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1959 (5) TMI 43
Issues Involved:
1. Legality of the notices issued under Section 34(1A) of the Indian Income-tax Act, 1922.
2. Constitutionality of Sections 5(7A) and 34(1A) of the Indian Income-tax Act.
3. Entitlement of the petitioner to inspect the documents and reasons recorded by the Income-tax Officer.
4. Justiciability of the Income-tax Officer's "reason to believe" under Section 34(1A).
Issue-wise Detailed Analysis:
1. Legality of the notices issued under Section 34(1A) of the Indian Income-tax Act, 1922:
The petitioner challenged the notices issued under Section 34(1A) for the assessment years 1940-41 to 1945-46, arguing that the Income-tax Officer did not have sufficient grounds to believe that the income had escaped assessment. The court noted that the Income-tax Officer must have "reason to believe" that income, profits, or gains chargeable to income-tax had escaped assessment and that the income, profits, or gains likely amounted to Rs. 1,00,000 or more. The court found that the Income-tax Officer had recorded his reasons and obtained the necessary sanction from the Central Board of Revenue, satisfying the conditions precedent for issuing the notices. Therefore, the court held that the notices were valid and proper.
2. Constitutionality of Sections 5(7A) and 34(1A) of the Indian Income-tax Act:
The petitioner initially argued that Sections 5(7A) and 34(1A) were ultra vires the Constitution, particularly Articles 14 and 19. However, the Supreme Court had already held these sections intra vires, and the court reiterated this position, dismissing the petitioner's argument on constitutional grounds.
3. Entitlement of the petitioner to inspect the documents and reasons recorded by the Income-tax Officer:
The petitioner sought to inspect the order of satisfaction of the Central Board of Revenue, the material on which the Income-tax Officer based his belief, and the basis for estimating the escaped income. The Income-tax Officer refused to disclose the reasons or grant inspection of the records, arguing that such disclosure would be detrimental to the Income-tax Department and frustrate the proceedings. The court agreed, stating that at this stage, the petitioner was not entitled to inspect the reasons recorded by the Income-tax Officer. The court emphasized that disclosing the reasons before the books and documents were produced could lead to the removal or alteration of evidence, defeating the purpose of the reassessment.
4. Justiciability of the Income-tax Officer's "reason to believe" under Section 34(1A):
The court addressed whether the Income-tax Officer's "reason to believe" was justiciable. It was argued that the expression "reason to believe" meant that the Income-tax Officer's belief must be based on objective facts, and the court could compel the officer to disclose the reasons and materials upon which this belief was based. The court concluded that while the matter was justiciable, the reasons should be disclosed to the court but not necessarily to the petitioner at this stage. The court reviewed the reasons and the sanction of the Board of Revenue and found them sufficient, noting that disclosing them to the petitioner could be prejudicial to the proceedings.
Conclusion:
The court dismissed the application, holding that the notices issued under Section 34(1A) were valid and proper, the petitioner was not entitled to further disclosure at this stage, and the Income-tax Officer had reasonable grounds to believe that the income had escaped assessment. The rule was discharged, and interim orders, if any, were vacated, with no order as to costs.
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1959 (5) TMI 42
Issues Involved:
1. Validity of Section 34(1A) of the Income-tax Act under Article 14 of the Constitution.
2. Whether the proceedings under Section 34(1A) are judicial or quasi-judicial and if the Income-tax Officer has a bias.
Issue-wise Detailed Analysis:
1. Validity of Section 34(1A) of the Income-tax Act under Article 14 of the Constitution:
- Petitioner's Argument: The petitioner argued that Section 34(1A) is ultra vires of Article 14 of the Constitution as it denies equality before the law. The contention was that persons who could be dealt with under Section 34(1A) could also be dealt with under Section 34(1) of the Act, leading to discriminatory treatment.
- Court's Analysis:
- Section 34(1) and 34(1A) Comparison: Section 34(1) allows the Income-tax Officer to issue a notice if income has escaped assessment due to the assessee's omission or failure. Section 34(1A), introduced in 1954, also allows the Income-tax Officer to issue a notice for escaped income during the period from September 1, 1939, to March 31, 1946, if the escaped income is likely to be one lakh rupees or more, without any limitation period.
- Interpretation of Provisions: The court interpreted that the procedure under Section 34(1A) should be the same as under Section 34(1). The provisions of the Act, including Sections 23, 31, 33, and 66, apply to both sections, ensuring no discrimination in procedural rights.
- Legislative Intent: The court noted that the legislative intent was to ensure that persons who evaded tax during the war period and whose evasion was substantial should not escape due to the limitation period. The differentiation in limitation periods was justified due to the specific historical context and the substantial amount involved.
- Conclusion: The court held that Section 34(1A) does not violate Article 14 of the Constitution as the procedural rights under the Act are equally available to persons proceeded against under either Section 34(1) or 34(1A).
2. Whether the proceedings under Section 34(1A) are judicial or quasi-judicial and if the Income-tax Officer has a bias:
- Petitioner's Argument: The petitioner contended that the proceedings under Section 34(1A) are judicial or quasi-judicial and the Income-tax Officer, being an interested party, has a bias, making the proceedings invalid.
- Court's Analysis:
- Nature of Proceedings: The court acknowledged that proceedings for assessment or reassessment under Section 34 are judicial or quasi-judicial in nature, as established by the Supreme Court in Suraj Mall Mohta and Co. v. A.V. Viswanatha Sastri.
- Bias of Income-tax Officer: The court considered whether the Income-tax Officer, as an employee of the Revenue Department, could be considered biased. It was noted that the Income-tax Officer is expected to act impartially and in accordance with the law.
- Appeal and Review Mechanism: The court emphasized that the Income-tax Act provides for appeals to the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, ensuring that any initial bias by the Income-tax Officer can be corrected through these independent appellate authorities.
- Conclusion: The court concluded that even if the Income-tax Officer has a bias, the availability of an independent appellate mechanism ensures compliance with principles of natural justice. Hence, the proceedings under Section 34(1A) are valid.
Separate Judgments:
- Bhargava, J.: Detailed the legislative history and interpreted the provisions to conclude that Section 34(1A) is not discriminatory and does not violate Article 14.
- Chaturvedi, J.: Agreed with Bhargava, J., and provided additional reasoning to support the conclusion.
- Upadhya, J. (Dissenting): Argued that Section 34(1A) does violate Article 14 due to the different procedural rights and the unlimited period for issuing notices, which could lead to discrimination.
Final Decision:
The majority judgment held that Section 34(1A) of the Income-tax Act is valid and does not violate Article 14 of the Constitution. The writ petitions were dismissed with costs.
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1959 (5) TMI 41
Issues Involved:
1. Whether the deed dated May 1, 1949, created a lease or a license.
2. The interpretation of the term "room in a hotel" under Section 2(b) of the Delhi and Ajmer-Merwara Rent Control Act, 1947.
3. Whether the spaces let out in the Imperial Hotel are exempt from the Rent Control Act.
Issue-Wise Detailed Analysis:
1. Whether the Deed Created a Lease or a License:
The court examined the nature of the deed dated May 1, 1949, to determine if it created a lease or a license. The document used the terms "licensor" and "licensee" and described itself as a deed of license. However, the court emphasized that the substance of the agreement, rather than its form, determines its nature. The document granted the respondent exclusive possession of the rooms for carrying out his business as a hair-dresser, with terms typically found in lease agreements, such as the right to transfer interest with the licensor's consent and the obligation to pay a fixed amount irrespective of business operation. The court concluded that the deed created a lease, as it transferred a right to enjoy the property, indicating a tenancy rather than a mere license.
2. Interpretation of "Room in a Hotel" Under Section 2(b) of the Rent Control Act:
The court analyzed the meaning of "room in a hotel" within the context of Section 2(b) of the Rent Control Act, which excludes rooms in hotels from the Act's purview. The term "hotel" was not defined in the Act, so the court referred to its ordinary meaning and definitions in cognate acts. The court considered whether the spaces let out to the respondent were rooms in a hotel, emphasizing that a room in a hotel must serve hotel purposes and provide amenities connected to the hotel business. The court concluded that the spaces let out for a hair-dressing business were amenities provided by the hotel, thus qualifying as rooms in a hotel.
3. Exemption from the Rent Control Act:
The court examined whether the spaces let out in the Imperial Hotel were exempt from the Rent Control Act under Section 2(b). The court considered the physical location of the rooms within the hotel and their intended use. The ruling highlighted that a room in a hotel must fulfill two conditions: it must be part of the hotel in a physical sense and its use must be connected with the general purpose of the hotel. The court concluded that the spaces let out for a hair-dressing business were connected to the hotel's amenities, thus exempting them from the Rent Control Act.
Separate Judgments Delivered:
- S.K. Das, J.: Agreed with Subba Rao, J., that the deed created a lease and not a license. Concluded that the rooms let out were part of the hotel and served hotel purposes, thus exempt from the Rent Control Act.
- Sarkar, J.: Concluded that the spaces were rooms in a hotel and exempt from the Rent Control Act. Did not express an opinion on whether the deed created a lease or a license, as the spaces were outside the Act's scope.
- Subba Rao, J.: Dissented, concluding that the deed created a lease and the rooms let out were not part of the hotel for hotel purposes, thus not exempt from the Rent Control Act.
Final Order:
In accordance with the majority opinion, the appeal was allowed, and no order for costs was made.
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1959 (5) TMI 40
Issues Involved:
1. Interpretation of Section 162 of the Code of Criminal Procedure.
2. The admissibility of omissions as contradictions under Section 162.
3. The right of the accused to cross-examine witnesses based on their statements to the police.
4. The legality of the trial judge's decision to disallow certain questions during cross-examination.
5. The impact of alleged procedural errors on the fairness of the trial.
Detailed Analysis:
1. Interpretation of Section 162 of the Code of Criminal Procedure:
The judgment discusses the historical evolution of Section 162, highlighting its primary objective to protect accused persons from prejudicial statements made to police officers during investigations. The section imposes a general bar against the use of such statements at trial, with a limited exception allowing the accused to use the statements to contradict a witness in the manner provided by Section 145 of the Indian Evidence Act. The court emphasizes that the section was intended to protect the accused by excluding statements made under potentially unreliable circumstances from being used as evidence.
2. The Admissibility of Omissions as Contradictions:
The court addresses the issue of whether omissions in a witness's statement to the police can be used as contradictions. It concludes that omissions can only be considered contradictions if they are necessarily implied by what is expressly stated, or if there is inherent repugnancy between the statement made in court and the statement made to the police. The court provides examples to illustrate when omissions can be deemed part of the recorded statement by necessary implication.
3. The Right of the Accused to Cross-Examine Witnesses Based on Their Statements to the Police:
The court discusses the scope of cross-examination allowed under Section 162, concluding that the accused has the right to cross-examine witnesses to establish contradictions between their statements to the police and their testimony in court. The court clarifies that this right is limited to bringing out contradictions and does not extend to eliciting new statements from the witness.
4. The Legality of the Trial Judge's Decision to Disallow Certain Questions During Cross-Examination:
The trial judge disallowed two questions put to a witness (P.W. 30) regarding omissions in his statement to the police. The court finds that the trial judge's decision was based on the nature of the omissions and was not a general ruling against all omissions. The court holds that the accused failed to demonstrate that the trial judge's decision prevented them from putting other relevant omissions to the witnesses.
5. The Impact of Alleged Procedural Errors on the Fairness of the Trial:
The court examines whether the disallowance of the two questions during cross-examination prejudiced the accused. It concludes that the alleged omissions did not satisfy the test for material contradictions and, therefore, their exclusion did not affect the fairness of the trial. The court also addresses the argument that the High Court erred in testing the veracity of the witnesses with reference to the first information report, finding that the High Court's approach was justified and did not prejudice the accused.
Separate Judgment by Hidayatullah, J.:
Hidayatullah, J., concurs with the dismissal of the appeal but provides a separate analysis. He emphasizes that the accused's right to cross-examine witnesses under Section 162 includes the right to establish contradictions through cross-examination. He argues that the trial judge's decision to disallow the two questions was not improper, as the questions were defective in form. He also highlights that the High Court's decision to disregard the two circumstances related to the recognition of the accused was justified based on the overall evidence.
Conclusion:
The appeal is dismissed, with the court affirming the interpretation of Section 162 of the Code of Criminal Procedure and the limited scope of cross-examination allowed under it. The court finds no procedural errors that prejudiced the accused, and the trial and High Court's decisions are upheld.
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1959 (5) TMI 39
Issues Involved:
1. Scope of item 5 of schedule II of the notification dated January 5, 1952.
2. Interpretation of section 10 of the Banking Companies Act, 1949 (prior to its amendment by Act 95 of 1956).
3. Whether an industrial tribunal can compel banks to disclose "secret reserves" and "other necessary provisions."
4. Applicability of the Full Bench formula laid down by the Labour Appellate Tribunal for the payment of bonus to employees in the textile industry to banks.
Issue-wise Detailed Analysis:
1. Scope of Item 5 of Schedule II of the Notification Dated January 5, 1952:
The primary question was whether item 5, which referred to "Bonus, including the qualifications for eligibility and method of payment," included the determination of the quantum of bonus payable for specific years. The Sastry Tribunal concluded that item 5 did not contemplate determining the quantum of bonus for specific years but was a general reference to the eligibility and method of payment. The Labour Appellate Tribunal, however, interpreted item 5 to include claims for bonus for the relevant years. The Supreme Court held that item 5 did not include claims for specific years, aligning with the Sastry Tribunal's interpretation. The Court emphasized that the item was intended to address general issues of bonus eligibility and payment methods, not specific claims for particular years.
2. Interpretation of Section 10 of the Banking Companies Act, 1949:
The second issue was whether section 10 of the Banking Companies Act, 1949, prohibited the grant of bonus to bank employees. The Sastry Tribunal had doubts and recommended legislative clarification, while the Labour Appellate Tribunal by a majority concluded that section 10 did not bar bonus claims. The Supreme Court disagreed with the Labour Appellate Tribunal, holding that section 10, which prohibited the employment of any person whose remuneration included a share in the profits, applied to bonus as well. The Court interpreted "remuneration" in its widest sense, including bonus, and concluded that bonus constituted a share in the profits, thus falling within the prohibition of section 10.
3. Disclosure of "Secret Reserves" and "Other Necessary Provisions":
The third issue was whether an industrial tribunal could compel banks to disclose "secret reserves" and "other necessary provisions." The Supreme Court decided not to address this issue at the current stage, as it was not necessary for the resolution of the appeals. The Court noted that no evidence was allowed regarding claims for specific years, and the dispute was treated as a general question of bonus.
4. Applicability of the Full Bench Formula to Banks:
The fourth issue was whether the Full Bench formula for bonus payment in the textile industry applied to banks. The Supreme Court chose not to decide this issue, emphasizing that it was exercising appellate jurisdiction and not advisory jurisdiction. The Court stated that it would be inappropriate to decide hypothetical questions without concrete cases and necessary materials.
Preliminary Objection in Civil Appeal No. 56 of 1957:
A preliminary objection was raised regarding the competence of the appeal, arguing that the decision of the Labour Appellate Tribunal was not an enforceable award and the appeal was premature. The Supreme Court overruled this objection, stating that the decision of the Labour Appellate Tribunal was indeed an "award" within the meaning of the Industrial Disputes Act, 1947, and the appeals were not premature or incompetent.
Conclusion:
The Supreme Court concluded that the reference of 1952 was not pending for determining the quantum of bonus for specific years, and section 10 of the Banking Companies Act, 1949, prior to its amendment in 1956, prohibited the grant of industrial bonus to bank employees. The other two issues were not decided at this stage, and the appeals were allowed in part, with no direction as to costs.
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1959 (5) TMI 38
Issues Involved:
1. Ingredients of Section 5(3) of the Prevention of Corruption Act.
2. Presumption of guilt under Section 5(3) when specific instances of corruption are not proven.
3. Evaluation of the appellant's explanation for disproportionate assets.
4. Burden of proof on the accused under Section 5(3) of the Prevention of Corruption Act.
5. Prosecution's evidence regarding the appellant's known sources of income.
Issue-wise Detailed Analysis:
1. Ingredients of Section 5(3) of the Prevention of Corruption Act:
The appellant contended that the ingredients of Section 5(3) of the Act were not established. It was argued that the charge of criminal misconduct was confined to the facts disclosed in his bank accounts, which showed a net credit of over Rs. 91,000. The appellant attempted to explain this by stating that his savings came from his salary, allowances, gratuity, provident fund, and other sources. However, the High Court found that these explanations were not substantiated with evidence, and mere allegations were insufficient.
2. Presumption of guilt under Section 5(3) when specific instances of corruption are not proven:
The appellant argued that since the specific instances of corruption were not proven, the presumption of guilt under Section 5(3) should not apply. The High Court, however, relied on the presumption under Section 5(3) of the Act, which allows the court to presume guilt if the accused is found in possession of pecuniary resources or property disproportionate to their known sources of income. The High Court found that the appellant had not satisfactorily accounted for the receipt of Rs. 73,000 in cash and Rs. 18,000 by cheques, which were disproportionate to his known sources of income.
3. Evaluation of the appellant's explanation for disproportionate assets:
The appellant provided several explanations for his large bank deposits, including savings from his salary, allowances, gratuity, provident fund, and loans from friends. The High Court found these explanations unconvincing, noting that they were not substantiated by evidence. The court emphasized that the appellant needed to "satisfactorily account" for the disproportionate assets, and mere plausible explanations were insufficient.
4. Burden of proof on the accused under Section 5(3) of the Prevention of Corruption Act:
The appellant contended that the burden of proof on the accused under Section 5(3) was not as heavy as that on the prosecution. The High Court, however, held that the section imposes a burden on the accused to prove the contrary once the prosecution has established a prima facie case of disproportionate assets. The court noted that the presumption of guilt continues unless the accused provides cogent evidence to rebut it.
5. Prosecution's evidence regarding the appellant's known sources of income:
The appellant argued that the prosecution did not lead evidence to show his known sources of income. The High Court held that the prosecution had provided the best evidence available, namely the appellant's bank accounts, which showed deposits disproportionate to his known income. The court stated that it was the appellant's responsibility to prove any additional sources of income not accounted for by the prosecution.
Conclusion:
The High Court upheld the conviction and sentence of six months' rigorous imprisonment for the appellant under Section 5(2) of the Prevention of Corruption Act. The court found that the appellant had not satisfactorily accounted for the disproportionate assets, and the presumption of guilt under Section 5(3) applied. The appeal was dismissed, and the appellant was ordered to surrender to his bail bond.
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1959 (5) TMI 37
Arbitration award
Held that:- Appeal allowed. The settlement did not amount to an accord and satisfaction. Till the terms of it had been carried out, the appellant retained all its rights under the contract. It was said that the case had been made in paragraphs 34 and 35 of the respondent's petition to the High Court. I do not think it was there made. These paragraphs refer to the arbitrator's decision that he had jurisdiction to arbitrate as the settlement had not destroyed the arbitration clause and the contention there made was that this decision was erroneous on the face of it. This has nothing to do with the question that the award was wrong on the face of it as it awarded a sum in excess of the amount fixed by the settlement. Whether the arbitrator was right or not in his decision that the arbitration clause had not been superseded is irrelevant for that is the question that the Court was called upon to decide in the application. Thus order of the High Court set aside
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1959 (5) TMI 36
Issues:
1. Interpretation of the term "green vegetable" in a sales tax exemption notification.
2. Whether sugar-cane qualifies as a green vegetable for exemption from taxation under the Bihar Sales Tax Act.
Analysis:
The case involved a dispute regarding the taxation of sugar-cane under the Bihar Sales Tax Act, specifically whether sugar-cane should be considered a green vegetable for exemption from taxation. The Board of Revenue referred the question to the High Court for determination. The contention was that the sale of sugar-cane to a sugar factory should be exempt from tax based on a government notification dated August 28, 1947, listing items exempt from taxation, including green vegetables other than potatoes.
The High Court analyzed the notification and the definition of "vegetable" from the Oxford Dictionary, concluding that the term "green vegetables" in the notification should be interpreted in the context of other exempt items like bread, flour, meat, fish, etc., which are fit for human consumption either cooked or uncooked. The court held that sugar-cane does not fall within this definition as it is not commonly consumed as a vegetable in Bihar. The court emphasized that sugar-cane does not meet the criteria of being a plant cultivated for food, commonly eaten raw or cooked with other foods.
Ultimately, the High Court ruled in favor of the State of Bihar, holding that sugar-cane does not qualify as a green vegetable under the notification and is therefore not exempt from taxation under the Bihar Sales Tax Act. The court did not award any costs for the reference.
In conclusion, the judgment clarified the interpretation of the term "green vegetable" in the context of a sales tax exemption notification and determined that sugar-cane does not meet the criteria to be considered a green vegetable for tax exemption purposes under the Bihar Sales Tax Act.
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1959 (5) TMI 35
Issues:
Liquidator's liability to pay employer's contribution of the provident fund under the Employees' Provident Funds Act, 1952 and rule 29 of the Employees' Provident Fund Scheme.
Analysis:
The judgment delivered by P.B. Mukharji, J. addresses the issue of the liquidator's liability to pay the employer's contribution of the provident fund under the Employees' Provident Funds Act, 1952. The liquidator contended that he is not liable under the Act to make this contribution. The argument was based on the liquidator not qualifying as an "employer" or "occupier" as defined under the Act. The liquidator argued that he does not have ultimate control over the affairs of the factory, as the control is with the court. However, the court rejected this argument, emphasizing that the liquidator is the statutory custodian of the property and effects of the company under the Companies Act. The court interpreted the term "ultimate control" in a practical sense, holding that the liquidator has control over the factory's affairs for all practical purposes.
The court also examined the main principle and object of the Employees' Provident Funds Act, 1952, which aims to provide for provident funds for employees in factories and establishments. The court highlighted that the Act's impact is on factories engaged in specified industries, and the Act's operation should not be defeated by a narrow interpretation of the term "employer." In this case, the court noted that the liquidator was ordered to keep the factory engaged in the industry and sell it as a going concern, making him liable as an employer under the Act.
Furthermore, the court addressed the argument regarding the priority of payment of contributions over other debts under the Act and the Companies Act. The court clarified that the statutory liabilities of making contributions to the provident fund are essential, and the liquidator, in this case, must fulfill these obligations to ensure the factory's continuity and eventual sale as a going concern. The court emphasized that such contributions are not liabilities for preferential payments but are necessary statutory obligations.
In conclusion, the court held that the liquidator is liable as an "employer" and "occupier" under the Employees' Provident Funds Act, 1952, to make the required contributions. The liquidator was directed to pay the employer's contribution from the estate's funds and was not held liable for contributions in respect of employees not covered by the Act. The costs of the application were to be borne by the Regional Provident Fund Commissioner, and the liquidator was permitted to retain costs from the company's funds.
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1959 (5) TMI 34
Issues:
Application for admission of claim by Lloyds Bank Ltd. as an ordinary creditor against the liquidator, raising the question of limitation and the court's authority to direct the liquidator to admit the claim.
Analysis:
The judgment pertains to an application by Lloyds Bank Ltd. against the liquidator, seeking admission of its claim as an ordinary creditor. The liquidator contended that the claim was time-barred, as it was not presented until November 1958, several years after the last transaction with the company in liquidation. The bank attributed the delay to efforts to recover the sum from bills held as security, which the government, involved in a set-off claim against the company, did not pay. The court addressed the issue of limitation under Section 3 of the Limitation Act, emphasizing that the statutory explanation did not apply in this scenario. The court highlighted that the liquidator, as a trustee under the Companies Act, was subject to specific duties and trusts, preventing the claim from being time-barred.
The judgment referred to the decision in Hansraj Gupta v. Dehra Dun Mussourie Electric Tramway Co. Ltd., establishing that a claim not initiated by presenting a plaint could still be considered within the limitation period. It further cited English cases, including In re General Rolling Stock Company, to support the principle that the liquidator acts as a trustee, ensuring assets are used to settle existing liabilities at the time of liquidation. The court concluded that a claim not time-barred at the date of the winding-up order could be entertained by the liquidator and the court, subject to conditions to safeguard the fairness of the liquidation process.
Regarding the application's limitation period, the court deliberated on the applicability of Article 181 of the Limitation Act, ultimately determining that even if it applied, the right to seek relief arose when the liquidator rejected the claim, falling within the limitation period. Consequently, the court directed the liquidator to admit the bank's claim as an ordinary creditor, subject to satisfactory proof by the bank. The judgment also specified that this decision would not impact prior dividends or commitments made by the liquidator. Finally, the court ordered the applicant to bear the costs of the application and granted a certificate to the liquidator's attorney.
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1959 (5) TMI 19
Whether the cognizance taken by the Magistrate on 16-9-1952, was without jurisdiction?
Held that:- In the present case, as the requisite authority had been granted by the Reserve Bank on 27-1-1953 to file a complaint, the complaint filed on February 2, was one which complied with the provisions of Section 23 of the Foreign Exchange Regulation Act and the Additional District Magistrate could take cognizance of the offence which, indeed, he did on that date.
Thus the proceedings before the Additional District Magistrate and the trying Magistrate were with jurisdiction and the trial of the appellant was legal. Appeal dismissed.
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1959 (5) TMI 18
Whether the notice issued under section 34 of the Act by the Income-tax Officer on February 27, 1950, after the assessee had filed a voluntary return was valid in law ?
Whether the assessment made on February 26, 1951, is valid in law ?
Held that:- If the Income-tax Officer had acted on that return and assessed the assessee before March 31, 1950, the assessment would have been valid. He chose to ignore the return, and served on the assessee a notice under section 34(1). This notice was improper, because with the return already filed, there was neither an omission nor a failure on the part of the assessee, nor was there any question of assessment "escaping". The notice under section 34(1) was, therefore, invalid and the consequent assessment, equally so. We accordingly agree with the judgment under appeal. Appeal dimssied
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1959 (5) TMI 17
Whether the trust property is held wholly for religious or charitable purposes within the meaning of section 4(3)(i) of the Indian Income-tax Act ?
Whether the trust property is held in part only for religious or charitable purposes ?
Held that:- In our opinion the income from the trust properties comes within the scope of section 4(3)(i) and is, therefore, entitled to exemption. Therefore, the negative answer given by the High Court to question No. 1 cannot be supported and that question should be answered in the affirmative. In this view of the matter, question No. 2 does not arise and needs no answer. The result is that this appeal must be allowed and the question No. 1 must be answered in the affirmative
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1959 (5) TMI 16
Whether the amounts of commission paid by cheques, drawn respectively on banks at Madras and Bombay and respectively posted from Madura and Bombay, can in the circumstances of this case be held to have been received in what was British India or at Secunderabad?
Held that:- Whatever may be the position when there is an express or implied request for the cheque for the amount being sent by post or when it can be inferred from the course of conduct of the parties, the appellant in this case expressly required the amount of the commission to be paid at Secunderabad and the rule of Ogale Glass Works' case [1954 (4) TMI 3 - SUPREME Court] would be inapplicable. Appeal dismissed.
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1959 (5) TMI 15
Whether the assessee is entitled to relief granted by the Notification No. 878-F dated March 21, 1922, as amended by Notification No. 8 dated March 24, 1928?
Held that:- Having regard to the purpose of the notification and the context and the sequence in which the words "assessed" and "charged" have been used, it is clear that the word "charged" does not, in the notification, mean the mere statutory liability to pay tax but goes further and includes the actual charge or levy. Apart from the fact that in view of the claim for relief under section 25(4) the Income-tax Officer need not have taken the trouble of going through the process of assessment of the firm's income at all, it is not disputed that in fact the firm's income has not been assessed to tax and no tax has been charged in the sense of being levied. In this view of the matter the third condition has not been fulfilled and the assessee cannot, therefore, claim any relief under the notification. The referred question should, in our opinion, be answered in the negative. The appeal is, therefore, allowed.
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1959 (5) TMI 14
What question of law arose for determination out of the Tribunal's order under section 33(4) of the Act?
Held that:- The result of our going into these appeals before us on the merits would be either to confirm the judgment which has been pronounced by the High Court or to differ from it. If we did the former the appellants would be out of court, if, however, perchance we came to the contrary conclusion and accepted the latter view, namely, that the High Court was wrong in not granting the applications of the appellants under section 66(2) of the Act there would be two contrary decisions, one by the High Court and the other by us and we would be in effect, though not by the proper procedure to be adopted by the appellants in that behalf, setting aside the judgment of the High Court. This is an eventuality which we cannot view with equanimity. It is contrary to all notions of comity of courts and even though we are a court which could in certain events set aside and overrule the decisions of the High Court concerned, we cannot by-pass the normal procedure which is to be adopted for this purpose and achieve the result indirectly in the manner suggested by the appellants. We, therefore, think that in the circumstances here it would be inappropriate on our part to enter upon an adjudication of these appeals on merits. We would, therefore, dismiss these appeals without anything more. Appeal dismissed.
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1959 (5) TMI 13
Whether in view of the circumstances of the case, and particularly the manner in which, after due consideration, the learned Agricultural Income-tax Officer in his first judgment dated the 5th January, 1946, had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease, the learned Agricultural Income-tax Officer has jurisdiction to revise his own order under section 26 of the Act?
Whether if he had the jurisdiction to revise his own order, under section 26 of the Act, the income from the zarpeshgi lease of the assessee was taxable under the Act?
Held that:- The Agricultural Income-tax Officer was competent under section 26 of the Act to assess an item of income which he had omitted to tax earlier, even though in the return that income was included and the Agricultural Income-tax Officer then thought that it was exempt. The answer given by the High Court was therefore correct.
The case of the assessee rests upon the claim that this was a money-lending transaction and the receipts represented a capital return. If, however, the payment to the lessor was premium and not a loan, the income, being agricultural, from these leasehold properties was assessable under the Act. We are of opinion that it was so, and that the Agricultural Income-tax Officer was right when he assessed it to agricultural income-tax. The income was not the income of money-lending, and this does not depend upon the character of the recipient. The Thika profits were clearly agricultural income being actually derived from land. The answer to the question by the High Court was thus correct. Appeal dismissed.
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1959 (5) TMI 12
whether there was any material to support the finding of the Tribunal that the sum of ₹ 1,41,000 represented the secreted profits of the appellant's business and as such liable to be taxed in the hands of the appellant under the Indian Income-tax Act and the Excess Profits Tax Act ?
Held that:- The Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and this court is entitled to interfere.
We are, therefore, of opinion that the High Court was clearly in error in answering the referred question in the affirmative. The proper answer should have been in the negative having regard to all the circumstances of the case which we have adverted to above.
The appeals will accordingly be allowed, the judgment and order passed by the High Court will be set aside and the referred question will be answered in the negative. Appeal allowed.
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1959 (5) TMI 11
Declining to register the appellant firm under section 26A of the Indian Income-tax Act
Held that:- The order of the Appellate Tribunal is reversed. The firm shall be registered under section 26A of the Act for the assessment year 1948-49. The appeal against the order of the High Court need not be considered, since it is not necessary to pass any orders thereon. Appeal allowed.
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1959 (5) TMI 10
Whether the solitary transaction in respect of about three-quarters of an acre of land in the suburbs of Calcutta, was an adventure in the nature of trade and, therefore, liable to income-tax?
Held that:- In all the circumstances of this case, the total impression created on our mind is that it has not been made out by the Department that the dominant intention of the appellant was to embark on a venture in the nature of trade, when he entered into the agreement which resulted in the profits sought to be taxed.
For the aforesaid reasons, we would allow this appeal, and set aside the orders of the Tribunal below with costs. Appeal allowed.
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