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Case Laws
Showing 221 to 229 of 229 Records
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1985 (3) TMI 10
Issues involved:
1. Acceptance of adjustments to the balance-sheet for assessment years 1965-66 and 1966-67.
2. Treatment of municipal valuation as annual letting value for properties.
3. Determination of whether the right acquired under agreements to sell created a capital asset for the assessee.
Acceptance of adjustments to the balance-sheet:
The Tribunal accepted the assessee's claim of adjustments to the balance-sheet by reference to a sum of Rs. 47.31 lakhs for assessment years 1965-66 and 1966-67. The High Court noted that this issue was previously addressed in a decision dated 2nd November, 1983, where it was held that the overall financial position had to be considered with reference to the adjusted balance-sheet. Therefore, the answer to the first question was in the affirmative, favoring the assessee.
Treatment of municipal valuation as annual letting value:
The Tribunal treated the municipal valuation as the annual letting value for properties located at specific addresses for the assessment years 1965-66 and 1966-67. Previous decisions of the High Court had also addressed this issue, with the answer being in the negative, favoring the assessee. Consequently, the municipal value was to be taken as the annual letting value.
Determination of capital asset creation under agreements to sell:
The Tribunal had to determine whether the right acquired by the assessee under agreements to sell dated May 21, 1955, and August 31, 1959, created a capital asset. Referring to a judgment in CIT v. J Dalmia [1984] 149 ITR 215, the High Court held that the right acquired was not a proprietary right, and therefore, no capital asset was created. As a result, no capital gain could accrue to the assessee.
In conclusion, all the questions raised in the references were covered by previous decisions of the High Court, leading to the answers being in favor of the assessee. Consequently, there was no order as to costs in this matter.
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1985 (3) TMI 9
Issues Involved:
1. Deduction of Rs. 61,917 from the total value of the estate.
2. Inclusion of Rs. 25,011 in the estate of the deceased.
3. Applicability of section 12 versus section 10 of the Estate Duty Act.
Detailed Analysis:
1. Deduction of Rs. 61,917 from the Total Value of the Estate:
The accountable person claimed a deduction of Rs. 61,917 as an outstanding liability owed by the deceased to the trustees of the settlement. The Assistant Controller disallowed this liability under section 46(1) of the Estate Duty Act, 1953, arguing that the trust was created by the deceased for her benefit and the money lent to her was from the properties she transferred. The Tribunal, however, after reviewing the accounts, concluded that the debts should be allowed as valid deductions if the Assistant Controller could verify that the debts were indeed included in the estate of the deceased. The Tribunal directed the Assistant Controller to scrutinize the accounts to ensure the debts were still outstanding at the time of death. The High Court affirmed this decision, stating that the Tribunal's direction to the Assistant Controller was appropriate.
2. Inclusion of Rs. 25,011 in the Estate of the Deceased:
The Assistant Controller included Rs. 25,011 in the estate, arguing that it was repaid within two years of the deceased's death towards satisfaction of debts, invoking section 46(2) of the Estate Duty Act. The Tribunal found that these payments were made towards discharge of liabilities and ruled that the Assistant Controller was incorrect in treating this amount as property deemed to be included in the estate. The High Court upheld the Tribunal's decision, stating that since the debt could not be disallowed under section 46(1), the sum of Rs. 25,011 could not be included in the estate under section 46(2).
3. Applicability of Section 12 versus Section 10 of the Estate Duty Act:
The Tribunal confirmed that the entire property settled by the deceased on trust passed on her death under section 12, not section 10, of the Estate Duty Act. The accountable person, aggrieved by this decision, suggested raising this as a question of law. However, the High Court ruled that the accountable person should have filed a reference application independently if they were aggrieved by the Tribunal's decision. The Tribunal exceeded its jurisdiction by referring this third question to the High Court, and thus, the reference on this question was deemed incompetent. Consequently, the High Court declined to answer the third question.
Conclusion:
The High Court answered the first and second questions in the affirmative and in favor of the accountable person, affirming the Tribunal's decisions on both counts. The third question was deemed incompetent and was not addressed. There was no order as to costs.
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1985 (3) TMI 8
Issues:
- Interpretation of whether the sale consideration of albezia trees constitutes agricultural income exempt from capital gains tax under the Income-tax Act, 1961.
Analysis:
The case involved a dispute regarding the taxability of receipts from the sale of albezia trees by an assessee company engaged in tea manufacturing and sales. The Income-tax Officer, upon discovering the omission of capital gains from the sale of albezia trees in the assessee's returns, initiated reassessment under section 147 of the Income-tax Act. The Officer considered the trees as shade trees and deemed the receipts as taxable capital gains. The Appellate Assistant Commissioner upheld this view, citing the assessee's previous stance that the trees were capital assets. However, the assessee argued that since the receipts were considered agricultural income under the Agricultural Income-tax Act, they should not be taxed as capital gains under the Income-tax Act.
The matter escalated to the Tribunal, where the assessee relied on a previous decision by the Agricultural Income-tax Appellate Tribunal, which classified the sale proceeds as agricultural income. Consequently, the Tribunal ruled in favor of the assessee, overturning the capital gains assessment. The Revenue challenged this decision and sought a reference to the High Court. However, the High Court noted a prior case involving the same assessee and the nature of albezia tree income. In that case, the High Court determined that the sale proceeds of albezia trees were revenue receipts taxable under the Agricultural Income-tax Act, upholding the view of the Agricultural Income-tax Officer. The High Court emphasized that once income is assessed as agricultural income under the Agricultural Income-tax Act, it cannot be treated as capital receipts for capital gains tax purposes.
Despite acknowledging that the albezia trees were cultivated for profit rather than solely for shade purposes, the High Court maintained that the income from their sale should be treated as revenue receipts, not capital gains. Given the consistency between the Tribunal's decision and the High Court's precedent, the High Court dismissed the Revenue's petitions, affirming the Tribunal's ruling. The judgment highlighted the distinction between revenue and capital receipts, emphasizing the tax treatment of income based on its classification under specific tax laws.
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1985 (3) TMI 7
Issues:
Reopening of assessment under section 147(a) of the Income-tax Act, 1961 based on failure to disclose capital gains on the sale of shares.
Analysis:
The case involves a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1959-60. The assessee sold 1,000 shares of a company to a trust but did not initially report the capital gains in her income tax return. The Income-tax Officer later reopened the assessment under section 147(a) upon discovering the undisclosed capital gains. The Appellate Assistant Commissioner ruled in favor of the assessee, stating no fresh facts justified reassessment. However, the Tribunal disagreed, emphasizing the duty to disclose capital gains in the income tax return regardless of disclosures in wealth tax returns. The Tribunal held that the reopening of assessment was justified, leading to a reference to the High Court.
The High Court considered the jurisdiction of the Income-tax Officer to initiate proceedings under section 147(a) and not the validity of reassessment or computation of capital gains. The court noted the failure of the assessee to disclose the sale of shares and capital gains in the original return, leading to an escapement of income. The Tribunal's finding of non-disclosure by the assessee was upheld, emphasizing the duty to disclose all primary facts for assessment. The court rejected the argument that disclosure in wealth tax returns absolved the duty to disclose in income tax returns, as the relevant fact of the sale of shares must be disclosed under the Income-tax Act.
The High Court affirmed the Tribunal's decision that the reopening of assessment under section 147(a) was justified based on the failure to disclose primary facts related to the sale of shares and capital gains. The court concluded that the assessee's omission to disclose fully and truly all material facts necessary for assessment resulted in an escapement of income. Therefore, the question of law regarding the reopening of assessment was answered in the affirmative in favor of the Revenue. The judgment was agreed upon by both judges, and no costs were awarded.
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1985 (3) TMI 6
Issues:
- Whether the assessee was entitled to deduction in respect of sales tax amounting to Rs. 49,110?
Analysis:
The case involved a dispute regarding the deduction of sales tax amounting to Rs. 49,110 claimed by the assessee for the assessment year 1974-75. The Income-tax Officer initially disallowed the deduction, stating that the assessee, a contractor, was not registered under the Sales Tax Act, and thus, had no liability to pay sales tax. However, the Commissioner of Income-tax (Appeals) allowed the deduction, emphasizing that the liability to pay sales tax arises when the dealer sells goods exceeding the specified limit under the Sales Tax Act, irrespective of registration status. The Commissioner relied on the Supreme Court decision in Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971] 82 ITR 363, which supported the deduction of sales tax liability for mercantile accounting-based assessee. The Income-tax Appellate Tribunal, in contrast, held that since the assessee was not a registered dealer and no sales tax proceedings were initiated within the limitation period, the deduction was not permissible. The Tribunal also distinguished the Kedarnath case, emphasizing the absence of assessment and payment of sales tax by the assessee.
The main contention revolved around whether the liability to pay sales tax, even without actual assessment or payment, could be deducted by the assessee following the mercantile system of accounting. The Department argued that without assessment or payment, the deduction was premature, citing decisions like Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 and Sinclair Murray and Co. P. Ltd. v. CIT [1974] 97 ITR 615, which required actual payment to claim deduction. Additionally, the Department relied on Deepchand Shyam Sunder v. CIT [1980] 125 ITR 724, highlighting the necessity of a legal liability for deduction. The Tribunal's decision was based on the absence of registration, assessment, and payment of sales tax by the assessee, leading to the conclusion that the deduction was not allowable.
In further support of the assessee's position, references were made to the Supreme Court case of Kedarnath Jute Manufacturing Co. Ltd. and other cases like CIT v. K. A. Karim and Sons [1982] 133 ITR 515 and Haji Lal Mohd. Biri Works v. CIT [1982] 134 ITR 718 (All), emphasizing the accrual of liability under the mercantile system of accounting. However, the court ultimately sided with the Department, ruling that the deduction for sales tax was not permissible in the absence of registration, assessment, or payment by the assessee. The court highlighted the necessity of a legal liability for deduction, which was not met in this case, leading to the denial of the deduction amounting to Rs. 49,110.
Therefore, the court answered the reference in the negative, favoring the Department's stance on the disallowance of the deduction claimed by the assessee for sales tax liability.
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1985 (3) TMI 5
The High Court of Madhya Pradesh ruled on a consolidated reference under the Income-tax Act, 1961. The court answered the questions of law as follows: 1) Borrowed capital should be considered in computing capital for deduction under section 80J. 2) The deduction at 6% per annum is applicable for the full year even if the undertaking worked for less than 12 months. The judgment referenced previous court decisions and concluded in favor of the Department on the first question and in favor of the assessee on the second question.
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1985 (3) TMI 4
Whether the sale price of water pumped out and discharged from the mine could be included in the annual net profits from the mine?
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Held that:- The facts of the present case go a step further inasmuch as the water pumped out from the mine was separately sold for price and, therefore, obviously it is covered by the provisions of section 6, read with section 72 of the Act.
Section 6 does not make any distinction as to whether the income is casual or a regular one. All that we are concerned with is whether the income derived by the sale of water pumped out from the mine is included in the profit from, the mine or not. We have not the slightest doubt that the income derived by sale of water pumped out from the coal mine constitutes a profit derived from the mine. Appeal allowed.
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1985 (3) TMI 3
"Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965 " framed u/s 280ZD of I.T. Act 1961 - HC negatived the challenge of appellant on the ground that tax credit would not be available to the appellant company in respect of the special excise duty levied under s. 80 of the Finance Act having regard to the special meaning assigned to the expression " duty of excise by clause (b) of s. 280ZD(6) - HC order confirmed - as per the scheme, application of the assessee is time barred
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1985 (3) TMI 2
Whether, on the facts and in the circumstances of the case, the Wealth-tax Officer was in law justified in including in the net wealth of the assessee interest due on accrual basis (though not realised) on the outstandings of the money-lending business, the accounts of the assessee being maintained on cash basis - question is answered in the affirmative, in favour of the Revenue and against the assessee
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