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Case Laws
Showing 221 to 237 of 237 Records
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1988 (12) TMI 17
The Bombay High Court ruled in favor of the Revenue, stating that relief under section 80-I should be allowed after allowing development rebate under section 33. The decision was based on the Supreme Court ruling in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84.
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1988 (12) TMI 16
Issues: Reopening of assessments under section 147(b) of the Income-tax Act, 1961 for the assessment years 1967-68, 1968-69, and 1969-70; Chargeability of lands as agricultural lands and tax implications under section 45 of the Income-tax Act, 1961.
Analysis:
The assessee filed income-tax returns for the mentioned assessment years, claiming that the sale of land was of agricultural nature and hence not subject to capital gains tax. The Income-tax Officer initially did not impose capital gains tax. However, the successor reopened the assessments under section 147 of the Income-tax Act, alleging that income had escaped assessment. The objections raised by the assessee were dismissed by the authorities.
The Income-tax Appellate Tribunal consolidated the appeals related to the reopening and the assessment for 1970-71. It was found that there was no failure on the part of the assessee to disclose all material facts, thus the assessments could not have been reopened under section 147(a). The Tribunal considered an audit note as information under section 147(b), leading to the reopening proceedings.
The Supreme Court's judgment in Indian and Eastern Newspaper Society v. CIT was referenced, emphasizing that information under section 147(b) should pertain to law created by a formal source. The audit note in question expressed an opinion rather than providing new information. It was concluded that the audit note did not constitute information within the meaning of section 147(b), and the reassessment amounted to a impermissible change of opinion.
The judgment also addressed the second issue related to the chargeability of lands for the assessment year 1970-71. Following the precedent in CIT v. V. A. Trivedi, the court ruled in favor of the Revenue, indicating that the lands were not agricultural and the sale proceeds were rightly chargeable to capital gains tax under section 45 of the Income-tax Act, 1961.
In conclusion, the first question regarding the reopening of assessments for the mentioned years was answered in favor of the assessee, while the second question for the assessment year 1970-71 was answered in favor of the Revenue. No costs were awarded in the judgment.
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1988 (12) TMI 15
The High Court of Bombay ruled in favor of the assessee, stating that the amount transferred from the general reserve to the profit and loss account for paying the final dividend should not be reduced from the general reserve in computing the capital of the assessee-company. The court found that the liability for dividend payment arises only after it has been declared by the shareholders at the annual general meeting, and that this liability does not relate back to any earlier date based on directors' recommendations. The Supreme Court decision cited was deemed not applicable to the case, as no reserve for distributing dividends was created from the profits of the year. The question of law was answered in favor of the assessee.
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1988 (12) TMI 14
The High Court of Bombay delivered a judgment on two questions referred by the Tribunal regarding income tax assessment. The first question was not answered, and the second question was answered in the negative in favor of the Revenue. The court cited a previous Full Bench judgment in support of its decision. (Case citation: 1988 (12) TMI 14 - BOMBAY High Court)
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1988 (12) TMI 13
The Bombay High Court ruled that the sum of Rs. 12,10,279 from the sale of 'import entitlements' was not exempt under section 10(3) of the Income-tax Act, 1961, and was not eligible for rebate under section 2(4)(a)(i) and (ii) of the Finance (No. 2) Act of 1967. The judgment favored the Revenue based on precedent.
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1988 (12) TMI 12
Issues:
1. Assessment of capital loss suffered by the assessee in the previous year.
2. Allowability of setting off capital loss against capital gains in a subsequent assessment year.
Analysis:
1. The case involved the assessment of capital loss suffered by the assessee in the previous year, specifically pertaining to the sale of shares of a company. The assessee sold shares and computed capital gains based on the market value of the shares as of January 1, 1954, instead of the cost price. However, the Income-tax Officer disagreed with the assessee's computation and calculated the capital gains at a lower value, leading to a dispute over the assessment of the capital loss amounting to Rs. 41,92,021 in the assessment year 1964-65.
2. In the subsequent assessment year 1966-67, the assessee earned capital gains and sought to set off this amount against the capital loss suffered in the earlier assessment year. The Income-tax Officer disallowed this claim, as the initial capital loss calculation was not accepted. The matter was escalated to the Appellate Assistant Commissioner and eventually to the Tribunal for resolution.
3. The Tribunal analyzed the core issue of whether the shares sold by the assessee in the previous year maintained their identity and continuity, particularly in light of a subsequent event where the face value of the shares was reduced by 90%. Relying on the Supreme Court's decision in Shekhawati General Traders Ltd. v. ITO [1971] 82 ITR 788, the Tribunal concluded that the identity and continuity of the shares remained intact, and thus, the market value of the shares as on January 1, 1954, should be considered for computing the capital gain or loss.
4. The High Court concurred with the Tribunal's findings, emphasizing that the identity of the shares was not lost despite the reduction in face value in 1958. The court held that the valuation of the shares as on January 1, 1954, should not be adjusted based on subsequent events, as the shares sold during the previous year were the same shares owned by the assessee before January 1, 1954. Consequently, the court answered both questions in the affirmative, in favor of the assessee, allowing the set off of capital gains against the earlier capital loss.
5. The judgment highlighted the importance of maintaining the identity and continuity of shares for the purpose of computing capital gains or losses, emphasizing the significance of the valuation date and the impact of subsequent events on such calculations. The decision provided clarity on the treatment of shares in determining capital gains/losses, drawing on relevant legal precedents to support the final ruling.
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1988 (12) TMI 11
The High Court of Bombay ruled in favor of the Revenue regarding the allowance of the assessee's claim for gratuity liability without an approved gratuity fund under the Income-tax Act, 1961. The decision was based on the precedent set by the Supreme Court in Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585.
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1988 (12) TMI 10
The High Court of Bombay ruled in a case involving the inclusion of loans in capital computation base under section 80J of the Income-tax Act. The court answered the first and third questions in the negative, favoring the Revenue, based on a previous Supreme Court judgment. The second question was not considered. No costs were awarded. (Case citation: 1988 (12) TMI 10 - BOMBAY High Court)
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1988 (12) TMI 9
Issues:
Rate of penalty applicable to the petitioner's case.
Analysis:
The petitioner, a firm, filed its return for the assessment year 1964-65 on August 10, 1964. The Income-tax Officer requested a duplicate return, which was filed on February 12, 1969. The total income was computed at Rs. 80,731, including Rs. 40,000 added under "Income from undisclosed sources." A penalty of Rs. 50,000 was imposed under section 271(1)(c) by the Inspecting Assistant Commissioner, applying amended provisions effective from April 1, 1968. The Tribunal upheld the penalty, and subsequent appeals were rejected. The petitioner challenged the rate of penalty applied in computing the minimum penalty.
The petitioner argued that the amended provisions of section 271(1)(c)(iii) could not be applied as the original return was filed on August 10, 1964, and the duplicate return on February 12, 1969. The authorities levied the penalty based on the duplicate return date, citing the amended provision effective from April 1, 1968. However, the court held that the offence of concealment occurred when the original return was filed, not when the duplicate return was submitted. Precedents like CIT v. Champlal Jain and CIT v. Bankim Chandra Dutt supported this view, emphasizing the law applicable at the time of the offence. The Supreme Court in Brij Mohan v. CIT also affirmed this principle, stating that the law in force at the time of concealment governs penalty imposition.
The court ruled that the rate of penalty should align with the law in effect when the concealment act took place, i.e., when the original return was filed on August 10, 1964. The amendment affecting penalty quantum was substantive, not procedural. Therefore, the penalty should be determined based on the law at the time of the offence. The court allowed the application, making the rule absolute, and directed the officer to recompute the penalty based on the provisions existing on the date of filing the original return. The petitioner was barred from further appeals or revisions under the Act against the recomputation. No costs were awarded, and a copy of the order was provided to the petitioner's advocate.
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1988 (12) TMI 8
Issues Involved: Determination of whether the assessee is a 'manufacturing company' and whether the dumpers purchased by the assessee qualify as 'road transport vehicles' for claiming development rebate under section 33 of the Income-tax Act, 1961.
Manufacturing Company Issue: The court referred to a previous decision in the assessee's own case, where it was established that the assessee is not a 'manufacturing company', leading to a negative answer in favor of the Revenue.
Road Transport Vehicles Issue: The assessee purchased dumpers for heavy construction jobs, claiming development rebate as part of plant and machinery. The Appellate Assistant Commissioner found that the dumpers were road transport vehicles based on the material provided, including a brochure from the manufacturers. The Tribunal noted that the dumpers were registered as motor vehicles and used for an efficient transport system. It concluded that the dumpers, intended to transport goods on roads, qualified as road transport vehicles based on their use and purpose, a factual determination supported by relevant evidence.
Conclusion: The Tribunal's factual conclusion regarding the dumpers being road transport vehicles was upheld, emphasizing that it was a reasonable decision based on the evidence presented. The second question was answered in the affirmative in favor of the Revenue, and the assessee was directed to pay the costs of the reference.
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1988 (12) TMI 7
Issues:
1. Cash allowances and their treatment under specific sections of the Income-tax Act for different assessment years.
2. Entitlement to depreciation on the cost of roads as part of factory buildings.
3. Entitlement to development rebate for durable machine tools.
4. Allowance of business expenditure for lunches and dinners.
5. Deductibility of public issue expenses as revenue expenditure.
Analysis:
1. The first and second questions raised by the Revenue regarding the treatment of cash allowances paid to employees under specific sections of the Income-tax Act were answered in favor of the assessee based on precedents cited in the judgments of CIT v. Indokem Pvt. Ltd. and CIT v. Colour-Chem Ltd. The court ruled that the cash allowances were outside the purview of the mentioned sections for the respective assessment years.
2. The third question raised by the Revenue regarding the entitlement to depreciation on the cost of roads was also decided in favor of the assessee. The court held that the assessee was entitled to depreciation on the cost of roads as part of "building" based on the interpretation of relevant laws and precedents.
3. The fourth question raised by the Revenue concerned the entitlement to development rebate for durable machine tools. The court noted that the Income-tax Rules considered such tools as plant and machinery. The Tribunal's decision to allow development rebate on these tools was upheld, emphasizing that the tools need not be physically installed to qualify as plant and machinery.
4. The first question raised by the assessee related to the disallowance of entertainment expenses. The court upheld the Tribunal's decision that the lunches and dinners provided to clients and business associates constituted entertainment expenses. The court deferred to the Tribunal's factual findings on the nature of these expenses.
5. The second question raised by the assessee pertained to the deductibility of public issue expenses as revenue expenditure. The court, based on precedent from Bombay Burmah Trading Corporation Ltd. v. CIT, ruled in favor of the Revenue, stating that such expenses were not deductible as revenue expenditure.
In conclusion, the court ruled on various issues related to income tax treatment, depreciation, development rebate, and deductibility of expenses, providing detailed reasoning and referencing relevant legal precedents to support its decisions.
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1988 (12) TMI 6
Issues:
1. Interpretation of section 40(c)(iii)/40(a)(v) regarding the valuation of benefits or amenities provided by the employer to employees.
2. Applicability of section 40(c)(iii)/40(a)(v) to employees in overseas branches.
3. Eligibility of weighted deduction under section 35B for expenditure on export of tea from East Africa to the United Kingdom.
Analysis:
1. The first and second questions raised in the judgment pertain to the interpretation of section 40(c)(iii)/40(a)(v) of the Income-tax Act, 1961. The court referred to a previous judgment and concluded that the value of benefits or amenities provided to employees should be considered in the hands of the employee, not the entire expenditure incurred by the employer. Following the precedent, the court ruled in favor of the Revenue for the first question and in favor of the assessee for the second question.
2. The third question addressed the eligibility of weighted deduction under section 35B for expenditure on the export of tea from East Africa to the United Kingdom. The Income-tax Officer and the Appellate Assistant Commissioner held that the deduction was only available if exports were made from India. However, the court disagreed, stating that the provision did not specify that the export had to be from India. The court analyzed the relevant provisions of section 35B and concluded that the language was clear and unambiguous, entitling the assessee to the deduction for the expenditure incurred on services outside India in connection with the execution of a contract for the supply of tea in the United Kingdom.
3. In summary, the court answered the third question in the affirmative and in favor of the assessee, allowing the weighted deduction under section 35B for the expenditure on the export of tea from East Africa to the United Kingdom. The judgment emphasized the plain language of the provision and rejected the argument that exports had to be made from India to qualify for the deduction.
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1988 (12) TMI 5
Issues:
1. Interpretation of section 155(6) of the Income-tax Act, 1961 regarding the allowance of bad debt deduction.
Analysis:
The judgment pertains to a dispute over the interpretation of section 155(6) of the Income-tax Act, 1961, concerning the allowance of a bad debt deduction for the assessment year 1964-65. The assessee claimed a bad debt of Rs. 10,305, which the Income-tax Officer disallowed, stating that the debt had become bad in the preceding previous year. The Appellate Assistant Commissioner directed the Income-tax Officer to rectify the assessment for the preceding year under section 155(6), allowing the deduction. The Revenue challenged this decision, arguing that the assessee should have accepted the Income-tax Officer's finding or filed an appeal or revision, making section 155(6) inapplicable. However, the Tribunal upheld the Appellate Assistant Commissioner's order, emphasizing that the language of section 155(6) did not restrict the assessee's right based on accepting or challenging the Income-tax Officer's finding.
The key contention revolved around the interpretation of the phrase "if the assessee accepts such finding of the Income-tax Officer" in section 155(6). The Revenue's counsel argued that this condition limited the assessee's benefit under the provision to accepting the Income-tax Officer's finding without further recourse. However, the court rejected this interpretation, stating that the use of "may" in the provision implied an obligation on the Income-tax Officer to recompute the total income if satisfied about the bad debt. Additionally, the clause allowing the assessee to accept the finding was seen as providing an opportunity to appeal or revise the decision, without forfeiting the right to the deduction if the appeal was unsuccessful. Therefore, the court held that the assessee did not lose the right to claim a bad debt deduction for the relevant year by challenging the Income-tax Officer's finding through an appeal or revision.
In conclusion, the court upheld the construction of section 155(6) by the Appellate Assistant Commissioner and the Tribunal, ruling in favor of the assessee. The judgment clarified that the assessee's right to a bad debt deduction was not contingent on accepting the Income-tax Officer's finding and that filing an appeal or revision did not preclude the assessee from availing the deduction if the challenge was unsuccessful.
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1988 (12) TMI 4
The High Court of Bombay delivered a judgment on the allowability of general reserves and taxation reserves as expenditure under the Income-tax Act, 1961. The court ruled that neither the taxation reserve nor the general reserve can be considered as an allowance or expenditure. The judgment was in favor of the assessee for the assessment years 1969-70, 1970-71, and 1971-72.
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1988 (12) TMI 3
Issues:
1. Interpretation of section 271(1)(c) regarding inaccurate particulars of income disclosure.
2. Consideration of disclosure in Part IV of the return as true and full disclosure under section 271(1)(c).
3. Evaluation of evidence for establishing income earned by the assessee and justification of penalty under section 271(1)(c).
Analysis:
The judgment by the High Court of Bombay involved three key questions of law referred by the Tribunal regarding the interpretation of section 271(1)(c) of the Income-tax Act, 1961. The case revolved around an individual assessee for the assessment year 1969-70 who had declared certain amounts as exempt income in Part IV of the return. The Department imposed a penalty under section 271(1)(c), which led to a dispute. The Tribunal had to determine whether the assessee's disclosure in Part IV exempted them from penalty and if the Department had established the impugned amount as income earned by the assessee.
The Tribunal accepted the assessee's submissions, ruling that the penal provisions of section 271(1)(c) were not attracted in this case. The Department argued that mere mention of false claims by the assessee in Part IV did not exempt them from penalty. However, the Tribunal found that the Department had not provided sufficient evidence to prove that the amounts disclosed were indeed the assessee's income. The settlement reached between the assessee and the Commissioner was also a point of contention, with the Department asserting that the settlement did not affect the penalty.
The High Court analyzed the purpose of Part IV of the return, emphasizing that it allows the assessee to disclose income claimed as exempt, even if unsure about its tax status. The Court highlighted that the settlement terms, based on the assessee's letter, indicated an offer to be assessed for peace and did not constitute an admission of concealment. The Court agreed with the Tribunal that there was insufficient evidence to support the imposition of penalty under section 271(1)(c) in this case, especially considering the disclosure in Part IV and the settlement conditions.
In conclusion, the High Court ruled in favor of the assessee, answering all three questions in the affirmative and holding that the assessee was not liable for penalty under section 271(1)(c). The judgment highlighted the importance of evidence, disclosure, and settlement terms in determining the applicability of penal provisions in income tax cases.
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1988 (12) TMI 2
Issues involved:
The interpretation of section 119(2)(b) of the Income-tax Act, 1961 regarding allowing claims for losses, unabsorbed depreciation, and relief by way of investment allowance pertaining to the assessment year 1977-78.
Judgment Summary:
The petitioner filed an application u/s 119(2) seeking direction to allow their claim for losses, unabsorbed depreciation, and relief by way of investment allowance for the assessment year 1977-78. The Board rejected the application stating that section 119(2)(b) does not cover belated returns for determining losses, and the matter is regulated by other sections. The petitioner challenged this decision, arguing that the Board's rejection was on irrelevant grounds and cited Circular No. 446 of 1985. The respondents contended that there is no power to extend time for filing returns u/s 80 of the Act. The Court considered the scope of section 119(2)(b) which allows the Board to authorize consideration of claims after the specified period for avoiding genuine hardship. The Court held that the petitioner's request falls within the scope of the expression "claim" under section 119(2)(b) and directed the Board to reconsider the matter. The petition was allowed, and the rule was made absolute.
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1988 (12) TMI 1
Central Board of Direct Taxes, rejecting the application of the appellant-company under section 80-0 - held that branch of an Indian Company can not be said to be a "foreign enterprise", for the purpose of s.80-O - assessee's appeal is dismissed
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9911796707
