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Case Laws
Showing 201 to 219 of 219 Records
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1990 (6) TMI 19
The High Court of Bombay ruled that gold ornaments without precious stones are exempt under section 5(1)(viii) of the Wealth-tax Act for assessment years before 1972. This decision was based on the interpretation of the term "jewellery" in the Act. (Case citation: 1990 (6) TMI 19 - BOMBAY High Court)
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1990 (6) TMI 18
The High Court of Bombay ruled on five questions under the Wealth-tax Act, 1957. The court referred to previous cases and clarified that income tax liability on outstanding fees cannot be considered as an accrued liability if accounts are kept on a cash basis. Questions 1, 2, and 3 were answered in favor of the Revenue, Question 4 in favor of the assessee, and Question 5 in favor of the Revenue. No costs were awarded.
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1990 (6) TMI 17
The High Court of Bombay ruled that amounts gifted by the deceased to his wife and son were not liable to be included in the estate under section 10 of the Estate Duty Act, 1953. The Tribunal held that the amounts were not includible based on previous Supreme Court decisions. The question of law was answered in the negative, against the Revenue. No costs were awarded.
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1990 (6) TMI 16
The High Court of Bombay addressed questions under the Wealth-tax Act, 1957, regarding valuation of shares and treatment of liabilities. The court ruled in favor of the assessee on valuation issues based on previous court decisions. The question raised by the Commissioner was also answered in favor of the assessee based on a previous court decision. No costs were awarded.
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1990 (6) TMI 15
The High Court of Bombay decided on Wealth-tax References 72, 73, and 74 of 1976. The questions referred were answered in favor of the Revenue based on a previous judgment. No costs were awarded.
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1990 (6) TMI 14
The High Court of Bombay held that the assessee was entitled to exemption from gift-tax for a donation made to the Bombay Pradesh Congress Committee. The court referred to a previous judgment in the assessee's own case to support this decision. The question of law was answered in favor of the assessee.
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1990 (6) TMI 13
Issues:
Validity of reassessment under section 17(1)(b) of the Wealth-tax Act after reopening under section 17(1)(a).
Analysis:
The case involved two references under section 27(1) of the Wealth-tax Act, 1957, concerning reassessment validity under sections 17(1)(a) and 17(1)(b) of the Act. The assessee's wealth was initially determined without a valuation report for a building called "Harsha Mahal." Subsequently, an official valuer's report valued the building higher. The Tribunal held that reassessment under section 17(1)(b) was valid as a portion of the wealth had escaped assessment due to new information. The Appellate Assistant Commissioner's view that the valuation report was not binding and constituted a mere change of opinion was overturned by the Tribunal.
The assessee contended that the subsequent valuation report was not binding as the original assessment was not based on it. Citing a Supreme Court decision, the assessee argued that a mere change of opinion could not justify reassessment under section 17 of the Act. The Revenue argued that the valuation report constituted new information for reassessment under section 17(1)(b) of the Act. They relied on precedents where valuation reports were considered binding and constituted valid information for reassessment.
The court considered the legal precedents cited by both parties. It noted that the valuation report received after the original assessment could be considered new information for reassessment under section 17(1)(b) of the Act. Relying on previous judgments, the court held that the reassessment under section 17(1)(b) was valid as it was based on information that had not been previously considered. The court ruled in favor of the Revenue, upholding the validity of the reassessment under section 17(1)(b) of the Wealth-tax Act.
In conclusion, the court answered the question referred for its opinion in the affirmative, supporting the validity of the reassessment under section 17(1)(b) of the Wealth-tax Act. The judgment clarified the distinction between new information justifying reassessment and a mere change of opinion, emphasizing the importance of valid information for reassessment purposes under the Act.
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1990 (6) TMI 12
The High Court of Kerala upheld the validity of proceedings under section 35 of the Wealth-tax Act, 1957, in response to a question raised by the Income-tax Appellate Tribunal. The court found that there was a mistake apparent from the records, leading to the conclusion that section 35 was properly invoked. The judgment favored the Revenue and ruled against the assessee for the assessment years 1974-75 and 1975-76.
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1990 (6) TMI 11
Issues:
Assessment of net wealth for the assessment years 1974-75 and 1975-76 based on enhanced compensation awarded in a land acquisition case.
Analysis:
The High Court of Kerala was presented with a question of law regarding the assessment of net wealth for the assessment years 1974-75 and 1975-76. The case involved an assessee to wealth-tax who was a partner in a firm that had a rubber estate acquired by the State of Kerala under the Land Acquisition Act. The Wealth-tax Officer had determined the net wealth of the assessee by adding a portion of the additional compensation claimed by the firm in the land acquisition proceedings to the assessee's net wealth. The Appellate Assistant Commissioner and the Appellate Tribunal upheld this determination, allowing the assessee to approach the Wealth-tax Officer for modification if the High Court reduced the compensation payable. The High Court noted that the enhanced compensation only accrues when the final court accepts the claim and cannot be considered an asset for wealth-tax until then, contrary to the decisions of the lower authorities.
The High Court acknowledged that subsequent events, including a judgment modifying the award substantially, had occurred. The court directed the Wealth-tax Officer to recalculate the net wealth for the relevant assessment years based on the judgment modifying the award. The court emphasized that the Wealth-tax Officer must give effect to the judgment passed by the court and recalculate the net wealth accordingly. The court affirmed the validity of the direction given by the Appellate Assistant Commissioner and the Appellate Tribunal, instructing the assessee to produce a copy of the judgment for the Wealth-tax Officer's consideration. The court answered the question referred to them in the affirmative, in line with the subsequent judgment modifying the award.
In conclusion, the High Court modified the question referred to them based on subsequent events and directed the Wealth-tax Officer to amend the assessments for the relevant years in accordance with the judgment modifying the award. The court affirmed the validity of the direction given by the lower authorities and instructed the assessee to provide the judgment for recalculating the net wealth. The court's decision was forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.
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1990 (6) TMI 10
Issues Involved:
1. Deduction of bad debts written off for the assessment year 1970-71.
2. Deduction of rebate allowed to customers for laboratory charges and copy printing charges for the assessment year 1969-70.
Summary:
Issue 1: Deduction of Bad Debts Written Off (Assessment Year 1970-71)
The primary issue was whether the sum of Rs. 17,693 representing bad debts written off should be allowed as a proper deduction while computing the business income of the assessee-family for the assessment year 1970-71. The Income-tax Officer disallowed the deduction on the grounds that the debts related to a discontinued business. However, the Tribunal found that the assessee was conducting a composite business with interlacing, interlocking, and unity of control. The Tribunal concluded that the disallowance was not sustainable and deleted the addition made by the Department. The High Court upheld the Tribunal's decision, noting that the entire business was indivisible and inseparable, and the discontinuance of a part of the business did not amount to discontinuance of the entire business.
Issue 2: Deduction of Rebate Allowed to Customers (Assessment Year 1969-70)
The second issue was whether the sum of Rs. 21,682 representing rebate allowed to customers for laboratory charges and copy printing charges should be allowed as a proper deduction while computing the business income of the assessee-family for the assessment year 1969-70. The Income-tax Officer disallowed this amount, stating that the assessee was not doing business in the colour laboratory during the assessment year under consideration. The Tribunal, however, found that the assessee was conducting a composite business and that the rebate was a part of maintaining good customer relationships. The High Court agreed with the Tribunal, stating that the assessee's business was an integrated and composite one, and the rebate was allowable as a deduction.
Conclusion:
The High Court concluded that the Tribunal was justified in deleting the additions made by the Department for both assessment years under consideration. The Court emphasized that the assessee's business was composite and integrated, with interlacing, interlocking, and unity of control. Therefore, the deductions for bad debts and rebates were permissible. Both questions referred to the Court were answered in the affirmative and against the Department. The assessee was entitled to its costs, with counsel's fee fixed at Rs. 500 (one set).
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1990 (6) TMI 9
Issues:
Interpretation of section 164(1) of the Income-tax Act, 1961 regarding the tax treatment of trust income when beneficiaries are not known and determinate.
Analysis:
The case involved a trust created for the benefit of a minor, with a provision that 95% of the trust income would be accumulated for the prospective wife of the minor. The Income-tax Officer applied section 164 of the Income-tax Act, 1961, assessing the income at the maximum marginal rate due to the prospective wife not being a known and determinate beneficiary. On appeal, the Appellate Assistant Commissioner held that the beneficiary being the prospective wife, even though not in existence at the time of trust creation, was determinate. The Tribunal also upheld this view.
The court analyzed the provisions of section 164 in light of Explanation 1 added by the Finance (No. 2) Act, 1980. The Explanation clarifies that income not specifically receivable for the benefit of any one person unless expressly stated in the trust deed and identifiable. It also deems individual shares of beneficiaries as indeterminate unless expressly stated and ascertainable. The court noted that the trust deed specified the beneficiary as the prospective wife, who was not identifiable at the time of trust creation, and there was uncertainty regarding the marriage taking place.
The court held that the trust was not for the benefit of known and determinate individuals as required by section 164(1) and the Explanation. Therefore, the Tribunal's decision that section 164(1) was not attracted was deemed incorrect. The court answered the referred question of law in the negative and in favor of the Revenue, upholding the Income-tax Officer's assessment at the maximum marginal rate. The judgment was delivered unanimously by both judges, with no order as to costs.
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1990 (6) TMI 8
The High Court of Bombay ruled in a case under the Estate Duty Act, 1953 that the deceased's one-third share in the Ghodbunder Road property did not pass on her death as no charge was created in her favor and she had no interest in the property after releasing it to her sons. The court cited a previous Supreme Court case to support its decision. The question was answered in the negative, against the Revenue, with no costs ordered.
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1990 (6) TMI 7
The High Court of Madras dismissed petitions filed under section 482 of the Code of Criminal Procedure to quash proceedings against Messrs. Raja Corporation and others. Prosecutions initiated under various sections of the Income-tax Act and Indian Penal Code. Mistakes in accounts were found during an Income-tax Act survey. Court rejected arguments related to bona fide mistakes, lack of proper notice, setting aside of assessment order, and penalty proceedings. Petitioners can raise contentions after evidence is presented in trial magistrate court.
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1990 (6) TMI 6
Issues Involved:
1. Adjustment of interest against tax liability u/s 245.
2. Intimation requirement u/s 245.
3. Refund of seized drafts or their value.
Summary of Judgment:
1. Adjustment of Interest Against Tax Liability u/s 245:
The petitioner was entitled to a sum of Rs. 1,95,295 on account of interest u/s 244(1A) of the Income-tax Act, 1961. The crucial issue was whether this interest could be adjusted against the petitioner's tax liability for the assessment year 1983-84 u/s 245. The court held that the term "refund" in section 245 includes any amount payable by the Income-tax Department to an assessee, including interest. The court reasoned that interpreting "refund" narrowly would lead to impractical results, requiring the Department to pay interest with one hand and collect it back as tax liability with the other. Thus, the adjustment of interest against tax liability was permissible.
2. Intimation Requirement u/s 245:
The petitioner argued that no prior intimation was given before the adjustment of interest against tax liability, as required u/s 245. The court found that the letter dated July 21, 1986, served as a prior intimation, even though it was issued fifteen months after the petitioner's entitlement to interest arose. The court considered this a technical lapse but not a violation of the statutory requirement, as the letter clearly indicated the proposed adjustment.
3. Refund of Seized Drafts or Their Value:
The petitioner sought the return or revalidation of thirty drafts seized during a raid or their value amounting to Rs. 1,24,558. Initially, the court was inclined to agree with the petitioner. However, it was later clarified that the drafts were revalidated, encashed, and the amounts appropriated towards the petitioner's tax liability, except for one draft of Rs. 2,500, which had become invalid. The court directed the respondents to refund Rs. 2,500 to the petitioner due to the lapse on the part of the Income-tax Department.
Conclusion:
The writ petition was largely dismissed except for the direction to refund Rs. 2,500 to the petitioner. The respondents were ordered to pay this amount within two weeks. The rule was discharged with no order as to costs.
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1990 (6) TMI 5
Issues:
Interpretation of section 10(24) of the Income-tax Act, 1961 regarding exemption claimed by a registered trade union association.
Detailed Analysis:
The High Court of Calcutta addressed a reference made by the Tribunal concerning the denial of exemption claimed under section 10(24) of the Income-tax Act, 1961 by a registered trade union association. The association's objects included various aspects such as regulating trade, arbitration, market development, quality standards, and employee relations. The contention was whether the association was primarily formed for regulating relations between workmen and employers or workmen and workmen, as required by section 10(24) for exemption. The Tribunal's decision was challenged by the association, leading to this reference.
The Court examined the objects of the association as outlined in its Rules and Regulations. While one object dealt with relations between workmen and employers, the majority focused on trade protection, market development, and technical advancements. The Court cited a Supreme Court judgment emphasizing that each object of an association must be considered primary, not ancillary. It was argued that since the Indian Sugar Mills Association, a registered body under the Trade Unions Act, was considered primarily formed for various purposes, the same should apply to the present association. However, the Court disagreed, stating that merely having one object related to employee relations did not make it the primary purpose of the association. The lack of evidence regarding significant expenditure on employee relations further weakened the association's claim.
Referring to past judgments, the Court distinguished cases where associations were found entitled to exemption under section 10(24) based on specific facts and objectives. The Court highlighted a case where an association was denied exemption due to its primary focus on member interests rather than employee relations. Considering the varied objectives of the present association, the Court upheld the Tribunal's decision to deny the exemption claim under section 10(24) of the Income-tax Act, 1961.
In conclusion, the Court answered the question in the affirmative, favoring the Revenue. The judgment was a joint decision by Judges Suhas Chandra Sen and Bhagabati Prasad Banerjee, with no order as to costs.
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1990 (6) TMI 4
Issues Involved:
1. Deduction of purchase tax in the assessment year 1977-78.
2. Eligibility for allowance u/s 80J for the entire business.
3. Entitlement to investment allowance on diesel generator and transformer u/s 32A.
Summary:
Issue 1: Deduction of Purchase Tax in Assessment Year 1977-78
The primary issue was whether the assessee could claim a deduction for the provision of purchase tax amounting to Rs. 2,86,436, which related to the assessment year 1975-76, in the subsequent assessment year 1977-78. The court noted that the assessee followed the mercantile method of accounting, where liabilities accrue in the year the transactions occur. The Full Bench decision in CIT v. Karim (K. A.) and Sons [1982] 133 ITR 515 established that liabilities must be accounted for in the year they arise. The court found that since the liability arose in 1975-76 and the assessee had already claimed it then, it could not be claimed again in 1977-78. The Appellate Tribunal's reasoning was inconsistent and contrary to established law. Therefore, the court answered question No. 1 in the negative, against the assessee and in favor of the Revenue.
Issue 2: Eligibility for Allowance u/s 80J
The second issue was whether the assessee's entire business was eligible for the allowance u/s 80J. The court referred to its earlier decision in CIT v. Marwell Sea Foods [1987] 166 ITR 624, which held that processing prawns amounts to the production of articles, qualifying the business as an industrial undertaking. Consequently, the court affirmed that the assessee was entitled to the allowance u/s 80J. Thus, question No. 2 was answered in the affirmative, against the Revenue and in favor of the assessee.
Issue 3: Entitlement to Investment Allowance u/s 32A
The third issue was whether the assessee was entitled to investment allowance on the diesel generator and transformer u/s 32A. Given the court's decision on issue 2, it followed that the assessee was also entitled to this allowance. Therefore, question No. 3 was answered in the affirmative, against the Revenue and in favor of the assessee.
Conclusion:
- Question No. 1: Answered in favor of the Revenue and against the assessee.
- Questions Nos. 2 and 3: Answered against the Revenue and in favor of the assessee.
The reference was answered accordingly.
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1990 (6) TMI 3
Issues Involved:
1. Reopening of assessment u/s 147(b) for the assessment years 1973-74 and 1974-75.
2. Validity of reassessment proceedings based on the information leading to the belief that income chargeable to tax had escaped assessment.
3. Assessability of service charges as income from business in reassessment proceedings.
4. Allowance of depreciation and insurance premium in computing income from service charges u/s 57(2).
Summary:
Issue 1: Reopening of Assessment u/s 147(b)
The Tribunal confirmed the reopening of the assessment for the years 1973-74 and 1974-75 by the Assessing Officer (AO) based on information that led to the belief that income chargeable to tax had escaped assessment. The AO noted that interest credited to the suspense account was not included in the total income, which was contested by the assessee on the grounds of irrecoverability and doubtfulness of debts. The Commissioner of Income-tax (Appeals) upheld the AO's decision, stating that the reopening was not based on an audit objection but on independent grounds.
Issue 2: Validity of Reassessment Proceedings
The Tribunal held that the reassessment proceedings were justified as the AO had reasons to believe that income had escaped assessment due to excessive depreciation allowance and other deductions not permissible under law. The Tribunal referenced the Supreme Court's decision in T.S. PL. P. Chidambaram Chettiar [1971] 80 ITR 467, stating that even vague information could justify reopening under section 147(b). The Tribunal also noted that the AO had not applied his mind to the details during the original assessment, thus justifying the reassessment.
Issue 3: Assessability of Service Charges
The Tribunal rejected the assessee's contention that service charges should be assessed as income from business rather than under 'other sources'. The Tribunal noted that the machinery and plant were owned by the assessee and not let out, and the service charges were consistently assessed under 'other sources' in previous years.
Issue 4: Depreciation and Insurance Premium
The Tribunal upheld the disallowance of depreciation and insurance premium in computing income from service charges u/s 57(2). The Commissioner of Income-tax (Appeals) found that these deductions were not permissible under law and that the AO had not considered these details during the original assessment.
Conclusion:
The High Court concluded that the condition precedent for invoking section 147(b) was absent as there was no fresh material before the AO. The reassessment was deemed a mere change of opinion based on materials already considered during the original assessment. Consequently, the Tribunal's decision was overturned, and question No. 1 was answered in the negative, in favor of the assessee. Questions Nos. 2, 3, and 4 were not addressed due to the resolution of question No. 1. There was no order as to costs.
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1990 (6) TMI 2
Issues Involved:
1. Jurisdiction of the Settlement Commission under section 245HA of the Income-tax Act and section 22HA of the Wealth-tax Act.
2. Petitioner's non-cooperation with the Settlement Commission.
3. Procedural aspects and inherent powers of the Settlement Commission.
4. Validity of findings regarding the petitioner's cooperation.
Issue-wise Detailed Analysis:
Jurisdiction of the Settlement Commission:
The petitioner challenged the jurisdiction of the Settlement Commission to dispose of the application under section 245HA of the Income-tax Act and section 22HA of the Wealth-tax Act, arguing that these provisions were introduced after the application was filed. The court found no merit in this argument, stating that the provisions are procedural and do not affect substantive rights. The court referenced the Supreme Court decision in Anant Gopal Sheorey v. State of Bombay, which established that procedural changes apply retrospectively. The petitioner was duly served notice under the amended provisions and failed to comply, justifying the Commission's actions.
Petitioner's Non-cooperation with the Settlement Commission:
The Settlement Commission concluded that the petitioner had not cooperated throughout the proceedings. The petitioner provided vague, evasive, and contradictory statements, and failed to produce necessary documents despite multiple opportunities and adjournments. The Commission noted that the petitioner aimed to use the proceedings to avoid criminal liabilities and delay assessments. The court upheld the Commission's findings, emphasizing that the petitioner's conduct demonstrated a lack of genuine intent to cooperate.
Procedural Aspects and Inherent Powers of the Settlement Commission:
The court explained that section 245D(4) of the Income-tax Act inherently grants the Settlement Commission the authority to pass orders as it deems fit, including disposing of cases for non-cooperation. The proceedings before the Settlement Commission are a concession for assessees who have suppressed income, and cooperation is essential for granting immunity. The court affirmed that the Commission could have disposed of the proceedings even without the specific provisions of section 245HA and section 22HA, based on the petitioner's failure to provide required documents and evidence.
Validity of Findings Regarding the Petitioner's Cooperation:
The court found that the Settlement Commission's determination of the petitioner's non-cooperation was a factual finding, not subject to disturbance in writ jurisdiction. The Commission's exhaustive order detailed the petitioner's attempts to delay proceedings and use the Commission to resolve family disputes. The court noted that the petitioner made contradictory statements regarding the ownership of foreign assets and failed to provide adequate disclosures. The court concluded that the petitioner's challenge lacked merit and upheld the Commission's order.
Conclusion:
The court discharged the rule with costs, affirming the Settlement Commission's jurisdiction, the procedural validity of its actions, and the factual findings of the petitioner's non-cooperation. The petition was dismissed.
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1990 (6) TMI 1
Issues involved:
1. Disallowance of claim under section 80G of the Income-tax Act, 1961 for a donation made to Vishwa Mangal Trust.
2. Disallowance of expenses representing statutory fee paid for raising authorized share capital and application fee paid for issue of bonus shares, and deletion of addition of export subsidy and duty drawback accrued but not shown in the profit and loss account.
Issue 1 - Disallowance of claim under section 80G:
The Tribunal upheld the disallowance of the claim under section 80G for a donation made to Vishwa Mangal Trust. The court referred to a previous judgment and concluded in favor of the Revenue.
Issue 2 - Disallowance of expenses and addition of export subsidy:
a. Statutory fee for raising authorized share capital: The court held that the expenditure incurred for raising authorized share capital is capital expenditure based on precedents and the change in the income-earning apparatus.
b. Application fee for issue of bonus shares: Unlike raising authorized share capital, issuing bonus shares does not change the capital structure of the company. The court explained the consequences of issuing bonus shares and concluded that the application fee for bonus shares was not capital expenditure.
c. Export subsidy and duty drawback: The court referred to a judgment in a different case to emphasize the importance of consistent accounting methods for receipts and payments, but found the circumstances in the present case justified the treatment of export subsidy separately.
The court answered the questions as follows:
- Issue 1 in R. A. No. 916/(Cal) of 1986 was answered in favor of the Revenue.
- Issue 1 in R. A. No. 962/(Cal) of 1986: Disallowance of statutory fee was upheld as capital expenditure, while application fee for bonus shares was not considered capital expenditure.
- Issue 2 in R. A. No. 962/(Cal) of 1986 was answered in favor of the assessee.
No costs were awarded in this judgment.
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