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Showing 301 to 320 of 324 Records

• 1996 (12) TMI 24
  
  Issues:
  1. Appeal against judgment and order passed by Special Judge for Economic Offences acquitting the respondents.
  2. Alleged wilful and deliberate income concealment by the respondent firm under sections 276C and 277 of the Income-tax Act.
  3. Consideration of evidence, including examination of witnesses and exhibits.
  4. Legal stand taken by the accused based on findings of the Income-tax Appellate Tribunal.
  5. Precedents from High Courts and Supreme Court regarding acceptance of findings by statutory authorities in criminal proceedings.
  6. Conflict between judgments regarding continuation of criminal proceedings post annulment of penalty proceedings.
  
  Analysis:
  The appeal was filed by the Revenue against the judgment and order of acquittal passed by the Special Judge for Economic Offences. The case involved allegations of wilful and deliberate income concealment by the respondent firm under sections 276C and 277 of the Income-tax Act. The Revenue contended that the impugned orders were illegal and should be set aside, while the respondents argued in support of the acquittal. The trial court examined witnesses and evidence, including exhibits P-1 to P-25, and the accused were also examined under section 313 of the Criminal Procedure Code. The court noted that the Income-tax Appellate Tribunal had allowed the appeal by the accused and deleted the penalty, finding no concealment on their part.
  
  The judgment referenced various legal precedents, including judgments from the High Courts of Kerala and Madras, as well as the Supreme Court, regarding the acceptance of findings by statutory authorities in criminal proceedings. The court highlighted that if a statutory authority like the Income-tax Appellate Tribunal finds no concealment by the assessee, the criminal court must accept this as binding. The court also referred to a Supreme Court decision where prosecution was quashed based on the Tribunal's findings of no false statements by the assessee.
  
  There was a mention of a conflicting judgment from another single judge of the court, but the court upheld the principle that findings by statutory authorities are binding on criminal courts. The court dismissed the appeal, stating that since the Income-tax Appellate Tribunal found no concealment, the trial court's acquittal of the accused did not warrant interference. The judgment emphasized the importance of accepting findings by statutory authorities in criminal proceedings, as established by legal precedents.

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• 1996 (12) TMI 23
  
  Issues Involved:
  1. Constitutional validity of section 43B and section 36(1)(va) of the Income-tax Act, 1961.
  2. Disallowance of employer's and employees' contributions to provident fund and employees' State insurance fund when paid after the due dates.
  3. Alleged discrimination and double jeopardy under the said provisions.
  
  Summary:
  
  Issue 1: Constitutional Validity of Section 43B and Section 36(1)(va)
  The petitioners challenged the constitutional validity of section 43B and section 36(1)(va) of the Income-tax Act, 1961, arguing that these provisions, which disallow deductions for employer's and employees' contributions to provident fund and employees' State insurance fund when paid after the due dates, are unconstitutional. The court held that these provisions are not violative of articles 14, 19, and 21 of the Constitution of India. The court emphasized that these provisions aim to ensure compliance with welfare legislations and do not impose any penalty or damages but merely disallow deductions for non-compliance.
  
  Issue 2: Disallowance of Contributions Paid After Due Dates
  The petitioners contended that contributions paid, though not within the due dates, should be allowed as permissible deductions based on the accrual method of accounting u/s 145 of the Income-tax Act. The court clarified that section 43B mandates that deductions for contributions to provident fund or any other welfare fund are allowable only if actually paid within the due dates as defined in the Explanation to section 36(1)(va). The court upheld the provisions, stating that they ensure prompt payment and compliance with beneficial legislations for employees.
  
  Issue 3: Alleged Discrimination and Double Jeopardy
  The petitioners argued that the provisos (1) and (2) to section 43B are discriminatory and result in double jeopardy. The court found no merit in these contentions, explaining that the classification between sums referred to in clause (b) and those in clauses (a), (c), and (d) of section 43B is reasonable and has a rational relation to the object sought to be achieved. The court noted that the provisions aim to prevent employers from unauthorizedly retaining employees' contributions and ensure compliance with welfare legislations. The court also dismissed the argument of double jeopardy, stating that the provisions deal with different aspects and benefits under different laws.
  
  Conclusion:
  The court concluded that the impugned provisions, viz., the Explanation to clause (va) of sub-section (1) of section 36 and provisos (1) and (2) to section 43B, are not violative of article 14 of the Constitution of India. The writ petitions were dismissed with no order as to costs.

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• 1996 (12) TMI 22
  
  Issues Involved:
  1. Validity of the partnership deed.
  2. Eligibility of the minor partner to be a full-fledged partner.
  3. Entitlement of the assessee-firm to registration under the Income-tax Act.
  4. Interpretation of sections 184 and 185 of the Income-tax Act.
  5. Applicability of section 30 of the Indian Partnership Act.
  6. Relevance of precedents from the Supreme Court and other High Courts.
  
  Detailed Analysis:
  
  1. Validity of the Partnership Deed:
  The primary issue was whether the partnership deed, which included a minor as a full-fledged partner, was valid. The Income-tax Officer and the Appellate Assistant Commissioner both determined that the deed was invalid because a minor cannot be made liable for the losses of the firm, as per section 30 of the Indian Partnership Act. The Tribunal, however, allowed the appeal, asserting that the minor had elected to continue as a partner upon attaining majority.
  
  2. Eligibility of the Minor Partner to be a Full-Fledged Partner:
  The Tribunal's decision hinged on the fact that the minor partner, Padmapriya, signed Form No. 11 after attaining majority, indicating her desire to be a full-fledged partner. However, the court held that this did not cure the initial invalidity of the partnership deed. According to section 30 of the Indian Partnership Act, a minor can only be admitted to the benefits of partnership and cannot be made liable for losses unless they explicitly opt to become a partner within six months of attaining majority by giving a public notice.
  
  3. Entitlement of the Assessee-Firm to Registration:
  The court concluded that the assessee-firm was not entitled to registration under sections 184 and 185 of the Income-tax Act because the partnership deed was invalid from its inception. Sections 184 and 185 require the partnership to be evidenced by a valid instrument, which was not the case here due to the inclusion of a minor as a full-fledged partner.
  
  4. Interpretation of Sections 184 and 185 of the Income-tax Act:
  Sections 184 and 185 stipulate that for a firm to be registered, the partnership must be evidenced by an instrument specifying the individual shares of the partners, and it must be signed by all partners (excluding minors). The court emphasized that these sections necessitate a valid partnership deed at the time of execution, which was not fulfilled in this case due to the inclusion of a minor partner.
  
  5. Applicability of Section 30 of the Indian Partnership Act:
  The court reiterated that under section 30 of the Indian Partnership Act, a minor cannot be made liable for the losses of the firm and can only be admitted to the benefits of the partnership. The minor must give a public notice within six months of attaining majority to elect to become a partner. The court found that Padmapriya's signing of Form No. 11 did not constitute a valid public notice, and thus, the partnership deed remained invalid.
  
  6. Relevance of Precedents:
  The court referred to the Supreme Court's decision in CIT v. Dwarkadas Khetan and Co. [1961] 41 ITR 528, which held that a minor cannot be a full partner and any document that contravenes this is invalid for registration purposes. Additionally, the court cited its own previous decision in Choudry Brothers v. CIT [1986] 158 ITR 224, which similarly held that a partnership deed including a minor as a full partner is void and cannot be cured by subsequent actions.
  
  Conclusion:
  The court concluded that the assessee-firm was not entitled to registration under the Income-tax Act due to the invalidity of the partnership deed, which included a minor as a full-fledged partner. The reference was answered in the negative, in favor of the Revenue and against the assessee.

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• 1996 (12) TMI 21
  
  Issues Involved:
  
  1. Legality of the penalty imposed under section 18B of the Wealth-tax Act, 1957.
  2. Compliance with the conditions for waiver or reduction of penalty under section 18B.
  3. Consideration of delay in filing wealth-tax returns.
  4. Voluntary disclosure and cooperation by the petitioner.
  5. Justification for remanding the matter to the Income-tax Commissioner.
  
  Issue-wise Detailed Analysis:
  
  1. Legality of the Penalty Imposed under Section 18B of the Wealth-tax Act, 1957:
  
  The petitioner challenged the order passed by the respondent under section 18B of the Wealth-tax Act, 1957, which imposed a penalty for failure to file wealth-tax returns within the prescribed period. The petitioner argued that his wealth was invested in industrial undertakings and was under the impression that he was exempted from filing wealth-tax returns. Upon realizing the mistake, he filed returns for the assessment years 1981-82 to 1987-88 and paid the due tax.
  
  2. Compliance with the Conditions for Waiver or Reduction of Penalty under Section 18B:
  
  The court examined section 18B(1) of the Wealth-tax Act, which allows the Commissioner to reduce or waive penalties if certain conditions are met:
  - The assessee must make a full and true disclosure of net wealth voluntarily and in good faith before being served with a notice under section 14(2).
  - The assessee must not have concealed any particulars of assets or provided incorrect particulars.
  - The assessee must cooperate in any inquiry and pay or arrange for the payment of any tax or interest due.
  
  The court found that the petitioner had fulfilled all these conditions. The returns were filed voluntarily before any notice was served, the wealth disclosed was accurate, and the petitioner cooperated fully with the Department and paid the due tax and interest.
  
  3. Consideration of Delay in Filing Wealth-tax Returns:
  
  The Commissioner had rejected the petitioner's application for waiver of penalty, citing the delay in filing the returns. The court held that the delay should not have been a factor in considering the waiver application under section 18B. The very existence of a penalty implies a delay, and the petitioner's voluntary disclosure and compliance with the other conditions should have been the focus.
  
  4. Voluntary Disclosure and Cooperation by the Petitioner:
  
  The court emphasized that the petitioner had voluntarily disclosed his wealth and filed accurate returns without any notice under section 14(2) or section 17. The Department had not found any additional wealth or inaccuracies in the returns. The petitioner also paid the due tax and interest, demonstrating full cooperation.
  
  5. Justification for Remanding the Matter to the Income-tax Commissioner:
  
  The Department's counsel argued for remanding the matter to the Commissioner to reconsider the penalty. However, the court found no justification for this, as the petitioner had already fulfilled all the necessary conditions for waiver. The court cited a precedent where a similar case resulted in the waiver of both penalty and interest.
  
  Conclusion:
  
  The court concluded that the petitioner's claim for waiver of the penalty was justified. The reasons given by the Commissioner for rejecting the waiver were deemed perverse. The court exercised its discretionary powers under Article 226 of the Constitution of India, quashed the Commissioner's order, and directed the Commissioner to waive the penalty imposed on the petitioner for the assessment years 1981-82 to 1987-88. The rule was made absolute, and no orders as to costs were issued.

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• 1996 (12) TMI 20
  
  Issues Involved:
  1. Underestimation of advance tax and liability under section 216 of the Income-tax Act, 1961.
  2. Interpretation and application of section 216 of the Income-tax Act, 1961.
  3. Justification of the assessee's estimation of income and advance tax.
  4. Conflict in judicial opinions across different High Courts regarding section 216.
  
  Issue-wise Detailed Analysis:
  
  1. Underestimation of advance tax and liability under section 216 of the Income-tax Act, 1961:
  
  The case revolves around whether the assessee is liable to pay interest under section 216 of the Income-tax Act, 1961, for underestimating the advance tax payable in the first instalment. The Income-tax Officer charged interest of Rs. 33,972 due to underestimation of advance tax. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both found the assessee's estimation justified and set aside the interest levy.
  
  2. Interpretation and application of section 216 of the Income-tax Act, 1961:
  
  Section 216 allows the Income-tax Officer to direct the assessee to pay simple interest at 12% per annum if there is underestimation of advance tax under sections 209A and 212, reducing the amount payable in the first two instalments. The court emphasized that the liability to pay interest arises from the fact of underestimation of advance tax, not the cause of such underestimation. The court disagreed with the argument that deliberate action is required for underestimation to attract section 216.
  
  3. Justification of the assessee's estimation of income and advance tax:
  
  The court noted that the estimation of advance tax must be justified based on the circumstances existing on the date of payment of the first two instalments. The assessee's estimation was deemed justified due to the significant change in income realization after the first instalment payment. The court acknowledged that various imponderables, such as sudden market changes, could justify revised estimates under section 212(2).
  
  4. Conflict in judicial opinions across different High Courts regarding section 216:
  
  The court reviewed conflicting judgments from different High Courts. The Division Bench of the Andhra Pradesh High Court in Vazir Sultan Tobacco Co. Ltd.'s case held that section 216 is not attracted if underestimation of advance tax is due to underestimation of income. However, the Allahabad, Calcutta, and Bombay High Courts held that section 216 applies irrespective of the cause of underestimation of advance tax. The Full Bench of the Andhra Pradesh High Court agreed with the latter view, emphasizing that section 216 imposes interest based on the effect of underestimation, not the cause.
  
  Conclusion:
  
  The court concluded that the provisions of section 216 are not attracted in this case as the estimation of income and advance tax at the time of the first instalment payment was justified. The question was answered in the affirmative, in favor of the assessee and against the Revenue. The court also rejected the Revenue's application for certification of the judgment for appeal to the Supreme Court, finding no conflict in judicial opinions.
  
  Summary:
  
  The High Court of Andhra Pradesh, in a detailed judgment, addressed the issue of underestimation of advance tax and the applicability of section 216 of the Income-tax Act, 1961. The court held that the liability to pay interest under section 216 arises from the fact of underestimation of advance tax, not the cause. The assessee's estimation was justified based on the circumstances at the time of the first instalment payment. The court disagreed with the earlier view of the Andhra Pradesh High Court in Vazir Sultan Tobacco Co. Ltd.'s case and aligned with the views of the Allahabad, Calcutta, and Bombay High Courts. The question was answered in favor of the assessee, and the Revenue's application for certification for appeal to the Supreme Court was rejected.

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• 1996 (12) TMI 19
  
  Issues:
  1. Entitlement to registration of a firm.
  2. Division of secret profits among partners.
  3. Benami nature of a partner in the firm.
  
  Entitlement to Registration of Firm:
  The case involved the assessment of whether the firm, Jayalakshmi Oil Firm, Khammam, was entitled to registration for the assessment year 1976-77. The Income-tax Officer initially disallowed the claim for registration on the grounds that the partnership deed and Form No. 11 were not properly signed, secret profits were not divided among partners, and a partner was acting as a benamidar for another. The Appellate Assistant Commissioner allowed registration except for the third objection regarding the benami nature of a partner. The Income-tax Appellate Tribunal later allowed registration, focusing on the non-sharing of secret profits. However, the High Court analyzed the evidence and found that the benami nature of the partnership, as determined by the Income-tax Officer and the Appellate Assistant Commissioner, rendered the firm ineligible for registration. The court referred to the provisions of section 185 of the Income-tax Act, which stipulated that a firm would not be considered genuine if any partner was a benamidar. The court concluded that the firm was not entitled to registration due to the benami nature of the partnership.
  
  Division of Secret Profits Among Partners:
  The issue of division of secret profits among partners was considered during the assessment of the firm's registration. The Appellate Assistant Commissioner confirmed the Income-tax Officer's decision regarding the non-division of secret profits, citing conflicting versions provided by the partners. However, the Income-tax Appellate Tribunal overruled this objection based on a revised return filed by one of the partners, which disclosed additional income. The Tribunal relied on a previous court judgment to support its decision. The High Court acknowledged the Tribunal's ruling on this issue but focused its analysis on the benami nature of a partner, ultimately determining that the firm was not entitled to registration.
  
  Benami Nature of a Partner in the Firm:
  The crucial issue in this case was the benami nature of a partner, which played a significant role in the firm's entitlement to registration. The Income-tax Officer and the Appellate Assistant Commissioner found evidence suggesting that a partner was acting as a benamidar for another partner. Various facts, including the handling of accounts and statements made by the involved parties, indicated the benami relationship. The High Court extensively analyzed the evidence and legal provisions, including the Explanation to section 185 of the Income-tax Act, which addressed the genuineness of a firm in cases of benami transactions. The court concluded that the failure to disclose the benami nature to the authorities rendered the firm ineligible for registration. Additionally, the court referenced a similar decision by the High Court of Allahabad to support its interpretation of the law. Ultimately, the High Court ruled against the firm, emphasizing the benami nature of the partnership as the determining factor in denying registration.
  
  This detailed analysis of the judgment highlights the intricate legal considerations and factual evidence that led to the High Court's decision regarding the entitlement to registration of the firm in question.

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• 1996 (12) TMI 18
  
  Issues Involved:
  1. Condonation of delay in filing the restoration petition.
  2. Setting aside the order of dismissal and restoring the case for rehearing.
  3. Applicability of the Limitation Act to tax case references.
  4. Jurisdiction and powers of the High Court under section 256 of the Income-tax Act, 1961.
  5. Relevance of Supreme Court decisions and other High Court judgments in similar contexts.
  
  Issue-wise Detailed Analysis:
  
  1. Condonation of Delay in Filing the Restoration Petition:
  The petitioner filed T.C.M.P. No. 693 of 1996 under section 151 of the Code of Civil Procedure to condone the delay of 77 days in filing the restoration petition, T.C.M.P. No. 692 of 1996. The delay was attributed to the fact that the original counsel for the assessee had either left practice or moved abroad. The petitioner learned of the case outcome through a letter from another advocate. The Supreme Court dismissed the special leave petition, allowing the petitioner to seek appropriate orders from the High Court.
  
  2. Setting Aside the Order of Dismissal and Restoring the Case for Rehearing:
  T.C.M.P. No. 692 of 1996 was filed to set aside the dismissal order in T.C. No. 1117 of 1984 and restore the case for rehearing. The court noted that the tax case had been listed for hearing multiple times, and the absence of the assessee's counsel was not justifiable. The court emphasized that the assessee should have shown diligence in engaging a new counsel for the tax case, similar to the writ petition.
  
  3. Applicability of the Limitation Act to Tax Case References:
  The court held that the Limitation Act does not apply to tax case references under section 256 of the Income-tax Act, 1961. The limitation period for filing tax case petitions is specified within the Income-tax Act itself. The court further noted that the notice under rule 6(a) in Form A of the Appellate Side Rules, 1965, clearly states that references will be heard and determined in the absence of the assessee if they fail to appear.
  
  4. Jurisdiction and Powers of the High Court under Section 256 of the Income-tax Act, 1961:
  The court clarified that under section 256, it functions in an advisory capacity to provide opinions on referred questions of law. The court cannot review its earlier decision in a tax case, as it would exceed its advisory jurisdiction. The court can either answer the question referred to it or return it unanswered but cannot recall an order once the question has been answered on its merits.
  
  5. Relevance of Supreme Court Decisions and Other High Court Judgments:
  The court examined several precedents:
  - In Jaipur Mineral Development Syndicate v. CIT, the Supreme Court held that the High Court has inherent power to recall its order if sufficient reason for non-appearance is shown. However, this applies to cases where the reference was declined, not where the question was answered on merits.
  - In CIT v. Bansi Dhar and Sons, the Supreme Court distinguished between incidental powers and the special jurisdiction under section 256, suggesting that incidental powers do not extend to reviewing decisions on merits.
  - The Kerala High Court in K. Ahamad v. CIT allowed correction of accidental errors or omissions, but no such errors were identified in the present case.
  - The Allahabad High Court in Lakshmi Industries and Cold Storage Co. (P.) Ltd. held that decisions without notice to the assessee are nullities. However, this was not applicable as the assessee had notice.
  
  Conclusion:
  The court concluded that the petitions filed under section 151 of the Code of Civil Procedure were not maintainable. The inherent powers under section 151 could not be invoked to review the earlier order passed in the tax case. The petitions were dismissed.

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• 1996 (12) TMI 17
  
  Issues involved:
  The judgment involves two main issues. The first issue pertains to the disallowance of expenses related to the maintenance of an executive hostel and import duty paid by the assessee for a memento. The second issue concerns the deduction claim for repairs to the guest house and the nature of the expenditure incurred by the assessee.
  
  Issue 1 - Maintenance of Executive Hostel and Import Duty:
  For the assessment year 1984-85, the assessing authority disallowed the claim of the assessee in respect of expenses related to the maintenance of its executive hostel under section 37(4) of the Income-tax Act, 1961. Additionally, the import duty paid by the assessee for a memento was also disallowed. The Tribunal, however, held that the duty for clearing memorial plaques could be considered as incurred for commercial expediency and for business purposes. Regarding the maintenance of the guest house, the Tribunal excluded the amount spent on repairs from the disallowance under section 37(4).
  
  Issue 2 - Deduction Claim for Repairs to Guest House:
  The second issue raised in the judgment is connected to the claim of the assessee regarding repairs to the guest house. The Tribunal upheld that the assessee is entitled to claim a deduction for repairs to the guest house, which the Income-tax Officer needs to ascertain. However, the Revenue contended that such a finding was erroneous as any expense incurred for the repair of a guest house falls within the purview of section 37(4) and is not allowable.
  
  Judgment Summary:
  The court analyzed the provisions of section 37(4) and 37(5) of the Income-tax Act, which deal with the maintenance of guest houses and related expenditures. The court rejected the assessee's claim that the rent paid for the executive hostel should be excluded from section 37(4) based on section 30 provisions. The court emphasized that any accommodation arranged by the assessee for lodging during official tours is considered a guest house, and no allowance is permitted for maintenance expenses post-1970. The court also dismissed the argument that repair expenses are separate from maintenance expenses under section 37(4).
  
  Regarding the import duty paid for the memento, the court upheld the Tribunal's decision that it was a necessary business expense to maintain a friendly relationship with foreign collaborators. The court found this expenditure to be incidental to the business and allowed the deduction. In conclusion, the court answered the questions raised in the two references, favoring either the Revenue or the assessee based on the analysis of the specific provisions and circumstances of the case.

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• 1996 (12) TMI 16
  
  Issues Involved:
  
  1. Method of valuing the cost of shares for determining taxable capital gains.
  2. Determination of the cost of acquisition for original shares acquired before January 1, 1954.
  3. Determination of the cost of acquisition for bonus shares issued after January 1, 1954.
  4. Application of Section 55(2) of the Income-tax Act, 1961.
  5. Applicability of the fair market value as of January 1, 1954, for original shares and its impact on bonus shares.
  6. Consideration of judicial precedents in valuing shares and bonus shares.
  
  Detailed Analysis:
  
  1. Method of Valuing the Cost of Shares for Determining Taxable Capital Gains:
  
  The primary issue was whether the method adopted by the Tribunal for valuing the cost of shares in the hands of the respective assessees for the purpose of arriving at taxable capital gains is correct in law. The Tribunal had directed the aggregation of the cost of original shares and the subsequent bonus shares to determine the taxable capital gains.
  
  2. Determination of the Cost of Acquisition for Original Shares Acquired Before January 1, 1954:
  
  The court observed that there is no dispute regarding the valuation of original shares acquired before January 1, 1954. These shares should be valued as per the fair market value prevalent on January 1, 1954, as per the option exercised by the assessee under Section 55(2) of the Income-tax Act, 1961.
  
  3. Determination of the Cost of Acquisition for Bonus Shares Issued After January 1, 1954:
  
  The critical question was whether the cost of acquisition of the bonus shares should be determined based on the fair market value of the original shares as of January 1, 1954, or the actual cost price of the original shares. The Tribunal had initially directed that the book value of the original shares should be taken into consideration for valuing the bonus shares, which was contested by the assessee.
  
  4. Application of Section 55(2) of the Income-tax Act, 1961:
  
  Section 55(2) allows the assessee to opt for the fair market value as of January 1, 1954, for shares acquired before that date. The court had to decide whether this provision also applies to the bonus shares issued after January 1, 1954. The Department argued that the bonus shares should be valued based on the cost price of the original shares, while the assessee contended that the fair market value as of January 1, 1954, should be spread over both the original and bonus shares.
  
  5. Applicability of the Fair Market Value as of January 1, 1954, for Original Shares and Its Impact on Bonus Shares:
  
  The court referred to several judicial precedents, including CIT v. Dalmia Investment Co. Ltd. [1964] 52 ITR 567, Shekhawati General Traders Ltd. v. ITO [1971] 82 ITR 788, and CIT v. Prema Ramanujam [1991] 192 ITR 692. These cases established that the cost of acquisition for bonus shares should be determined by spreading the cost of the original shares over both the original and bonus shares. The court noted that adopting different values for original and bonus shares would contravene the provisions of Section 55(2) and the established judicial principles.
  
  6. Consideration of Judicial Precedents in Valuing Shares and Bonus Shares:
  
  The court concluded that the Tribunal's method of valuing the bonus shares based on the book value of the original shares was incorrect. Instead, the fair market value as of January 1, 1954, should be used for both the original and bonus shares. The court emphasized that any deviation from this method would violate Section 55(2) and the judicial precedents cited.
  
  Conclusion:
  
  The court answered the referred question in the negative and in favor of the assessee. It directed the Tribunal to redetermine the cost of acquisition and value of the bonus shares while ascertaining the capital gains tax to be levied on the assessee. The court held that the fair market value as of January 1, 1954, should be used for both the original and bonus shares, in line with the judicial precedents and statutory provisions.

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• 1996 (12) TMI 15
  
  Issues:
  1. Waiver of interest under section 139(8) of the Income-tax Act, 1961.
  
  Analysis:
  The petitioner filed a petition under article 226 of the Constitution of India seeking total waiver of interest under section 139(8) of the Income-tax Act, 1961. The Commissioner of Income-tax had already granted a 50% waiver of interest, prompting the petitioner to approach the court for further relief. The case pertained to the assessment year 1986-87, where the return was filed after a significant delay. The initial income admitted was later revised, leading to a change in the interest amount levied by the assessing authority. The petitioner cited reasons for the delay, including finalizing business accounts and delays in ascertaining income from other sources. The petitioner also mentioned a search conducted at the business premises under section 132 of the Income-tax Act, stating that the delay was not intentional but due to unavoidable circumstances.
  
  The appellate authority reduced the total income and the corresponding interest amount. The petitioner then applied for waiver of interest, invoking rule 117A(iv) and (v) of the Income-tax Rules, 1962. However, the application was rejected by the Assistant Commissioner of Income-tax, Cannanore, citing that the reasons provided did not align with the provisions of rule 117A. The petitioner then filed a revision petition under section 264 of the Income-tax Act, 1961, before the Commissioner of Income-tax, Cochin. The revisional authority considered factors such as the delay caused by a search under section 132 and disallowance under section 43B in granting a 50% waiver of interest.
  
  The petitioner's counsel argued that the delay was also due to awaiting an audit report under section 44AB, which is mandatory for businesses over a certain threshold. However, the court noted that the delay between the due date of filing the return and the search conducted did not justify the delay in filing. The court emphasized the importance of timely filing and the mandatory nature of the audit report under section 44AB. Ultimately, the court upheld the decision of the revisional authority to grant a 50% waiver of interest, stating that no exceptional circumstances warranted further relief beyond what was already granted. The original petition was dismissed, affirming the waiver of interest to the extent of 50% as allowed by the revisional authority.

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• 1996 (12) TMI 14
  
  The High Court of Madras ruled that the status of the assessee should not be considered as that of a Hindu undivided family for wealth-tax assessment purposes for the assessment year 1976-77. This decision was based on a previous ruling in a similar case involving the same assessee for the assessment years 1972-73 to 1974-75. The court's decision favored the Department.

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• 1996 (12) TMI 13
  
  Issues:
  1. Assessment of demand under the Estate Duty Act, 1953.
  2. Adjustment of amount under Section 50B of the Estate Duty Act in self-assessment tax.
  3. Application for waiver of interest under Section 220(2A) of the Income Tax Act.
  4. Rejection of waiver application by the CBDT and the CIT.
  5. Maintainability of a second application for waiver.
  6. Conditions for reducing or waiving interest under Section 220(2A).
  7. Justification for not making timely payment of tax.
  8. Satisfaction of conditions for waiver of interest.
  9. Discretionary powers of the authority under Section 220(2A).
  10. Compliance with conditions for waiver of interest.
  
  Analysis:
  1. The petitioner, a legal heir, was provisionally assessed for a demand under the Estate Duty Act, 1953, which led to the sale of equity shares to meet the tax liability. The petitioner claimed adjustment of the amount under Section 50B of the Estate Duty Act in the self-assessment tax, which was denied, resulting in a notice of demand under the Income Tax Act.
  
  2. The petitioner filed applications for waiver of interest under Section 220(2A) of the Income Tax Act before the CBDT and the CIT, which were rejected. The petitioner sought relief through a writ petition to quash the orders and requested a mandamus to stop the recovery of interest during the petition's pendency.
  
  3. The court noted that the conditions for waiver of interest under Section 220(2A) required genuine hardship, circumstances beyond the control of the assessee, and cooperation in inquiries. The amendment in 1986 shifted the power to reduce or waive interest to the CIT from the Board.
  
  4. The court found that the second application for waiver before the CIT was not maintainable, as the earlier application to the Board had been rejected on the same grounds. The petitioner failed to challenge the Board's decision and did not provide sufficient justification for filing a second application.
  
  5. The court emphasized that the discretion to reduce or waive interest must be exercised reasonably and objectively, with all conditions under Section 220(2A) being satisfied cumulatively. The petitioner's argument of genuine hardship due to non-payment of tax on capital gains was deemed misconceived.
  
  6. The court analyzed the reasons for the default in payment and found that the circumstances were not beyond the petitioner's control. The petitioner's reliance on entitlement to relief under the Estate Duty Act was not considered relevant for the waiver of interest under the Income Tax Act.
  
  7. The report by the CIT to the Board highlighted that the conditions for waiving interest were not met in the petitioner's case. The court concluded that the writ petition lacked merit and dismissed it, stating that the petitioner was not entitled to relief.

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• 1996 (12) TMI 12
  
  The High Court of Delhi upheld the Tribunal's finding that Oswal Tailors is an independent entity, not a benami of the assessee-company. The income from Oswal Tailors' export business is not attributed to the assessee-company. The Tribunal's decision was not challenged, and no legal question arises. Case dismissed.

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• 1996 (12) TMI 11
  
  Issues:
  1. Validity of assessments based on belated returns.
  2. Levy of interest under sections 139(8) and 217 in assessments pursuant to notice under section 148.
  3. Interpretation of "regular assessment" under section 2(40) of the Act.
  4. Consideration of waiver or reduction of interest under sections 139(8) and 217.
  
  Detailed Analysis:
  1. The petitioner, a partnership firm engaged in electrical repair works, filed returns under the Income-tax Act beyond the prescribed period for the assessment years 1978-79 to 1982-83. The Income-tax Officer completed assessments based on the belated returns and levied penal interest under sections 139(8) and 217. The petitioner contended that assessments on belated returns were invalid, thus challenging the levy of interest. The Commissioner held that assessments were not based on belated returns but on returns filed pursuant to a notice under section 148, thus rejecting the contention of invalidity.
  
  2. A new contention was raised regarding the levy of interest under sections 139(8) and 217 in assessments made after a notice under section 148. The petitioner argued that such interest can only be levied in a "regular assessment" as defined in the Act. The Commissioner noted that assessments were made for the first time under section 143 read with section 147, not as reassessments under section 147. Referring to a previous judgment, the Commissioner held that assessments made for the first time under section 147 qualify as regular assessments for invoking section 217, rejecting the petitioner's contention.
  
  3. The assessing authority considered the question of waiver or reduction of interest under rules 40 and 117A of the Rules. It was found that there was no case for waiver or reduction of interest under sections 139(8) and 217, and no valid reason was presented for granting relief. The Commissioner upheld this decision, stating that the assessments were not based on belated returns but on returns filed pursuant to the notice under section 148, qualifying as regular assessments for the purpose of interest levy.
  
  4. The court, after considering arguments from the petitioner's counsel, found no justification to interfere with the orders passed by the authorities below. The Commissioner had thoroughly examined the matter and concluded that the assessments were valid and interest was correctly levied under the Act. The court upheld the Commissioner's decision, dismissing the original petition due to lack of merit and without costs.
  
  In conclusion, the court upheld the validity of assessments based on returns filed pursuant to a notice under section 148 and rejected the petitioner's contentions regarding the levy of interest under sections 139(8) and 217. The court found no reason to interfere with the Commissioner's decision and dismissed the petition accordingly.

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• 1996 (12) TMI 10
  
  Issues:
  Assessment of losses for the years 1989-90 and 1990-91 under the Income-tax Act, 1961, Disallowances under section 43B, Additional tax levied under section 143(1A), Challenge to the retrospective amendment of section 143(1A), Constitutionality of section 143(1A)(a)(B), Applicability of levy of additional tax in cases of losses, Interpretation of the Finance Act, 1993.
  
  Analysis:
  The petitioner, an assessee, filed returns declaring substantial losses for the assessment years 1989-90 and 1990-91 under the Income-tax Act, 1961, seeking carry forward of the losses. The assessing authority made disallowances under section 43B, resulting in differences in the losses assessed. The authority rectified the mistake for 1989-90 under section 143(1A) and levied additional tax. Similar proceedings were conducted for 1990-91, leading to additional tax imposition. The petitioner challenged the levy of additional tax through revision petitions, questioning the retrospective amendment of section 143(1A) and its constitutionality, specifically sub-clause (B) of clause (a). The petitioner contended that the amendment, allowing levy of additional tax on assessed losses even after adjustments, was ultra vires the Constitution.
  
  The court noted that the amendment to section 143(1A) specifically allowed for the levy of additional tax even in cases of losses, aiming to prevent tax evasion. Referring to a prior decision, the court held that the retrospective amendment by the Finance Act, 1993, did not violate constitutional provisions. The court emphasized that the purpose of the provision was to ensure tax compliance and prevent manipulation of losses to evade tax liabilities. The court rejected the petitioner's contentions, relying on the precedent and the legislative intent behind the amendment. Consequently, the original petitions challenging the levy of additional tax were dismissed, with no order as to costs.
  
  In conclusion, the court upheld the validity of the retrospective amendment to section 143(1A) and the levy of additional tax on assessed losses, rejecting the petitioner's arguments against its constitutionality. The judgment reaffirmed the legislative intent to curb tax evasion and maintain tax compliance, emphasizing the significance of preventing misuse of loss declarations for tax avoidance purposes.

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• 1996 (12) TMI 9
  
  Issues Involved:
  1. Validity and legality of the notices of assessment issued by the Wealth-tax Officer.
  2. Jurisdiction and limitation for reassessment under Section 17 of the Wealth-tax Act.
  3. Requirement of disclosure of reasons for reassessment.
  4. Compliance with procedural requirements under Section 17 of the Wealth-tax Act.
  5. Finality of assessment orders under Section 16 of the Wealth-tax Act.
  
  Detailed Analysis:
  
  1. Validity and Legality of the Notices of Assessment:
  The petitioner challenged the validity and legality of the notices of assessment (Annexures D, D-1, D-2, and D-3) issued by the Wealth-tax Officer on May 29, 1985. The petitioner argued that these notices were issued without jurisdiction, barred by limitation, and were illegal and void in law. The court examined whether the Wealth-tax Officer had valid grounds to issue these notices and whether the procedural requirements under Section 17 of the Wealth-tax Act were satisfied.
  
  2. Jurisdiction and Limitation for Reassessment under Section 17 of the Wealth-tax Act:
  The petitioner contended that the reassessment proceedings were initiated without jurisdiction and were barred by limitation. Section 17 of the Wealth-tax Act authorizes reassessment if the Wealth-tax Officer has reason to believe that the net wealth chargeable to tax had escaped assessment. The court noted that for clause (a) of Section 17(1), the Wealth-tax Officer must have reason to believe that there was an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. For clause (b), the Officer must have information in his possession that leads him to believe that the net wealth chargeable to tax had escaped assessment. The court found no material on record to show that the Wealth-tax Officer had any valid reason to believe that the net wealth had escaped assessment.
  
  3. Requirement of Disclosure of Reasons for Reassessment:
  The petitioner requested the Wealth-tax Officer to provide the reasons for reopening the assessment, but the Officer refused to disclose them. The court emphasized that the reasons for the formation of the belief must have a rational connection or relevant bearing on the formation of the belief. The court cited precedents, including ITO v. Lakhmani Mewal Das, which held that the reasons must be held in good faith and should not be a mere pretence. The court found that the Wealth-tax Officer did not provide any reasons for reopening the assessment, which violated the procedural requirements.
  
  4. Compliance with Procedural Requirements under Section 17 of the Wealth-tax Act:
  The court examined whether the Wealth-tax Officer complied with the procedural requirements under Section 17 of the Wealth-tax Act. The court noted that the assessment orders passed under Section 16 are final and can only be unsettled if the requirements of Section 17 are satisfied. The court found that there was no material available with the Wealth-tax Officer to form an opinion or reason to believe that the net wealth chargeable to tax had escaped assessment. The court cited the case of CWT v. Malhar Rao Tatya Saheb Holkar, where it was held that the material to form such a view must be available with the Assessing Officer. The court concluded that the Wealth-tax Officer did not have any positive information to justify the reassessment.
  
  5. Finality of Assessment Orders under Section 16 of the Wealth-tax Act:
  The court emphasized that the assessment orders passed under Section 16 are final and cannot be easily unsettled. The court noted that the petitioner had disclosed all material facts and provided complete details of his wealth in the returns filed. The court found that the Wealth-tax Officer accepted these details and made the assessment orders. The court concluded that any subsequent officer could not unsettle these assessment orders unless the three requisite conditions of Section 17 were satisfied. The court held that the notices issued under Section 17 did not show any valid reason to believe that the net wealth chargeable to tax had escaped assessment.
  
  Conclusion:
  The court quashed the notices of assessment (Annexures D, D-1, D-2, and D-3) and the proceedings drawn on the basis of these notices. The petition was allowed, and there was no order as to costs. The security amount, if any, was to be refunded to the petitioner after due verification.

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• 1996 (12) TMI 8
  

  Maintainability of appeal - High Court declined to call for the reference on questions - having regard to the fact that the Supreme Court in the case of CIT vs. Shri Arbuda Mills Ltd. squarely dealt therewith, Court shall deem this to be a reference of the questions to the Court itself - hence appeal is maintainable

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• 1996 (12) TMI 7
  

  Powers/jurisdiction of Tribunal - held that tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee and have the discretion to allow or not allow a new ground to be raised

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• 1996 (12) TMI 6
  

  Fee paid to the Registrar for expansion of the capital base of the company - directly related to the capital expenditure incurred by the company - Tribunal was right in law in holding that the amount of ₹ 1,50,000 paid to the Registrar of Companies, as filing fee for enhancement of capital was not revenue expenditure - Held, yes

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• 1996 (12) TMI 5
  
  The Supreme Court allowed the appeals against the Andhra Pradesh High Court's order in favor of the assessee, ruling in favor of the Revenue. The court followed the decision in Maya Rani Punj v. CIT [1986] 157 ITR 330, setting aside the High Court's judgment. The appeals were allowed with no costs.

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