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Showing 301 to 320 of 354 Records
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1990 (8) TMI 54
Issues:
1. Interpretation of the first proviso to section 40A(5)(a) of the Income-tax Act, 1961.
2. Allowance of weighted deduction under section 35B of the Income-tax Act.
Analysis:
The judgment by the Kerala High Court, delivered by Justice K. S. PARIPOORNAN, involved two connected cases concerning the interpretation of the first proviso to section 40A(5)(a) of the Income-tax Act, 1961, and the allowance of weighted deduction under section 35B of the Act. The cases revolved around the assessee, a company dealing in tea and spices, and its whole-time director's salary and perquisites for the assessment years 1977-78 and 1979-80. The Income-tax Officer had invoked section 40A(5) to restrict certain expenses, leading to disputes and appeals.
For the assessment year 1977-78, the Income-tax Officer disallowed a portion of the director's salary and perquisites, which was upheld in subsequent appeals. The Appellate Tribunal followed previous decisions of the court and confirmed the disallowance. The first proviso to section 40A(5)(a) was a central issue in determining the allowable deductions for the director's remuneration.
Similarly, for the assessment year 1979-80, the Income-tax Officer disallowed a portion of the director's salary and perquisites, which was also confirmed in appeals. The Appellate Tribunal allowed weighted deduction only on specific expenses related to export activities, not on all claimed items. The Tribunal's decision was challenged, leading to the reference of legal questions to the High Court for consideration.
The court examined previous decisions, including those of other High Courts, and concluded that the decisions in Travancore Rayons Ltd. cases were applicable to the present cases. The court held that the decisions did not require reconsideration and upheld the Tribunal's decision, ruling in favor of the Revenue and against the assessee on the issues related to the first proviso to section 40A(5)(a).
Regarding the weighted deduction under section 35B of the Act, the court found that the items claimed by the assessee did not fall within the language of the provision. Therefore, the court held that the assessee was not entitled to a deduction on the cost of cartons themselves, affirming the Tribunal's decision.
In conclusion, the court answered the legal questions in favor of the Revenue and against the assessee in both cases, disposing of the income-tax referred cases accordingly. A copy of the judgment was to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.
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1990 (8) TMI 53
Issues Involved:
1. Whether the income derived by the assessees from the sale of agricultural land can be considered as income from agriculture and therefore not taxable as capital gains.
2. The applicability of retrospective amendments to the Income-tax Act, 1961, in determining the taxability of capital gains from agricultural land.
Summary:
Issue 1: Taxability of Capital Gains from Agricultural Land
Both income-tax applications raised the common question of whether the income derived by the assessees from the sale of agricultural land can be considered as income from agriculture and thus not taxable as capital gains. The Tribunal, relying on the High Court's decision in Manubhai A. Sheth v. N. D. Nirgudkar [1981] 128 ITR 87, held that the capital gains were not taxable under the Income-tax Act, 1961, as they constitute agricultural income. The Tribunal declined to refer the questions to the High Court, asserting that the issue was covered by the aforementioned decision.
Issue 2: Retrospective Amendments and Their Applicability
The relevant provisions of section 2(14) of the Income-tax Act, 1961, were discussed, particularly the amendment introduced by the Finance Act, 1970, which excluded land situated within the jurisdiction of a municipality from the definition of "agricultural land." The constitutional validity of this amendment was challenged and upheld in Manubhai A. Sheth v. N. D. Nirgudkar, where it was held that capital gains from the sale of agricultural land would constitute revenue derived from agricultural land and thus come within the definition of "agricultural income."
However, section 2(1A) defining "agricultural income" was amended by the Finance Act, 1989, with retrospective effect from April 1, 1970, adding an Explanation that revenue derived from land shall not include any income arising from the transfer of any land referred to in section 2(14)(iii). This amendment was not in existence when the Tribunal decided not to refer the question but is now in effect.
The court examined whether the High Court should consider the retrospective amendment while deciding an application u/s 256(2). It was contended that the Tribunal's refusal to refer the question was correct based on the law existing at that time. However, the court held that when a law is amended retrospectively, the High Court must apply such law as if it were in force at all material times, even while deciding an application u/s 256(2).
The court disagreed with the Andhra Pradesh High Court's decision in Addl. CIT v. M. J. Devda [1977] 109 ITR 484, which held that the correctness of the Tribunal's decision should be judged based on the law in force when the Tribunal rendered its decision. The court emphasized that full effect must be given to retrospective amendments, and the High Court is bound to consider the law as amended retrospectively.
Conclusion:
The applications were allowed, and the rules were made absolute, directing the Tribunal to frame and refer the questions of law to the High Court, considering the retrospective amendment to section 2(1A) by the Finance Act, 1989.
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1990 (8) TMI 52
The High Court of Bombay quashed a demand for Rs. 5,69,11,730 issued to the petitioner by the Deputy Commissioner of Income-tax. The court directed that no further steps for recovery should be taken. The petitioner's liability for Micoperi S. P. A.'s tax was under dispute. The court ruled in favor of the petitioner, making the rule absolute with no costs.
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1990 (8) TMI 51
The High Court of Bombay dismissed an application under section 256(2) of the Income-tax Act, 1961. The court upheld the Tribunal's decision that 40% of bonus/commission received by the assessee should be deducted as estimated expenses for earning the income. The court refused to question the Tribunal's conclusion that the bonus/commission was income from business or profession. The application was discharged with no costs.
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1990 (8) TMI 50
Issues:
1. Whether provision for gratuity in consequence of closure of mining business is allowable as deduction.
2. Whether settlement with employees for gratuity after the end of the relevant previous year is deductible.
3. Whether disallowance of gratuity provision is justified based on precedent.
Analysis:
1. The Tribunal found that the assessee continued business operations even after the mines were taken over, making the first question irrelevant if the mining business had not closed. The provision for gratuity was held to be wholly and exclusively laid out for business purposes, as confirmed by the Commissioner (Appeals) and the Tribunal.
2. The liability for gratuity had become payable during the previous year, and the payment was made to the State Government on behalf of the employees after negotiations. The Tribunal's decision was based on the fact that the payment was made during the relevant year, even though the settlement with employees occurred after the end of the previous year, making Question 2 not a legal issue arising from the Tribunal's order.
3. The Department argued that the Tribunal's decision conflicted with a previous court decision regarding gratuity payments. However, the court distinguished the present case from the precedent by highlighting that the workers' continuity of service was a result of a separate agreement between them and the government, not the assessee-company. As a result, the court found no legal question arising and discharged the rule with no costs.
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1990 (8) TMI 49
The High Court of Bombay dismissed the Revenue's application regarding interest accrued on doubtful loans, stating that the interest had not been credited to the suspense account. The Tribunal's findings on both questions raised were based on detailed examination of facts, leading to rejection of the Revenue's application under section 256(2) of the Income-tax Act for the assessment year 1977-78. The application was rejected, and the rule was discharged.
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1990 (8) TMI 48
Issues: Challenge to order by Commissioner of Income-tax withholding payment of Rs. 49,03,000 to petitioners.
Analysis:
The case involved a challenge to an order passed by the Commissioner of Income-tax withholding payment of Rs. 49,03,000 to the petitioners. The dispute arose from pay orders totaling Rs. 50,40,000 issued by an individual, which were deemed seized by the Deputy Commissioner of Income-tax under section 132(1). The petitioners contended that a portion of the amount belonged to them, as they had issued pay orders to sister concerns of the individual who issued the pay orders in question. The Commissioners of Income-tax accepted the petitioners' contention in separate orders, vacating the restraint order. However, the money was not refunded, leading to the impugned order by the Commissioner of Income-tax on March 1, 1990, assessing the amount in the name of the individual who issued the pay orders.
The petitioners argued that the Commissioner of Income-tax lacked the power to review and challenged the legality of the seizure under the second proviso to section 132(1). The court noted the lack of diligence in investigating the transactions, highlighting discrepancies in the handling of funds and the involvement of a non-existing person. The court emphasized the need for thorough examination of accounts and transactions in such cases to prevent unjust outcomes. Despite the petitioners' arguments and the earlier orders in their favor, the court held that since a regular assessment had been conducted in the name of the individual who received the pay orders, there was no basis to direct payment to the petitioners. The court emphasized the importance of upholding assessment orders and dismissed the petition, stating that the petitioners had already availed their appeal rights under section 132(11) and that the court should not intervene when a regular assessment had been completed and upheld.
In conclusion, the court dismissed the petition, highlighting the completion of a regular assessment in the name of the individual who received the pay orders and emphasizing the need to respect assessment orders unless set aside. The court found no grounds to direct payment to the petitioners, considering the assessment of the amount as undisclosed income of the individual. The court declined to intervene through article 226 of the Constitution, stating that as long as the assessment remained valid, the petitioners were not entitled to the withheld amount.
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1990 (8) TMI 47
The High Court of Bombay dismissed the application as the twisting and crimping of yarn were considered manufacturing activities according to a circular by the Central Board of Direct Taxes. No legal question arose. The rule was discharged. (Case citation: 1990 (8) TMI 47 - BOMBAY High Court)
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1990 (8) TMI 46
Issues Involved:
1. Retention of income by the Appellate Assistant Commissioner.
2. Use of evidence and material by the Inspecting Assistant Commissioner.
3. Admissibility of evidence considered by the Inspecting Assistant Commissioner.
4. Liability of the assessee-firm for concealment of income by the managing partner.
Detailed Analysis:
1. Retention of Income by the Appellate Assistant Commissioner:
The first issue pertains to whether the Appellate Assistant Commissioner retained the very income at a reduced figure which had been added by the Income-tax Officer. The Tribunal found that the identity and content of the addition of Rs. 4,00,000 was in no way different from the addition of Rs. 5,00,000 made by the Income-tax Officer as suppressed income from the transport business. The Tribunal also found substantial material independent of the settlement terms justifying that the assessee had concealed its income. The High Court agreed, noting that the addition maintained for the year had a direct nexus with the material brought on record during the assessment proceedings. Thus, the first question was answered in the affirmative and in favor of the Revenue.
2. Use of Evidence and Material by the Inspecting Assistant Commissioner:
The second issue questioned whether the Inspecting Assistant Commissioner was entitled to base his conclusion on evidence and material which came to light after the assessment for the assessment year 1962-63 was completed. The High Court clarified that the Inspecting Assistant Commissioner did not base his conclusion on any post-assessment evidence or material. The penalty order was based on the material available during the assessment proceedings. The Court emphasized that penalty proceedings are separate and independent from assessment proceedings and must consider all relevant evidence and material. Therefore, the second question was answered in the negative and in favor of the Revenue.
3. Admissibility of Evidence Considered by the Inspecting Assistant Commissioner:
The third issue revolved around whether the order of the Inspecting Assistant Commissioner was vitiated and liable to be canceled on the ground that it was partly based on inadmissible evidence. The High Court found no inadmissible evidence was considered by the Inspecting Assistant Commissioner for imposing the penalty. This question was seen as another aspect of the second issue. Consequently, the third question was also answered in the negative and in favor of the Revenue.
4. Liability of the Assessee-Firm for Concealment of Income by the Managing Partner:
The fourth issue addressed whether the assessee-firm was liable to be penalized for concealment of income by the managing partner, P. V. S. Mani. The High Court rejected the argument that the concealed income was solely attributable to the managing partner and not the firm. The Court highlighted that under the Indian Partnership Act, the firm is liable for the actions of its partners. Since the managing partner acted for the firm, the concealed income was considered the firm's income. The Court noted that the firm had agreed to the settlement terms, which included the addition of Rs. 4,00,000 as suppressed income. Therefore, the fourth question did not require an answer as there was no finding that the concealment was solely by the managing partner for himself and not on behalf of the firm.
Conclusion:
The High Court concluded that the minimum penalty imposable under section 271(1)(c) was justified and sustained by the Tribunal. The Court also noted that for other years covered by the settlement, the penalty equal to 25% of the penalty imposable under the Act was agreed upon. No order as to costs was made.
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1990 (8) TMI 45
Issues involved: Assessment years 1962-63, 1963-64, and 1964-65; validity of findings by the Income-tax Appellate Tribunal; exclusion of certain investments and income from assessments; questions of law arising from the Tribunal's decision.
Summary:
The High Court of Orissa addressed references concerning the assessments for the mentioned years of the same individual assessee. The Appellate Assistant Commissioner set aside the assessments with directions for a fresh assessment allowing the appellant to cross-examine witnesses. The Income-tax Appellate Tribunal held that statements obtained u/s 131 cannot be used against the assessee without providing an opportunity for rebuttal. The Tribunal directed the exclusion of investments and income related to Kalinga Foundation Trust from the assessments. The Revenue filed applications u/s 256(1) for stating a case to the High Court, which were initially refused by the Tribunal.
The Supreme Court identified eight questions of law arising from the Revenue's proposed questions, including the Tribunal's handling of evidence, the existence of the Kalinga Foundation Trust, and ownership of certain assets. The Supreme Court directed the Tribunal to send a statement of case to the High Court based on these questions.
During the hearing, it was acknowledged that the Tribunal's findings regarding the assessee's opportunity to rebut statements and the consideration of evidence remained undisturbed. The High Court found that the Tribunal's findings were flawed as they did not give due weight to relevant evidence and were vulnerable, necessitating reconsideration.
The High Court emphasized the importance of providing the assessee with a reasonable opportunity to present evidence and explanations. It was concluded that a final decision could only be made after such an opportunity was granted. The Tribunal was instructed to reconsider the evidence and make decisions accordingly.
The reference applications were disposed of, leaving it to the Tribunal to take further action based on the High Court's guidance. No costs were awarded in the matter. J. M. Mahapatra agreed with the decision.
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1990 (8) TMI 44
Issues:
Interpretation of the term "evidenced by an instrument" in the context of partnership firm registration under the Income-tax Act, 1961.
Analysis:
The case involves a partnership firm where a change in the constitution occurred due to a partner's retirement and the addition of a new partner. The dispute arose when the Income-tax Officer refused to register the firm under the Income-tax Act, 1961, citing the absence of a fresh deed of partnership. The Appellate Assistant Commissioner disagreed, holding that the original partnership continued with the changes made by the subsequent agreement. The Tribunal upheld this decision, allowing registration without a new deed of partnership.
The main issue for determination was whether, in the event of a change in the firm's constitution, a fresh partnership deed is necessary, or if an agreement modifying some terms of the original deed is sufficient. The interpretation of the term "evidenced by an instrument" under Section 184 of the Act was crucial in resolving this issue.
Section 184 of the Income-tax Act requires a partnership to be "evidenced by an instrument" for registration. The Court delved into the meaning of "instrument," concluding that it signifies a formal expression in writing of the agreement between the parties. The Court rejected the Revenue's argument that it must be a formal deed of partnership, instead accepting the broader interpretation that any writing documenting the partnership terms suffices.
Several High Court decisions were cited to support this interpretation, emphasizing that a partnership may be evidenced by one or multiple documents. As long as the terms are specified in any document(s) constituting the partnership instrument, the legal requirement is fulfilled. The Court highlighted that the original deed and the agreement together can constitute the instrument of partnership under Section 184(1) of the Act.
In conclusion, the Court held that a change in the firm's constitution can be effected by an agreement referencing the original deed's terms, without the necessity of executing a fresh partnership deed. Therefore, the Tribunal's decision to grant registration without a new deed of partnership was upheld, ruling in favor of the assessee-firm and against the Revenue.
Judge H. K. SEMA concurred with the judgment delivered by Judge DR. B. P. SARAF.
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1990 (8) TMI 43
Issues Involved:
The judgment involves the interpretation of sections 68 and 69 of the Income-tax Act, 1961 regarding the set off of intangible additions against unexplained cash deposits and investments for the assessment year 1961-62.
Facts and Decision:
The assessee had unexplained cash credits and investments added to their income by the Income-tax Officer. The Appellate Tribunal allowed a set off of Rs. 15,000 for intangible additions made in previous years. The Commissioner challenged this set off, arguing against its justification. The High Court considered various legal precedents, including the Supreme Court's rulings on intangible additions. It was established that intangible additions are part of the real income of the assessee and can be used for expenditures. The Court concluded that the Tribunal was correct in allowing the set off based on the connection between past intangible additions and current cash deposits and investments. The question was answered in favor of the assessee.
Legal Principles:
1. Intangible additions are considered undisclosed income and are part of the assessee's real income.
2. Income from intangible additions can be utilized by the assessee.
3. Set off can be given if unexplained cash deposits relate to intangible additions made in the past.
4. The true nature of cash deficits or credits must be determined based on the specific facts of each case.
Judge's Opinion:
Justice H. K. Sema agreed with the decision, affirming that the Tribunal was justified in allowing the set off of Rs. 15,000 for intangible additions against unexplained cash deposits and investments for the assessment year 1961-62.
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1990 (8) TMI 42
The High Court of Gauhati addressed a case involving depreciation on concrete poles and molds used for their manufacture. The court ruled in favor of the Revenue, allowing depreciation at 10% for the assessment years 1977-83. The court concluded that the molds did not fall under specific clauses in the Income-tax Act for higher depreciation rates. The decision was supported by a reference to Appendix 1, Part 1, Table, and previous court rulings. The judgment was agreed upon by both judges.
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1990 (8) TMI 41
Issues:
Challenge to legality and validity of orders refusing to waive interest under section 217 for assessment years 1977-78 and 1978-79.
Analysis:
The petitioner challenged the Commissioner's orders refusing to waive interest under section 217 for the assessment years 1977-78 and 1978-79. The petitioner applied for waiver under rules 40 and 117A of the Income-tax Rules, which allow for reduction or waiver of interest under specific circumstances. The petitioner argued that it satisfied the conditions for waiver but the Commissioner rejected the applications. The discretion to waive interest is conditional upon satisfying specific circumstances as per the rules.
The petitioner claimed that due to losses in previous years, it believed it had no obligation to file advance tax estimates. However, the Commissioner rejected this claim, stating that losses do not automatically carry forward to set off against future profits. The Commissioner's conclusion that the petitioner was not prevented by sufficient cause from filing returns in time for the assessment year 1978-79 was upheld, as the petitioner's belief was deemed unjustified.
For interest charged under section 139(8), the Commissioner waived it for the assessment year 1977-78 due to the petitioner being prevented by sufficient cause. However, for the assessment year 1978-79, the Commissioner rejected the waiver, stating that the petitioner could have filed the return in time. The High Court disagreed with the Commissioner's decision for 1978-79, noting that the accounts needed to be audited before filing, and set aside the order refusing waiver for that year.
Citing relevant case law, the High Court distinguished previous judgments where waiver was granted based on specific circumstances. Ultimately, the High Court directed full waiver of interest charged under section 139(8) for the assessment year 1978-79, in line with the waiver granted for 1977-78. However, the order regarding interest charged under section 217 for both years was not interfered with.
In conclusion, the High Court partially allowed the petition, directing full waiver of interest under section 139(8) for the assessment year 1978-79, while upholding the Commissioner's decision on interest charged under section 217 for both years. No costs were awarded in the judgment.
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1990 (8) TMI 40
The High Court of Bombay delivered a judgment on cross-references by the assessee and the Department regarding questions of law related to loans, liabilities, and taxable income. The court answered all questions in favor of the Revenue, citing relevant case law. Leave to appeal to the Supreme Court was granted on one question. No costs were ordered.
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1990 (8) TMI 39
The High Court of Bombay was asked to provide opinion on two questions related to Income-tax Act, 1961. Question 1 was answered in favor of the assessee based on a previous court decision. Question 2 was not answered as it was deemed unwarranted. No costs were awarded.
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1990 (8) TMI 38
The High Court of Bombay ruled on two questions under the Wealth-tax Act, 1957 regarding outstanding fees as net wealth. Question 1 answered in favor of Revenue based on previous court decisions. Question 2 directed the Tribunal to determine the value of outstandings considering factors like bad debts and discounts. No costs ordered.
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1990 (8) TMI 37
The High Court of Bombay dismissed an application under section 256(2) of the Income-tax Act, 1961, regarding the classification of tyre-cord as an 'automobile ancillary' for the purpose of higher development rebate. The court upheld the Tribunal's decision based on evidence and precedent, and ruled that no further action was necessary. (Case citation: 1990 (8) TMI 37 - BOMBAY High Court)
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1990 (8) TMI 36
Issues:
1. Interpretation of revenue and capital expenditure on foreign tours and know-how fees.
2. Allowability of various expenses incurred for business purposes.
3. Depreciation and development rebate on plant and machinery.
4. Treatment of cash allowance to employees.
5. Relief under section 80J for specific divisions.
6. Treatment of security deposit for cops as income.
Analysis:
1. The petitioner sought reference on various expenditure decisions by the Income-tax Appellate Tribunal. The court determined that certain questions did not warrant reference as they were either factual findings or had been previously addressed in other cases. The court found that expenses related to foreign tours and business activities were rightly treated as revenue expenditure, thus not necessitating a reference.
2. The court declined reference on questions regarding the allowance of specific expenses, such as advertisement expenditure and excise duty liability, citing previous decisions and established principles. The court also noted that certain questions were already granted relief by the Income-tax Officer, hence not requiring further reference.
3. Issues relating to depreciation, development rebate, and specific rates for machinery were considered for reference. The court directed the Tribunal to refer these questions to the court for detailed examination, indicating a need for clarification and legal interpretation on these matters.
4. The treatment of cash allowance to employees was addressed by the court, emphasizing that such allowances should be considered part of the salary and not as separate perquisites. The court relied on precedent and established principles to make this determination.
5. Regarding relief under section 80J for specific divisions, the court directed the Tribunal to refer this question for further examination. The court highlighted the need to assess the eligibility of the assessee for relief under this section based on the specific circumstances of the case.
6. The court considered the treatment of security deposit for cops as income and found that it was not an integral part of the transaction of sale, thus not constituting income for the assessee. This decision was based on a thorough analysis of the facts and legal principles involved in the case.
In conclusion, the court directed the Tribunal to refer specific questions for further examination while providing detailed reasoning for the exclusion of certain questions from reference. The judgment reflects a comprehensive analysis of various expenditure, allowance, and relief issues under the Income-tax Act, emphasizing the importance of legal interpretation and precedent in tax matters.
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1990 (8) TMI 35
The High Court of Delhi dismissed the petitioner's request for reference of questions related to an alleged profit of Rs. 3,41,655. The Tribunal found that the income had accrued from a forward transaction in goods with a party named Daulat Ram Nathu Mal and belonged to the petitioner, not Smt. Gitesh Bansal. The Tribunal's conclusions were based on evidence, and no legal questions were identified. The petition was dismissed.
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