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Showing 301 to 315 of 315 Records
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1987 (1) TMI 15
Issues Involved:
1. Identity of the property transferred.
2. Character of the transaction.
3. Year(s) in which the income is taxable.
4. Amount of taxable income.
Summary:
1. Identity of the Property Transferred:
The Tribunal held that it was not the business of the Wardha undertaking as a going concern which was transferred by the assessee to the Board; rather, it was a sale of various assets of that undertaking. The High Court agreed with this view, answering the first question in the negative and in favor of the Revenue.
2. Character of the Transaction:
The Tribunal determined that the transaction between the assessee and the Board was in the nature of a sale. The High Court upheld this characterization, noting that the provisions of section 41(2) of the Income-tax Act, 1961, were applicable. The court referenced the Supreme Court's judgment in Fazilka Electric Supply Co. Ltd. v. CIT [1962] 46 ITR 127 (SC) to support this conclusion, emphasizing that the sale was not of a going concern but of individual assets. Consequently, the second question was answered in the affirmative and in favor of the Revenue.
3. Year(s) in Which the Income is Taxable:
The Tribunal found that the only income includible in the assessee's assessment for the assessment year 1967-68 was the capital gain relating to the sale and transfer of movable property delivered to the Board on March 11, 1967/March 12, 1967. The High Court agreed, answering the fourth question in the affirmative and in favor of the Revenue.
4. Amount of Taxable Income:
The Tribunal included the solatium in the purchase price and held that the difference between the amount of the consideration (original cost) and the written down value of the assets was taxable as income u/s 41(2) of the Act. Additionally, the difference between the balance of the consideration (sale price) and the original cost of the assets was taxable as a capital gain. The High Court, referencing its earlier judgment in Akola Electric Supply Co. (P) Ltd. v. CIT [1978] 113 ITR 265 (Bom), confirmed that the solatium was includible in the sale price for determining the taxable capital gain. Thus, the third question was answered in the affirmative and in favor of the Revenue.
Conclusion:
The High Court answered all four questions in favor of the Revenue, affirming the Tribunal's findings and holding that the transaction was a sale of individual assets, taxable u/s 41(2) and as capital gains. No order as to costs was made.
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1987 (1) TMI 14
Issues Involved: Cancellation of bail, seriousness of economic offences, application of section 439 of the Code of Criminal Procedure, and the principles for granting bail in cases of high-value tax evasion.
Detailed Analysis:
1. Cancellation of Bail:
The primary issue involves the cancellation of bail granted to the accused by the Sessions Judge. The Income-tax Officer filed applications under section 482 of the Code of Criminal Procedure to cancel the bail granted to the accused, arguing that the Sessions Judge should not have granted bail in cases involving serious economic offences.
2. Seriousness of Economic Offences:
The accused were charged under section 276C of the Income-tax Act, 1961, for evasion of income-tax and forgery. The court noted that the alleged tax evasion involved substantial amounts, with one accused evading Rs. 17 lakhs and the other Rs. 14 lakhs. The court emphasized that economic offences of such high valuation jeopardize the entire economy and should be treated seriously.
3. Application of Section 439 of the Code of Criminal Procedure:
The court observed that the Sessions Judge's decision to grant bail was based on the issuance of bailable warrants, which should not be the sole premise for granting bail in non-bailable offences. The court cited the Supreme Court's view that even in bailable offences, bail can be canceled if the ends of justice are jeopardized by the accused's conduct.
4. Principles for Granting Bail in High-Value Tax Evasion Cases:
The court highlighted that the Sessions Judge's order was cryptic and lacked a comprehensive consideration of the seriousness and gravity of the crime. The court noted that the trend in recent decisions is to deal with economic offences seriously and that bail should not be granted as a matter of course in such cases. The court also mentioned that the Income-tax Department failed to show any new facts warranting the cancellation of bail and that the accused had not misused their bail.
Separate Judgments:
The court referred to various judgments, including those of the Supreme Court, which provide guidance on the principles for canceling bail. The court noted that the power to cancel bail should be exercised with care and circumspection and that the accused's conduct after being granted bail is a crucial factor.
Conclusion:
The court concluded that while the Sessions Judge's approach was erroneous, it would be inexpedient to cancel the bail at this stage due to the intervening circumstances, including the prolonged delay in final assessments and the absence of any misuse of bail by the accused. The applications under section 482 were rejected, with the court emphasizing that in serious economic offences, the principle should be "jail and not bail."
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1987 (1) TMI 13
Issues Involved:
1. Taxability of voluntary contributions aggregating to Rs. 55,000.
2. Taxability of voluntary contributions aggregating to Rs. 4,00,000.
3. Exemption u/s 12(1) of the Income-tax Act, 1961 for voluntary contributions.
4. Tribunal's misdirection regarding the discharge of debt from voluntary contributions.
5. Justification of interest levy u/s 139 and 215 of the Income-tax Act, 1961.
Summary:
Issue 1: Taxability of Voluntary Contributions Aggregating to Rs. 55,000
The court examined whether the voluntary contributions of Rs. 55,000 received by the assessee were liable to be taxed u/s 12(1) of the Income-tax Act, 1961. The court concluded that these contributions could form part of the "income" of the trust even under the old section 12(1).
Issue 2: Taxability of Voluntary Contributions Aggregating to Rs. 4,00,000
Similarly, the court considered the taxability of Rs. 4,00,000 received by the assessee. It was determined that this amount was rightly added as income, as voluntary contributions themselves could be considered income under the old section 12(1).
Issue 3: Exemption u/s 12(1) of the Income-tax Act, 1961 for Voluntary Contributions
The court analyzed the applicability of the exemption provision in section 12(1). It was found that the voluntary contributions were not solely applicable to charitable or religious purposes and were not actually applied as such. Therefore, the contributions did not qualify for exemption u/s 12(1).
Issue 4: Tribunal's Misdirection Regarding the Discharge of Debt from Voluntary Contributions
The court addressed whether the Tribunal misdirected itself in holding that the mere discharge of debt from voluntary contributions does not render it solely charitable. It upheld the Tribunal's finding that the contributions were not solely applicable to charitable or religious purposes.
Issue 5: Justification of Interest Levy u/s 139 and 215 of the Income-tax Act, 1961
The court noted that this issue did not arise from the order of the Tribunal and was therefore not pressed.
Conclusion:
The court answered questions (1) and (2) in the affirmative and against the assessee, question (3) in the negative and against the assessee, and question (4) in the negative and against the assessee. Question (5) was not pressed. There was no order as to costs.
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1987 (1) TMI 12
Issues Involved:
1. Assessment of surplus from the sale of Binaki lands as income from an adventure in the nature of trade for the year 1966-67.
2. Assessment of surplus from the sale of three acres of Ajni lands as income from an adventure in the nature of trade for the year 1969-70.
3. Assessment of surplus from the sale of three more acres of Ajni lands as income from an adventure in the nature of trade for the year 1971-72.
4. Whether the six acres of Ajni lands sold in the assessment years 1969-70 and 1971-72 could be considered agricultural lands for the purposes of section 2(14).
5. Legality of reopening the assessment of the assessee for the assessment year 1969-70 u/s 147(b).
Summary of Judgment:
Issue 1: Assessment of Surplus from Binaki Lands (1966-67)
The court examined whether the surplus from the sale of Binaki lands could be considered income from an adventure in the nature of trade. The Tribunal found that the assessee was an agriculturist who had cultivated the Binaki land until its sale. The land was sold to forestall its acquisition, and the purchase was deemed an investment. The court held that the profits from the sale were not taxable under the heading "Business" as income from an adventure in the nature of trade. The first question was answered in the negative and in favor of the assessee.
Issue 2: Assessment of Surplus from Ajni Lands (1969-70)
The court evaluated whether the surplus from the sale of three acres of Ajni lands could be considered income from an adventure in the nature of trade. The Tribunal found that the assessee had cultivated the Ajni land until its sale and had purchased it as an investment. The court held that the profits from the sale were not taxable under the heading "Business" as income from an adventure in the nature of trade. The second question was answered in the negative and in favor of the assessee.
Issue 3: Assessment of Surplus from Ajni Lands (1971-72)
The court considered whether the surplus from the sale of another three acres of Ajni lands could be considered income from an adventure in the nature of trade. The Tribunal's findings were consistent with those for the 1969-70 assessment year. The court held that the profits from the sale were not taxable under the heading "Business" as income from an adventure in the nature of trade. The third question was answered in the negative and in favor of the assessee.
Issue 4: Agricultural Status of Ajni Lands (1969-70 and 1971-72)
The court examined whether the six acres of Ajni lands sold in the assessment years 1969-70 and 1971-72 could be considered agricultural lands for the purposes of section 2(14). The Tribunal found that the Ajni land was agricultural at the time of purchase and had been under cultivation until its sale. However, the court noted that the assessee had obtained permission to convert the land to non-agricultural use and had entered into agreements to sell the land for non-agricultural purposes. The court held that the character of the land had changed and it was not agricultural land at the time of sale. The fourth question was answered in the negative and in favor of the Revenue.
Issue 5: Reopening of Assessment (1969-70)
The fifth question regarding the legality of reopening the assessment u/s 147(b) was not answered as the assessee did not press for an answer.
Conclusion:
Questions Nos. 1, 2, and 3 were answered in the negative and in favor of the assessee. Question No. 4 was answered in the negative and in favor of the Revenue. The fifth question was not answered. No order as to costs.
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1987 (1) TMI 11
Issues:
1. Liability abatement under section 46(1)(b) of the Estate Duty Act, 1953
2. Proportionate abatement of liability based on property value gifted
Analysis:
Issue 1: Liability abatement under section 46(1)(b) of the Estate Duty Act, 1953
The case involved the liability of a deceased individual to a firm, M/s. New Guna Shenoy Co., and whether it is liable to be abated under section 46(1)(b) of the Estate Duty Act, 1953. The deceased had gifted properties to family members who later formed a partnership firm, including the value of the gifted properties. The Tribunal held that the computation of the estate value should be made with reference to section 46(1)(b) due to the recipients becoming partners in the new firm and granting a loan to the deceased. The Tribunal determined the nexus between the loan granted and the proportionate value of assets brought in by the recipients, leading to a direction for proportionate abatement of the liability based on the net value of the firm's resources. The judgment cited the Madras High Court decision and the principle from Mc Dougal's Trustees case to support the Tribunal's decision.
Issue 2: Proportionate abatement of liability based on property value gifted
The second question referred to whether only a portion of the liability could be subjected to abatement based on the ratio of the value of the property gifted to the net value of the firm's resources. The Tribunal directed that only the proportionate portion of the liability, as determined by the ratio of the property value gifted to the net value of the firm's resources, could be subjected to abatement. This direction was deemed warranted by the proviso to section 46(1) of the Estate Duty Act, as supported by legal precedents.
In conclusion, the High Court answered question No. (1) in favor of the Revenue and against the assessee, while answering question No. (2) in favor of the assessee and against the Revenue. The parties were directed to bear their respective costs in the tax referred cases, with a copy of the judgment to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.
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1987 (1) TMI 10
Issues:
1. Validity of assessment completed on May 2, 1977 in terms of time limitation.
2. Justifiability of the addition of Rs. 1 lakh sustained by the Appellate Assistant Commissioner.
Analysis:
Issue 1:
The assessment for the year 1974-75 was completed by the Income-tax Officer under section 143(3) read with section 144B of the Income-tax Act, 1961. The assessee contended that the assessment completed on May 2, 1977, was invalid due to limitation. The counsel argued that there was only one draft assessment order issued on March 15, 1976, and the directions issued by the Inspecting Assistant Commissioner were part of the original draft order. The court held that there was only one draft order, and the directions issued were in line with the provisions of section 144B(4). Therefore, the assessment made on May 2, 1977, was within the prescribed time and valid. Question No. 1 was answered in favor of the Revenue.
Issue 2:
The Appellate Assistant Commissioner had sustained an addition of Rs. 1 lakh out of the total additions made by the Income-tax Officer. The assessee appealed to the Income-tax Appellate Tribunal contending that no addition was justifiable based on the facts and circumstances of the case. The Tribunal, after considering the facts, held that no additions were warranted. The Accountant Member concurred that the sales were properly accounted for and no understatement was found. Therefore, the Tribunal's finding that no additions were necessary was upheld by the court. Question No. 2 was answered in favor of the assessee.
The court directed the parties to bear their respective costs in the tax referred cases and ordered the forwarding of a copy of the judgment to the Income-tax Appellate Tribunal, Cochin Bench.
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1987 (1) TMI 9
Issues Involved:
1. Deduction of expenses incurred due to higher foreign exchange rates.
2. Allowance of exchange difference for dollar loans as revenue expenditure.
3. Higher rate of depreciation and development rebate for certain assets.
4. Treatment of miscellaneous expenses as capital and their eligibility for depreciation and development rebate.
5. Allowance of pre-commissioning expenses other than technical services.
6. Depreciation and development rebate on expenses incurred per technical services agreement.
7. Consideration of certain expenditures u/s 43A for depreciation and development rebate.
Summary:
Issue 1: Deduction of Expenses Incurred Due to Higher Foreign Exchange Rates
The Tribunal held that the purchase of dollars by the assessee-company for repayment of loans taken in dollars is in the ordinary course of the company's business, and if in making such purchase, the company incurs certain extra expenses because of the higher rate of foreign exchange, the company's claim for deduction of such expenses is allowable. However, the court concluded that the excess amounts payable due to devaluation or fluctuation in currency value were for the acquisition of capital assets and thus constituted capital expenditure. Questions Nos. 1 and 2 were answered in the negative, in favor of the Revenue.
Issue 2: Allowance of Exchange Difference for Dollar Loans as Revenue Expenditure
The Tribunal allowed the assessee's claim for deduction of Rs. 90,106 representing the difference in exchange for payment of dollar loans as revenue expenditure. However, the court held that the repayment of loans raised for the purchase of capital assets is capital expenditure. Thus, the court answered in favor of the Revenue.
Issue 3: Higher Rate of Depreciation and Development Rebate for Certain Assets
The Tribunal allowed higher rates of depreciation and development rebate for assets like waste ponds, fresh water tank, pipe racks, alloy piping, jetty facilities, and cherry picker cranes, treating them as integral parts of the refinery. The court agreed with this view and answered question No. 3 in the affirmative, in favor of the assessee.
Issue 4: Treatment of Miscellaneous Expenses as Capital and Their Eligibility for Depreciation and Development Rebate
The Tribunal granted depreciation and development rebate on miscellaneous expenses treated as capital expenditure. The court found that the Tribunal exceeded its jurisdiction by granting development rebate, which was not sought by the assessee. The court redrafted question No. 4 and answered it in the negative, in favor of the Revenue.
Issue 5: Allowance of Pre-Commissioning Expenses Other Than Technical Services
The Tribunal allowed the capitalisation of the total pre-commissioning expenses and directed that depreciation and development rebate be allowed. The court upheld this decision based on precedents and answered question No. 5 in the affirmative, in favor of the assessee.
Issue 6: Depreciation and Development Rebate on Expenses Incurred Per Technical Services Agreement
The Tribunal allowed depreciation and development rebate on expenses incurred under the Technical Services Agreement, considering them as part of the plant. The court agreed with this view, referencing the Supreme Court's decision in Scientific Engineering House P. Ltd. v. CIT, and answered question No. 6 in the affirmative, in favor of the assessee.
Issue 7: Consideration of Certain Expenditures u/s 43A for Depreciation and Development Rebate
The court held that the excess liability towards payment of interest on dollar loans, etc., obtained for the acquisition of capital assets, is attracted by section 43A of the Income-tax Act, 1961. Thus, question No. 7 was answered in the affirmative, in favor of the assessee.
Conclusion:
The court directed the parties to bear their respective costs and ordered a copy of the judgment to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.
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1987 (1) TMI 8
Issues Involved:
1. Constitutionality of restricting the term "accountant" to chartered accountants u/s 44AB of the Income-tax Act, 1961.
2. Alleged violation of Article 14 of the Constitution.
3. Alleged infringement of the fundamental right u/s 19(1)(g) of the Constitution.
4. Comparison of Section 44AB with Section 142(2A) of the Income-tax Act.
Summary:
1. Constitutionality of restricting the term "accountant" to chartered accountants u/s 44AB of the Income-tax Act, 1961:
The petitioners, comprising income-tax practitioners and an advocate, challenged the constitutionality of the restricted definition of "accountant" to chartered accountants in the Explanation to section 44AB of the Income-tax Act, 1961. They argued that they are equally competent to audit accounts and should be eligible to do so.
2. Alleged violation of Article 14 of the Constitution:
The petitioners contended that section 44AB, which confines the audit to chartered accountants, results in invidious discrimination and is violative of Article 14 of the Constitution. The court held that the classification of chartered accountants for the purpose of audit under section 44AB is based on reasonable grounds and bears a just and proper relation to the objective of checking tax evasion. The court cited several precedents, including State of West Bengal v. Anwar All Sarkar and R. K. Garg v. Union of India, to support the principle that reasonable classification is permissible under Article 14.
3. Alleged infringement of the fundamental right u/s 19(1)(g) of the Constitution:
The petitioners argued that the exclusion of income-tax practitioners and advocates from conducting audits infringes their fundamental right to practice any profession u/s 19(1)(g) of the Constitution. The court held that the restriction is a reasonable one, saved under Article 19(6) of the Constitution, as it is aimed at ensuring meticulous scrutiny of accounts by qualified professionals (chartered accountants) to detect tax evasion and facilitate expeditious assessments.
4. Comparison of Section 44AB with Section 142(2A) of the Income-tax Act:
The petitioners contended that section 44AB is superfluous as section 142(2A) already provides for the audit of complex accounts. The court clarified that section 44AB is intended for assessees with higher income brackets to ensure vigilance and expedite assessments, whereas section 142(2A) is invoked for complex accounts irrespective of the income bracket. The court found that the overlapping of these provisions does not render section 44AB invalid or superfluous.
Conclusion:
The writ petitions were dismissed, and the court upheld the constitutionality of section 44AB, affirming that the classification of chartered accountants for audit purposes is reasonable and does not violate Articles 14 or 19(1)(g) of the Constitution.
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1987 (1) TMI 7
Issues:
1. Interpretation of section 146 of the Income-tax Act in relation to best judgment assessment under section 144.
2. Application of section 146 when an assessment is completed under section 144 for non-compliance with section 142(2A) directions.
Analysis:
The judgment in this case revolves around the interpretation of section 146 of the Income-tax Act concerning best judgment assessments completed under section 144. The assessment in question involved two sets of defaults by the assessee: failure to file a return and comply with notices under section 142(1), and failure to comply with directions under section 142(2A). The Appellate Tribunal accepted the assessee's explanation under section 146 for the defaults related to section 142(1) but did not address non-compliance with section 142(2A. The petitioner argued that section 146 does not apply when best judgment assessment is based on non-compliance with section 142(2A) directions, as section 146 does not mention section 142(2A).
The Court rejected the petitioner's argument, emphasizing that section 146 can be invoked in all cases where an assessment is completed under section 144. To cancel an assessment under section 144, the assessee must prove to the Income-tax Officer that the defaults mentioned in section 146 were due to reasonable cause. The Court clarified that the absence of a specific reference to section 142(2A) in section 146 does not prevent an assessee from invoking section 146 if they can demonstrate reasonable cause for the defaults.
Furthermore, the Court dismissed the contention that interpreting section 146 in this manner would render section 142(2A) and related defaults irrelevant, stating that an assessee can still utilize section 146 if they meet the conditions specified therein. The judgment highlights that the Tribunal's decision aligns with the clear language of the section, and the absence of a reference to section 142(2A) in section 146 does not favor the Revenue. Consequently, the petition was dismissed, with no order as to costs.
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1987 (1) TMI 6
The High Court of Madras rejected the petition filed by the assessee under section 256(2) of the Income-tax Act, 1961, as the issues raised had already been addressed in a previous case involving the same assessee. The court held that the trust deed could not be rectified to delete objectionable objects, leading to the assessee-trust not being eligible for exemption. The petitions regarding wealth-tax and income-tax assessments were rejected for the years 1970-71 to 1979-80.
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1987 (1) TMI 5
The High Court of Madras ruled in favor of the assessee on three questions regarding revenue expenditure for cinema theatres, depreciation on partition works, and gratuity provision for employees for the assessment year 1972-73. The court cited previous decisions and answered all three questions in favor of the assessee.
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1987 (1) TMI 4
The High Court of Madras ruled in favor of the Revenue, stating that the inclusion and assessment of share income of minor sons in the assessee's individual hands was not proper under section 64(1)(iii). The decision was based on a previous case law.
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1987 (1) TMI 3
Issues Involved:
1. Application of mind by the Magistrate.
2. Investigation under the Criminal Procedure Code.
3. Summons content.
4. Ingredients of Section 120B IPC.
5. Misjoinder of charges and persons.
6. Premature prosecution under Section 277 of the Income-tax Act.
7. Liability under Section 271(1)(c) of the Income-tax Act.
8. Competency of the complainant under Sections 172 to 178 IPC.
9. Competency of the complainant under Sections 199 to 201 IPC.
Issue-wise Detailed Analysis:
1. Application of Mind by the Magistrate:
The accused argued that the Magistrate did not apply his mind when issuing the process, as evidenced by the use of a rubber stamp. The court found no merit in this argument, noting that each accused was provided with a copy of the complaint detailing the offences under the Indian Penal Code (IPC) and the Income-tax Act. Therefore, the accused were not prejudiced by the summons mentioning only Section 277 of the Income-tax Act.
2. Investigation under the Criminal Procedure Code:
The accused contended that the prosecution was vitiated because the offences under the IPC were not investigated as per the Criminal Procedure Code. The court held that the accused could raise these points before the trial court under Sections 245(1) or (2) of the Criminal Procedure Code. However, since the stage for discharge under Section 245(2) had passed, the accused could only seek discharge after evidence under Section 244 was recorded.
3. Summons Content:
The accused claimed that the summons mentioned only Section 277 of the Income-tax Act, omitting the IPC offences, causing surprise. The court dismissed this point, stating that the accused were provided with the complaint detailing all offences, thus no prejudice was caused.
4. Ingredients of Section 120B IPC:
The accused argued that no ingredients of criminal conspiracy under Section 120B IPC were made out. The court did not find this argument convincing, as the detailed complaint provided sufficient material to establish a prima facie case of conspiracy.
5. Misjoinder of Charges and Persons:
The accused claimed misjoinder of charges and persons. The court did not find this argument persuasive, as the complaint detailed a conspiracy involving multiple accused and offences, justifying their joint trial.
6. Premature Prosecution under Section 277 of the Income-tax Act:
The accused argued that prosecution under Section 277 was premature without complying with Sections 271(1)(c) and 273(a) of the Income-tax Act. The court held that the prosecution was not premature and that the accused could raise this defense during the trial.
7. Liability under Section 271(1)(c) of the Income-tax Act:
The accused contended that only an assessee could be held liable under Section 271(1)(c). The court found this argument irrelevant at the current stage, as the complaint was based on conspiracy and other IPC offences, not solely on Section 271(1)(c).
8. Competency of the Complainant under Sections 172 to 178 IPC:
The accused argued that the Chief Commissioner (Admn.) was not competent to file a complaint for offences under Sections 172 to 178 IPC. The court agreed, noting that the complainant was not administratively superior to the Income-tax Officers at Trivandrum or Bombay. Thus, the charges related to offences at these locations were quashed.
9. Competency of the Complainant under Sections 199 to 201 IPC:
The accused claimed that the Chief Commissioner (Admn.) was not competent to file a complaint under Sections 199 to 201 IPC, as he was not a court. The court agreed, quashing the proceedings concerning offences under Section 195(1)(b) of the Criminal Procedure Code.
Conclusion:
The petitions were allowed in part. The court quashed the proceedings related to offences alleged to have taken place at Trivandrum and Bombay, except for evidence related to conspiracy. Additionally, the proceedings concerning offences under Section 195(1)(b) of the Criminal Procedure Code were quashed.
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1987 (1) TMI 2
Karta makes gift to his son by book entry - Tribunal held that there was a valid gift and the amount was liable to be excluded from the wealth of the Hindu undivided family - There is no evidence of acceptance of gift and it was never utilised for sons benefit - therefore gift is invalid - hence it is to be included in net wealth and interest credited is not deductible
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1987 (1) TMI 1
If the returned income is less than assessed income, the presumption is raised against the assessee that the assessee is guilty of fraud as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant - It is for the fact-finding body to judge the relevancy of the materials - If such a fact-finding body, comes to the conclusion that the assessee has discharged the onus; it becomes a conclusion of fact. No question of law arises.
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