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Case Laws
Showing 221 to 233 of 233 Records
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1989 (4) TMI 13
Issues:
1. Disallowance of commission paid by the assessee.
2. Change in the method of valuation of closing stock by the assessee.
Analysis:
1. The Commissioner of Income-tax disallowed a portion of the commission paid by the assessee, stating lack of proof of services rendered. The Commissioner of Income-tax (Appeals) overturned this decision, citing previous orders and voluminous correspondence as evidence. The Income-tax Appellate Tribunal upheld the decision based on lack of "contra material" and dismissed the Revenue's appeal. The High Court, in previous orders for similar assessment years, upheld the Tribunal's findings as factual, leading to the rejection of the application for reference on question No. 1.
2. The assessee changed its method of valuing closing stock for the assessment year 1978-79. The Income-tax Officer did not accept this change initially. However, the Commissioner of Income-tax (Appeals) found the change justified based on uniformity and commercial principles. The Tribunal upheld this decision, and the Revenue's subsequent application was rejected. The High Court deemed the Tribunal's decision on the valuation method change as factual, finding no question of law to refer question No. 2.
In conclusion, the High Court dismissed the application, maintaining the decisions of the lower authorities on both issues. The court found the Tribunal's findings on both matters to be factual and not warranting a reference on questions of law.
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1989 (4) TMI 12
Issues Involved:
1. Deductibility of service charges paid to Messrs. Karam Chand Thapar and Bros. (P.) Ltd. u/s 37(1) of the Income-tax Act, 1961.
2. Applicability of section 57(iii) for the expenditure incurred.
3. Whether the expenditure was wholly and exclusively for the purpose of business.
Summary:
Issue 1: Deductibility of Service Charges u/s 37(1)
The assessee claimed service charges of Rs. 29,250 paid to Messrs. Karam Chand Thapar and Bros. (P.) Ltd. for secretarial, liaison, and registrar services. The Income-tax Officer disallowed the claim, deeming the payment illusory. The Appellate Assistant Commissioner allowed Rs. 6,000 but not the full Rs. 27,000 claimed. The Tribunal, however, held that the payment was not unreasonable and allowed Rs. 27,000 for 12 months, noting that section 40B was not applicable and the expenditure was allowable u/s 37.
Issue 2: Applicability of Section 57(iii)
The Tribunal considered whether the expenditure could be allowed if no business was carried on. The Supreme Court's ruling in CIT v. Rajendra Prasad Moody was cited, emphasizing that expenditure can be deductible u/s 57(iii) if laid out wholly and exclusively for making or earning income, regardless of whether income was actually earned.
Issue 3: Expenditure Wholly and Exclusively for Business
The Tribunal found that the services rendered by Messrs. Karam Chand Thapar and Bros. (P.) Ltd. were necessary for the company's operations, including maintaining accounts, banking, taxation, and liaison activities. The Tribunal concluded that the expenditure was wholly and exclusively for business purposes. The High Court agreed, noting that even if the company did not carry on business, it had to maintain its establishment and comply with statutory obligations, making the expenditure necessary and reasonable.
Conclusion:
The High Court reframed the question to focus on whether the expenditure of Rs. 27,000 was allowable in computing the income for the assessment year 1972-73. It concluded affirmatively, in favor of the assessee, and held that the Tribunal's decision to allow the expenditure was correct. There was no order as to costs.
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1989 (4) TMI 11
Issues involved:
The issue involves the disallowance of interest by the Appellate Tribunal on advances made by a firm to a Hindu undivided family for non-business purposes, specifically for the construction of a building, under section 256(2) of the Income-tax Act, 1961.
Summary:
The assessee, a firm engaged in supplying various goods, advanced funds to a Hindu undivided family for constructing a house. The Income-tax Officer disallowed the interest on these advances, stating that the firm had no other interest-free capital available. The Appellate Assistant Commissioner upheld the disallowance, emphasizing that all funds available to the firm bore interest. However, the Tribunal overturned these decisions, noting that there was no direct link between the borrowings by the firm and the investment in the family house. The Tribunal deleted the disallowance of interest, leading to the reference to the High Court.
The Revenue argued that the firm and the family were separate entities, and the borrowed amounts were indeed used for the house construction, justifying the interest disallowance. Case references were made to support this position. On the other hand, the assessee contended that there was no clear evidence of fund diversion for the house construction, and the mere expenditure from borrowed funds did not warrant interest disallowance. Case law was cited to support this argument.
The Tribunal found no justification for the interest disallowance, highlighting the credit balance in the partners' accounts and the lack of a direct connection between specific borrowings and house construction expenses. However, the High Court disagreed, stating that the borrowed funds were diverted to the family for non-business purposes, justifying the interest disallowance. The Court emphasized the separate treatment of the firm and the family in the accounts, concluding in favor of the Revenue.
In conclusion, the High Court held that the Tribunal erred in deleting the interest disallowance, as the borrowed funds were diverted to the family for non-business purposes. The Court ruled in favor of the Revenue, emphasizing the distinct treatment of the firm and the family in the accounts.
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1989 (4) TMI 10
Issues:
1. Allowability of provision for gratuity based on actuarial valuation in computing total income for the assessment year 1972-73.
The judgment deals with the issue of whether a provision for gratuity based on actuarial valuation is an allowable deduction in computing the total income of the assessee for the assessment year 1972-73. The Income-tax Officer initially disallowed the claim, citing that the Gratuity Act came into force after the assessee's accounting year had ended, and there was no statutory liability during that year. However, the Appellate Assistant Commissioner found that the West Bengal Employees' Payment of Compulsory Gratuity Ordinance, 1971, was in force before the close of the accounting year, establishing the liability for payment of gratuity. The actuarial valuation amounting to Rs. 3,70,035 was deemed allowable, with a balance of Rs. 1,61,483 being disallowed. The Tribunal upheld the Appellate Assistant Commissioner's decision, stating that the liability was for the entire amount determined by actuarial valuation and not just the incremental value for that year.
The court referenced the decision in CIT v. Steel Rolling Mills of Bengal Ltd. [1988] 169 ITR 430, which had already addressed a similar issue. The Revenue contended that the Supreme Court's decision in CIT v. Vanaz Engineering P. Ltd. [1986] 162 ITR 876 favored their position, suggesting a remand to the Tribunal. However, the court disagreed, stating that the decision in Vanaz Engineering did not alter the precedents set by earlier Supreme Court judgments. Ultimately, the court ruled in favor of the assessee, allowing the provision for gratuity based on actuarial valuation as a deduction in computing the total income for the assessment year 1972-73.
In conclusion, the court answered the question in the affirmative and in favor of the assessee, emphasizing that the matter did not warrant a remand to the Tribunal. The judgment was agreed upon by both judges, and no costs were awarded in the case.
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1989 (4) TMI 9
Issues:
1. Jurisdiction of Family Court to summon records from Income-tax Department.
2. Maintainability of the writ petition without exhausting remedy under section 138(1)(b) of the Income-tax Act, 1961.
3. Impleadment of parties in the writ petition.
Analysis:
1. Jurisdiction of Family Court: The petitioner sought a writ of mandamus to direct the respondent to produce documents for a case pending in the Family Court. The Income-tax Department contended that the Family Court lacked jurisdiction to issue such summons. The court held that under Section 10 of the Family Courts Act, the Family Court is deemed a civil court with powers under the Code of Civil Procedure. The court opined that the Income-tax Department's stand before the Family Court was not sustainable, directing the Family Court to decide whether the Department should produce the records for the case.
2. Maintainability of Writ Petition: The Income-tax Department argued that the writ petition was not maintainable as the petitioner should first exhaust the remedy under section 138(1)(b) of the Income-tax Act, 1961. The court agreed that the petitioner must exhaust this remedy but disagreed with the Department's stance on the Family Court's jurisdiction. The court directed the Family Court to decide on the issue of summoning records before proceeding with the case, emphasizing that the petitioner should implead his mother-in-law in the Family Court proceedings.
3. Impleadment of Parties: The court noted that the petitioner's mother-in-law was not impleaded in the writ petition, which could be fatal to the case. It directed the petitioner to implead her in the Family Court proceedings. Additionally, the court instructed the Family Court to allow the counsel for the Income-tax Department to make submissions on the issue after issuing notice. The court emphasized the need for a prompt resolution of the matter, directing the Family Court to pass orders promptly.
In conclusion, the court dismissed the writ petition but directed the Family Court to decide on the request to summon records from the Income-tax Department before making any final decisions in the case.
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1989 (4) TMI 8
The High Court of Madras dismissed petitions to quash proceedings for various offenses under the Indian Penal Code and Income-tax Act. Petitioners argued against prosecution for accidental errors and lack of evidence. Court found no grounds to entertain the petitions under section 482 of the Criminal Procedure Code.
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1989 (4) TMI 7
The High Court of Madras dismissed four petitions filed under section 482 of the Criminal Procedure Code to quash proceedings in C.C. Nos. 153 and 156 of 1985. The petitioner was charged with offenses under sections 193, 196, and 420 of the Indian Penal Code, and sections 276C(1) and 277 of the Income-tax Act, 1961. The court held that the prosecution was not premature, and the petitioner could seek a stay of proceedings until the disposal of appeals by the Commissioner of Income-tax. The issue of limitation on prosecution was not raised earlier and should be addressed in the trial court.
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1989 (4) TMI 6
Issues involved:
1. Interpretation of depreciation rate for moulds used in manufacturing rubber containers.
2. Depreciation rate for borewells under the category of 'hydraulic works'.
3. Disallowance of cash payments for medical expenses and insurance premiums.
Interpretation of depreciation rate for moulds used in manufacturing rubber containers:
The assessee claimed depreciation at 40 per cent. for moulds used in making rubber containers, citing E(2) of the Depreciation Schedule. The Income-tax Officer disagreed, applying a 10 per cent. rate for machinery and plant. The Commissioner of Income-tax (Appeals) ruled in favor of the assessee, considering the factory's separate division for manufacturing rubber goods. The Tribunal upheld this decision, stating that the assessee, with a division for rubber goods, qualifies for the 40 per cent. depreciation rate under E(2) of the Depreciation Schedule. The High Court affirmed this, emphasizing the assessee's engagement in manufacturing rubber goods, including rubber containers for batteries.
Depreciation rate for borewells under the category of 'hydraulic works':
Referring to a previous court decision, the High Court determined that borewells are eligible for a 10 per cent. depreciation rate, rather than the 5 per cent. rate set by the Income-tax Officer. The court relied on the precedent set in CIT v. MICO, affirming the higher depreciation rate for borewells. This decision was made in favor of the assessee.
Disallowance of cash payments for medical expenses and insurance premiums:
Regarding the disallowance of cash payments for medical expenses and insurance premiums, the High Court referenced a prior case involving the same assessee. In alignment with the previous decision in CIT v. Amco Batteries Ltd., the court ruled against the Revenue, allowing the deduction for the cash payments related to medical expenses and insurance premiums.
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1989 (4) TMI 5
Diversion by Overriding Title - Whether on a correct interpretation of the lease deed, the Tribunal was right in holding that the profits of the glass factory during the relevant accounting year accrued to the assessee-company - whether the Tribunal was right in holding that the entire profits and not one-half of the profits of the glass factory during the relevant accounting year accrued to the assessee-company
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1989 (4) TMI 4
Priority Industry - assessee manufactures strawboard - assessee claimed concessional rates of income-tax, development rebate at higher rate and deduction under section 80E of the Income-tax Act, 1961, on the ground that the manufacture of strawboard was a priority industry - claim accepted
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1989 (4) TMI 3
Assessee is a co-operative society - objects of the society intend that it should press cotton and pack the bundles for its individual members as well as other customers, to use its machinery for any useful work of its members, and to sell raw cotton, cotton seeds and other agricultural products - Whether, the income of the society from ginning and pressing was exempt under section 81(i)(c) of the Income-tax Act, 1961, as it stood prior to its amendment on Ist April, 1968
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1989 (4) TMI 2
Statutory Agent - reassessment u/s 147(b) on non-resident to reapportion overhead expenses between income from sales and from commission - Whether the Tribunal was right in holding that the reassessments being only consequent to a change as to the method of computation of the profits, the initiation of proceedings u/s148 was justified - Held, yes - Whether the Tribunal was right in law in holding reassessment proceedings could not be initiated against the assessee direct
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1989 (4) TMI 1
Issues:
Whether the share of profit of the assessee's wife was includible in the total income of the assessee under section 64(1)(iii) of the Income-tax Act, 1961?
Analysis:
The Supreme Court heard an appeal against the High Court at Calcutta's judgment regarding the inclusion of the share of profit of the assessee's wife in the total income of the assessee under section 64(1)(iii) of the Income-tax Act, 1961. The assessee, a partner in a firm, made gifts to his wife, who later became a partner in a newly constituted firm with contributions from those gifts. The Income-tax Officer included the wife's profits in the assessment of the assessee under section 64(1)(iii), leading to appeals and subsequent dismissals. The High Court opined that the wife's share of profits did not arise directly from the gifts and that her admission to the partnership was not solely due to the gifts. The Supreme Court analyzed previous case law, emphasizing the need for a proximate connection between the income and assets transferred. The court held that the wife became a partner due to her capital contribution and the agreement of other partners, not solely because of the gifts. Citing relevant case law, the court concluded that the High Court's decision was correct, ruling in favor of the assessee and against the Revenue.
In conclusion, the Supreme Court upheld the High Court's decision, dismissing the appeal and affirming that the share of profit of the assessee's wife was not includible in the total income of the assessee under section 64(1)(iii) of the Income-tax Act, 1961.
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9911796707
