Plant during that particular previous year. This special civil application, therefore, fails and is dismissed. Rule is discharged with costs. Mr. Kaji for the petitioners orally applies for leave to appeal to the Supreme Court under art. 133 of the Constitution. In view of the question of law which is involved in this case and in view of the interpretation which has to be culled out from the decisions of the Supreme Court, this is certainly a case in which a substantial question of law of general importance which is needed to be decided by the Supreme Court arises. Hence, leave is granted.
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1979 (1) TMI 79 - BOMBAY HIGH COURT
Assessee Carrying On Business, Manufacture And Sale ... ... ... ... ..... reme Court. Accordingly, in Traub (India) Ltd. s case 1979 118 ITR 525 (Bom), the application made by the Commissioner under s. 256(2) for referring a similar question was rejected although rule had already been issued and at that stage we had delivered a fairly substantial judgment dealing fairly extensively with the view of the Andhra Pradesh High Court in Amonbolu Rajiah s case 1976 102 ITR 403. The view which this court has expressed in Associated Cement Co. Ltd. s case 1968 68 ITR 478 (Bom) and reaffirmed in Traub (India) Private Ltd. s case (Income-tax Application No. 106 of 1977 -since reported in 1979 118 ITR 525 (Bom)) has been followed by the Mysore High Court (as it then was) and by the Madras High Court. On the principles laid down in the aforesaid decisions (which, in our opinion, must govern this reference), the question referred to us is answered in the affirmative and in favour of the assessee. The parties, however, will bear their own costs of the reference.
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1979 (1) TMI 78 - KARNATAKA HIGH COURT
Attributable To, Income From Other Sources, Income From Property ... ... ... ... ..... y the co-owners of the building. We are, however, of opinion that, on the facts and in the circumstances of these cases, the receipts derived on account of the provision of the air-conditioning facility should be treated as income from a source other than property. In the result, we hold that, on the facts and in the circumstances of the cases, there is no lease of the air-conditioning plant by the assessees in favour of the State Bank of India. Consequently, s. 56(2)(iii) of the Act is not applicable to these cases. The rent realised in respect of the lease of the building should be assessed in accordance with s. 26 of the Act and the income realised on account of the provision of air-conditioning facility should be dealt with as income from other sources. The question referred to us in each of the above cases is answered accordingly, in the negative and against the department. Having regard to the circumstances of these cases, we direct the parties to bear their own costs.
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1979 (1) TMI 77 - CALCUTTA HIGH COURT
Best Judgment Assessment, Registration Of Firm ... ... ... ... ..... ate Assistant Commissioner.-(1) An appeal (under section 246) ... to the Appellate Assistant Commissioner shall be made in Form No. 35. Form No. 35 appears to be an omnibus form and applies to all appeals prescribed under s. 246. All that the assessee is required to do is to strike out the inappropriate columns. It appears to us that the objections of the revenue in this matter are hyper-technical. The contention of the revenue has no force inasmuch as under the I.T. Act, 1961, read with the I.T. Rules, 1962, and the forms prescribed, it is possible to combine more than one appeal. In any event, the matter is otherwise of little consequence as no fee is prescribed for filing of appeals before the AAC. We find no error in the order of the Tribunal and we find no reason to differ from the conclusions arrived at by the Tribunal and, accordingly, we answer the question in the negative and in favour of the assessee. There will be no order as to costs. C. K. BANERJEE J. -- I agree.
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1979 (1) TMI 76 - BOMBAY HIGH COURT
Income Tax Concession, New Industrial Undertaking, Plant And Machinery ... ... ... ... ..... kilns are a completely integrated unit which could be put into production independently of the other units or production therefrom can cease without affecting the production from the other kilns. There is also no doubt that all these four kilns at the four different factories have been established with the plant and machinery newly purchased and required exclusively for the purposes of these new kilns. Thus, even though the business or the industrial establishment as a whole has been expanded by the addition of a new kiln, each new kiln by itself wouId, in our view, clearly constitute a new industrial undertaking within the meaning of s. 15C of the Indian I.T. Act, 1922. The Tribunal was, therefore, right, in taking the view that the assessee was entitled to the benefit of s. 15C of the Indian I.T. Act, 1922. The question referred to us is, therefore, answered in the affirmative and in favour of the assessee. We, however, make no order as to costs in respect of this matter.
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1979 (1) TMI 75 - BOMBAY HIGH COURT
Income Tax Act ... ... ... ... ..... he time of computing its profits. In this view of the matter, on questions Nos. 2 and 3 also the answer will have to be given in favour of the assessee. Accordingly, the questions referred to us are answered as follows Question No. 1 In the affirmative and in favour of the assessee. Question No. 2 In the affirmative, but it being made clear that in our opinion the conflict with which we are concerned, pertains to the portion of r. 8 set out in para. 8 of the statement of case which provides for nil per cent. of depreciation for the four types of assets if they are held for 30 days or less by the assessee. We are not required to consider and have not considered the question of any possible conflict between the other portions of r. 8(2), viz., cases (i) and (ii). Question No. 3 In the affirmative and in favour of the assessee. This is a fit matter in which, in our opinion, the parties should be asked to bear their own costs of the reference. There will be an order accordingly.
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1979 (1) TMI 74 - DELHI HIGH COURT
Foreign Company, High Court, Indian Company, Managing Agent, Technical Services ... ... ... ... ..... xpressed by the Board as to the meaning of technical services is both a question of law and a question of judgment. This is because the Board is the primary authority in giving meaning to the words technical services . They have to construe these words not only as a question of law, but in case of doubt or ambiguity or with a view to implement the object of s. 80-O and in the light of policy considerations they have also to exercise a judgment of their own in doing so. If this judgment has to be ordinarily of the Board and if this court is not sitting in appeal over that judgment in judicial review, interference with the judgment of the Board would not be called for unless that judgment is apparently wrong. If a reasonable view is adopted by the Board no reason would warrant interference with it. Fot the above reasons, we are of the view that the impugned orders do not call for any interference. The writ petitions are dismissed with no order as to costs. Petitions dismissed.
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1979 (1) TMI 73 - KARNATAKA HIGH COURT
Capital Of Company, Computation Of Capital ... ... ... ... ..... eserves and hence the Explanation to r. 1 of the Second Schedule of the Act is of no avail to the department. It appears to us that the amounts in question fall under item 4 of Sch. VI of the Companies Act under the head Reserves and Surplus which reads Other reserves specifying the nature of each reserve and the amount in respect thereof. The Tribunal was, therefore, right in holding that the amounts in question fall under cl. (iii) of r. 1 of the Second Schedule of the Act which provides for the inclusion of the other reserves as reduced by the amounts credited to such reserves as have been allowed as income of the company for the purposes of the Indian I.T. Act, 1922, or the I.T. Act, 1961, in the capital base for purposes of determining the statutory deduction. We, therefore, answer question No. 1 also against the department. In the result, both the questions are answered in the affirmative. In the circumstances of the case, we direct the parties to bear their own costs.
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1979 (1) TMI 72 - GUJARAT HIGH COURT
Agricultural Land ... ... ... ... ..... he Tribunal, which is a final fact-finding body, should be very careful in making statements of facts of the type which have been made in para. 8 of its order in the instant case. In view of the record before us, we can disregard these statements as perverse and contrary to the record of the case, but it is possible that such unsubstantiated statement set out in its order may possibly harm an assessee in some other case. The Tribunal should, therefore, be very careful in setting out its conclusion on facts in its order. In view of the above discussion, we hold that the Tribunal committed an error of mixed question of law and fact when it came to the conclusion that the land had ceased to be agricultural land on the date of the sale and that when it was sold it was not agricultural land. We, therefore, answer the question referred in the negative, that is, in favour of the assessee and against the revenue. The Commissioner will pay the costs of this reference to the assessee.
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1979 (1) TMI 71 - GUJARAT HIGH COURT
Agency Business ... ... ... ... ..... no circumstance at all. In the ultimate analysis, in our opinion, there is no prima facie evidence whatsoever which will justify initiation of proceedings. It has been strenuously contended on behalf of the respondent that this is merely an inquiry which the ITO concerned is entitled to hold so as to satisfy himself and find out as to whether there is any successor to the business of the firm so that the income-tax dues of the defaulting firm should be recovered. We are afraid that this is too broad a contention to be acceded to, since that would be virtually empowering the ITO to hold a fishing inquiry without any prima facie evidence to justify such an action. In the result, this petition is allowed and the impugned notice of 10th December, 1973, annexure C to the petition, is quashed and set aside by a writ of certiorari and the respondent is prevented from proceeding further in pursuance of the said notice. The rule is made absolute accordingly with no order as to costs.
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1979 (1) TMI 70 - GUJARAT HIGH COURT
Acquisition Proceedings, Fair Market Value, Natural Justice, Tax Evasion, Tax Proceedings ... ... ... ... ..... he entire order, but in view of our decision to remand the matter to the Tribunal with the direction to the Tribunal to remit the entire matter to the competent authority, who will be required to decide afresh the entire matter in the light of the evidence that may be placed before him, he would be also required to obtain fresh approval of the Commissioner as envisaged in s. 269F(6) of the I.T. Act, 1961. The result is that these appeals are allowed. The orders of the Tribunal are set aside and both the matters are remanded to the Tribunal with the direction to remit the entire matter to the competent authority after setting aside the orders of the competent authority so as to enable him to carry out the directions given above. Decree be drawn accordingly with no order as to costs. Cross-objections of the respondent-transferees shall stand dismissed in view of the main order in the appeals. Since the matter is remanded, there will be no order as to costs in cross-objections.
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1979 (1) TMI 69 - GUJARAT HIGH COURT
A Partner, High Court, Income Tax Act, Individual Income, Minor Child ... ... ... ... ..... annex. A-1, and the orders of reassessment, annex. A-2, together with the notice of demand issued under the Act of 1961, are quashed and set aside. The respondents herein are directed not to proceed further with the notice, annex. A-1, or the order of reassessment, annex. A-2, or the notice of demand issued thereunder. Rule is made absolute accordingly with costs. The learned Government Pleader appearing on behalf of the respondents urged before us that the petition is premature so far as notice under ss. 147 and 148 are concerned because it would be open to the petitioner to proceed by the regular machiney of appeal, first to the AAC, thereafter to the Tribunal and thereafter by way of reference to the High Court. However, since the question involved is a question of jurisdiction, we are examining the matter on the merits of the case and since the case can only fall under s. 64(1)(i) or (ii), we have passed the orders as above. Rule is made absolute accordingly with costs.
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1979 (1) TMI 68 - MADRAS HIGH COURT
Levy Of Penalty, Power Of Rectification, Supreme Court ... ... ... ... ..... d out by the ITO, namely, about the legality of the earlier order in so far as it was held that the penalty could not be levied under the provisions of the new Act. The result of the miscellaneous application filed by the ITO being accepted by the Tribunal would only have rendered the appeal against the order of the AAC being dismissed without any further aspect having to be gone into by way of reviewing its earlier order. The order dated December 28, 1971, in so far as it dealt with the quantum was without jurisdiction. The Tribunal can only rectify the mistake. Interference with quantum cannot be effected in exercise of the power of rectification. It would amount to a reconsideration of the appeal, for doing which the Tribunal has no power or authority. Whether Rs. 3,000 was leviable as penalty or not is not a mistake apparent from the record. The result is that the two questions are answered in the negative and in favour of the revenue. There will be no order as to costs.
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1979 (1) TMI 67 - MADRAS HIGH COURT
Urban Land Tax ... ... ... ... ..... n any earlier year could not be allowed as deduction for purposes of computation of the income. It was pointed out that on the true construction of the provision under consideration the allowance must be an allowance incurred in the year in respect of which arise the income, profits and gains, forming the basis of assessment. That was a case where the provisions of s. 12 were under consideration. Section 12 relates to the assessment under other sources and the method of accounting employed which was also relevant. That decision came to be rendered under these special features and we do not consider that the said decision has anything to do with the interpretation raised on the word paid with which we are now concerned. The word paid would permit allowance of the amount paid for any year or years. Therefore, the question that has been referred is answered in the affirmative and against the revenue. The assessee will be entitled to his costs. Counsel s fee is fixed at Rs. 500.
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1979 (1) TMI 66 - GUJARAT HIGH COURT
Adventure In The Nature Of Trade, Burden Of Proof ... ... ... ... ..... e other side of the line and it was a transaction which was not an adventure in the nature of trade. It is clear, that the assessees invested part of their business capital in the purchase of this land and, ultimately, when they found that they could not get permission from the municipal authorities and the Government for using the land for industrial purposes, they sold the land to a co-operative society. The efforts made by them to use the land for industrial purposes, as indicated by the materials on the record, militate against the case of the revenue. Under these circumstances, it is clear that the Tribunal applied the correct test and came to the correct conclusion on the totality of circumstances of this particular case. Therefore, the question referred to us in each of these two cases is answered in the affirmative, that is, in favour of the assessee concerned and against the revenue. The Commissioner will pay the costs of the assessee in each of these two references.
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1979 (1) TMI 65 - BOMBAY HIGH COURT
Industrial Undertaking, Previously Used In Any Other Business, Setting Up ... ... ... ... ..... her business and not to a building earlier used for business by a stranger ? (2) Whether, on the facts and in the circumstances of the case, the lease taken by the assessee of the portion of the Bank of Baroda building and portion of the Laxmi Woollen Mills Estate for setting up its factory amounted to transfer to the assessee-company within the meaning of the words transfer to a. new business of building previously used in any other business occurring in section 15C(2)(i) ? Having regard to the discussion made earlier, we answer the questions reframed as follows Question No. 1 For the purposes of s. 15C(2)(i) of the Indian I.T. Act, 1922, it is not necessary that the building transferred to the newly started undertaking must have been previously used by the assessee himself in any other business and that a building earlier used for business by a stranger is included. Question No. 2 is answered in the affirmative and in favour of the revenue. Parties to bear their own costs.
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1979 (1) TMI 64 - BOMBAY HIGH COURT
Assessee Carrying On Business, Enduring Nature, Expenditure Incurred, Revenue Expenditure ... ... ... ... ..... and, following the decision of the Supreme Court in India Cements Ltd. s case 1966 60 ITR 52 and the ratio spelt out therein, it was held in Hoechst Pharmaceuticals Ltd. s case 1978 113 ITR 877 (Bom) that the Tribunal had taken the correct view and allowed the expenditure as being expenditure of a revenue nature. In our opinion, merely because the period of the lease of the industry Manor premises in the instant case is one of ten years, it does not constitute such a startling difference as would appeal to us to apply a different test than the one which we applied in Hoechst Pharmaceuticals Ltd. s case 1978 113 ITR 877 (Bom). In our view,the expenses were rightly considered by the Tribunal as being of a revenue nature and on that footing deduction was rightly allowed. In this view of the matter,the question referred to us is answered in the affirmative and in favour of the assessee as regards both the amounts. The parties, however, will bear their own costs of the reference.
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1979 (1) TMI 63 - BOMBAY HIGH COURT
Business Expenditure, Expenditure Incurred, Revenue Expenditure, Setting Up ... ... ... ... ..... (Bom) and Forging and Stamping s case 1979 119 ITR 616 (Bom). In our opinion, considering the test laid down in Western India Vegetable Products case 1954 26 ITR 151 (Bom) as applied in the aforesaid two cases, viz., ITR No. 72 of 1967 (CIT v. Industrial Solvents and Chemicals P. Ltd. 1979 119 ITR 608 (Bom)) and ITR No. 85 of 1970 (CIT v. Forging and Stamping Pvt. Ltd. 1979 119 ITR 616 (Bom)), it is impossible to hold that the, present assessee could be regarded as having set up its business which was of producing tools when it incurred the expenditure of Rs. 92,400. In this view of the matter, the decision of the Tribunal would be required to be upheld since the assessee cannot claim deduction of this amount as a revenue expenditure till it could be regarded as having set up the business. In this view of the matter, the question referred to us is answered in the negative and in favour of the Commissioner. The assessee will pay to the Commissioner the costs of the reference.
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1979 (1) TMI 62 - MADRAS HIGH COURT
Foreign Enterprise, Total Income ... ... ... ... ..... income included by way of royalty or technical fee which is per se income. It is not necessary for our present purpose to consider a case where the amount of receipt does not by itself represent income. Having regard to the nature of the amount received from the foreign company in the present case, we consider that the sum of Rs.4,63,663 would be the income that is included in the total income and would qualify for the relief under s. 85C. The principle of the decision of the Supreme Court cited above, in view of the facts here and the language of s. 80E, which is materially different, would not be applicable. The result is that the question is answered in the affirmative and against the revenue. We may, however, make it clear that the computation of the actual amount for which the assessee will be eligible for relief will have to be made in accordance with the provisions of s. 85C by giving effect to the 25 . The assessee will be entitled to its costs. Counsel s fee Rs. 500.
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1979 (1) TMI 61 - MADRAS HIGH COURT
Capital Gains On Sale, Cost Of Acquisition, Cost Of Improvement ... ... ... ... ..... for the allowance of the amount spent in the litigation. But for this expenditure, the shares would have been of no value. Part of the expenditure referable to getting the shares registered in his name would be cost of acquisition. The expenditure on getting better voting rights would be cost of improvement to the asset. That case has no application here. In the present case, as already seen, the amount cannot be treated as cost of acquisition. The only further question is whether this amount represents the cost of improvements to the asset. The preposition " to " would show that the asset must itself be the beneficiary of the expenditure. There is no such improvement of the asset. The expenditure was only in improving the title of the owner rather than improving the asset as such. There is no scope for deducting this amount under s. 49 or s. 55. The reference is accordingly answered in the negative and in favour of the revenue. There will be no order as to costs.
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