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Showing 361 to 366 of 366 Records

• 1997 (5) TMI 7
  
  Issues: Validity of Circular No. 737 dated February 23, 1996, Interpretation of section 44AD of the Income-tax Act, 1961, Retrospective operation of proviso to sub-section (2) of section 44AD.
  
  In this case, the main issue revolves around the validity of Circular No. 737 dated February 23, 1996, issued by the Central Board of Direct Taxes ("CBDT"), and the subsequent actions taken based on it. The petitioner sought to quash this circular due to doubts arising from the interpretation of section 44AD of the Income-tax Act, 1961. The Circular No. 684 dated June 10, 1994, initially explained the provisions of section 44AD, stating that all deductions under specified sections, including depreciation, were already allowed, and no further deductions would be permitted. However, a subsequent Circular No. 737 raised doubts regarding the admissibility of deductions for salary/interest to partners of a firm under section 44AD and section 44AE. This doubt stemmed from the deletion of specific lines from Circular No. 684, creating confusion for income-tax authorities and resulting in reopened assessments and fresh orders against the petitioner.
  
  Furthermore, the judgment highlighted the retrospective operation of the proviso to sub-section (2) of section 44AD introduced by the Finance Act, 1997. This proviso allowed for the deduction of salary and interest paid to partners of a firm from the income computed under sub-section (1), with retrospective effect from April 1, 1994. The court found that the Circular No. 737, by deleting the provision allowing normal deductions for firms under section 40, was erroneous in light of the retrospective operation of the proviso to section 44AD. Consequently, the court quashed Circular No. 737 dated February 23, 1996, and directed the Income-tax Officer to pass fresh orders for reassessment of the petitioner in accordance with the law, considering the circular as non-existent. This decision clarified the interpretation of section 44AD and rectified the confusion caused by the conflicting circulars, ensuring compliance with the amended provisions of the Income-tax Act, 1961.

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• 1997 (5) TMI 6
  
  The Commissioner of Income-tax revised an assessment under section 263 due to expenses exceeding a threshold. The Income-tax Appellate Tribunal ruled in favor of the assessee, stating that commission, sales incentive, and cash discount expenses were not subject to disallowance under section 37(3A) of the Income-tax Act. The Tribunal rejected the Revenue's reference application, deeming the issues as questions of fact. The reference application was ultimately rejected.

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• 1997 (5) TMI 5
  
  Issues:
  1. Deduction of liability incurred under the Employees' Provident Funds Act.
  2. Allowance of penalty under the Central Sales Tax Act as a deduction.
  
  Analysis:
  
  1. The appeal involved questions regarding the deduction of liability incurred by the assessee under the Employees' Provident Funds Act and the allowance of penalty under the Central Sales Tax Act. The High Court had ruled against the assessee on these issues, citing previous decisions that supported the Revenue's stance. The appellant's counsel argued for a reconsideration based on a Supreme Court decision in Prakash Cotton Mills Pvt. Ltd.'s case [1993] 201 ITR 684.
  
  2. The Supreme Court noted that the previous decision established a framework for determining the deductibility of statutory imposts based on whether they were compensatory or penal in nature. The Court emphasized the need to analyze the nature of the impost to decide on deductibility. In this context, the Court referred to the judgment of the Andhra Pradesh High Court in CIT v. Hyderabad Allwyn Metal Works Ltd. [1988] 172 ITR 113, which dealt with a similar issue under the Employees' Provident Funds Act, 1952.
  
  3. Regarding the first question on the deduction of liability under the Employees' Provident Funds Act, the Supreme Court found that the High Court had not examined the issue in light of the principles laid down in the Prakash Cotton Mills case. Therefore, the Court remitted the question back to the High Court for reconsideration based on the established principles, allowing for a supplementary statement of the case if necessary.
  
  4. On the second question concerning the penalty under the Central Sales Tax Act, the Supreme Court determined that the penalty imposed was not related to delayed payment but was for contravention of the Act. The Court found no compensatory element in the penalty and upheld the High Court's decision on this issue.
  
  5. In conclusion, the Supreme Court partly allowed the appeal, remitting the first question to the High Court for reconsideration in line with the established principles. The Court disposed of the appeal without costs, providing clarity on the deductibility of statutory imposts based on their nature as compensatory or penal.

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• 1997 (5) TMI 4
  

  Whether the Tribunal was right in law in holding that the gifts of immovable properties belonging to the joint family made by its karta to his minor daughters were not invalid and that, therefore, the value should not be included in the assessment of the assessee-family - Since the Revenue has already treated these gifts as valid gifts for the purpose of gift-tax, it is not open to the Revenue to assail the said gifts in connection with the income-tax and wealth-tax assessments

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• 1997 (5) TMI 3
  

  After the passing of the order dated March 4, 1974, by the executing court, UOI did not take any steps to obtain stay of the payment - appellant has obtained the cheque from the executing court on April 23, 1974 - That, in our opinion, has no effect on the maintainability of the application under section 226(4) which was submitted on August 31, 1973, prior to such payment - payment of money to the appellant after the filing of the application would not render the said application infructuous.

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• 1997 (5) TMI 2
  

  Case of the assessee is that the rental income from the flats was assessable as "income from other sources" u/s 56 of the Act inasmuch as the assessee-company was not the "legal owner" of the property in the flats - Whether Tribunal was justified in law in holding that the income derived by the assessee-company from flats from the building known as ' Silver Arch ' of Bombay is taxable under the head ' Income from other sources ' u/s 56 and not income from ' house property ' u/s 22 - Held, no

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