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Showing 381 to 391 of 391 Records

• 2000 (4) TMI 11
  
  Issues Involved:
  1. Validity of journal entries evidencing payment of interest and deposit in the loan account of a minor.
  2. Applicability of Section 40A(3) of the Income-tax Act to the transactions of payment of interest and deposit in the loan account of a minor.
  3. Justification of payment of interest in cash under Rule 6DD(j) of the Income-tax Rules.
  4. Applicability of the circular relied on by the Tribunal to the facts of the case.
  
  Issue-wise Detailed Analysis:
  
  1. Validity of Journal Entries:
  The Tribunal held that the entries evidencing the payment of interest and deposit in the loan account of the minor could not be dismissed as mere journal entries or book entries. The factual position indicated that the assessee, a partnership firm, credited interest at 18% per annum in the interest account on loans advanced. The Assessing Officer found that the interest rate charged was 30% per annum, leading to an addition to the income disclosed. The Tribunal deleted the addition for the assessment year 1991-92, stating that independent enquiries were absent for that year. The Tribunal observed that the entries passed by the assessee did not partake of the nature of the mercantile system of accounting unless it was shown that the amounts had become legally due to the payees, which was not established.
  
  2. Applicability of Section 40A(3):
  The Tribunal noted that the payment of interest in cash exceeding Rs. 10,000 was made to the minor daughter of a partner. The Revenue's objection was that the payment was hit by Section 40A(3) of the Act. The Tribunal found that the minor daughter did not have a bank account and the transactions occurred on a bank holiday, which justified the cash payment under Rule 6DD(j) of the Income-tax Rules. The Tribunal concluded that the disallowance of interest under Section 40A(3) could not be sustained.
  
  3. Justification of Payment of Interest in Cash:
  The Tribunal examined whether there had been a cash payment of interest to the minor. It was observed that the partner, acting on behalf of the minor daughter, received and redeposited the amounts with the firm. The Tribunal held that the transactions represented efficient cash management and could not be considered a tax avoidance scheme as the interest received by the minor was included in her income tax return. The Tribunal justified the payment of interest in cash under Rule 6DD(j), noting that the transactions took place on a bank holiday.
  
  4. Applicability of Circular:
  The Tribunal referred to Circular No. 220, dated May 31, 1977, issued by the Central Board of Direct Taxes, which stated that payments made on a bank holiday would be considered an exceptional circumstance under Rule 6DD(j). The Tribunal observed that the transactions took place on the last working day of the accounting year of the banks, which was a bank holiday, thereby justifying the cash payment of interest.
  
  Conclusion:
  The Tribunal's findings were challenged by the Revenue, arguing that the entries were mere book entries without physical movement of cash and that the assessee did not have adequate cash balance to make the payment. The Tribunal's observations indicated that the transactions were effectively managed and justified under the relevant rules and circulars. However, the High Court found that the factual aspects were not adequately considered by the Tribunal in light of the statutory provisions and principles. Consequently, the High Court directed the Tribunal to rehear the case on merits and deal with the points involved afresh, without answering the referred questions.

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• 2000 (4) TMI 10
  
  The Bombay High Court dismissed an appeal where the Tribunal allowed the assessee to raise an additional ground related to jurisdiction, even though no substantial question of law arose. The order under section 143(3) of the Income-tax Act was passed without prior notice under section 143(2). The Tribunal's decision was upheld.

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• 2000 (4) TMI 9
  
  Issues involved:
  1. Investment allowance on jeeps and motor cycles under section 32A of the Income-tax Act, 1961.
  2. Extra shift allowance on building and furniture as per section 32 read with rule 5 of the Income-tax Rules, 1962.
  3. Entitlement to relief under section 35C of the Income-tax Act, 1961.
  
  Analysis:
  1. The Income-tax Officer disallowed the investment allowance claimed by the assessee on jeeps and motor cycles under section 32A of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) upheld this decision, except for the claim under section 35C. The Tribunal, however, allowed the investment allowance, stating that the jeeps and motor cycles were essential for supervising the tea estate and thus qualified for the investment allowance under section 32A.
  
  2. Regarding the extra shift allowance on building and furniture, the Tribunal reasoned that as the normal allowance was equivalent to the extra shift allowance, it should be allowed. However, the Tribunal erred in concluding that the building and furniture were entitled to extra shift allowance as there was no provision for it in the relevant rules. The rates of depreciation in Appendix I did not include extra shift allowance for building and furniture.
  
  3. The Tribunal considered the claim for relief under section 35C, concluding that the assessee was entitled to the deduction due to agricultural development works. However, the court disagreed, citing precedents where deductions were denied when goods and services were provided for the assessee's own benefit, not to a distinct person. As the facilities were for the assessee's own farm and not extended to others, the deduction under section 35C was not allowed.
  
  In conclusion, the court ruled against the assessee on all three issues, denying the investment allowance on jeeps and motor cycles, extra shift allowance on building and furniture, and relief under section 35C of the Income-tax Act, 1961.

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• 2000 (4) TMI 8
  
  The High Court of Jammu and Kashmir dismissed the application seeking a reference to the Income-tax Appellate Tribunal regarding the grant of investment allowance on a transformer used for producing alcoholic drinks. The court ruled in favor of the Revenue, stating that the assessee was not entitled to the investment allowance based on a previous decision. The Tribunal's decision to allow the investment allowance was deemed erroneous.

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• 2000 (4) TMI 7
  

  Writ - Rectification Of Mistakes - In my opinion, since the petitioners have alternative, effective and efficacious remedy provided under the statute itself, they are not entitled to invoke the discretionary jurisdiction of this court seeking a writ to cancel the orders made by the Income-tax Appellate Tribunal in the appeals filed by them against the orders of the Commissioner of Income-tax (Appeals), Bangalore, dated December 27, 1996. Accordingly, the petitions deserve to be rejected.

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• 2000 (4) TMI 6
  

  Reassessment of income escaping assessment – limitation – jurisdiction - four years prescribed under the proviso to section 147 have to be read with section 149 where the four years have been extended to seven years if the income chargeable that has escaped assessment is more than ₹ 50,000. The proviso to section 147 does not refer to the amount of escaped assessment. The only difference is that the notice under section 148, if issued within four years does not require any authority's sanction. But the Commissioner's sanction is required for notice issued after four years. The notice states that such sanction has been obtained. Therefore, the notice in reference to the petitioner's case cannot be held to be beyond the period of limitation.

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• 2000 (4) TMI 5
  

  Assessee was of generating and of supply of electricity - In a case where compensation amount and its receipt is admitted, which is business profit under section 41(2), it is to be taxed in the previous year of its receipt - on a proper interpretation of the provisions of the Indian Electricity Act, 1910, the Tribunal erred in holding that addition of the sum of Rs. 1,29,35,557 under section 41(2) of the Income-tax Act, 1961, in the assessment year 1965-66 was not justified

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• 2000 (4) TMI 4
  

  When the parties enter into a clear contract creating mutual rights & obligations, the parties are bound by it and the extraordinary jurisdiction of the HC under article 226 of the Constitution cannot be allowed to be utilised for enforcing an obligation in departure from the terms of the agreement - the transferee-petitioners not entitled to any relief but are at liberty to have their remedy against the transferor and seek return of the money paid by them to the transferor under the agreement

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• 2000 (4) TMI 3
  

  On a proper construction of the scope & effect of the judgment of the Chief Judge of the Civil Court, Hyderabad, in the proceedings u/s 34 of the Indian Trusts Act, the Tribunal is correct in holding that as on the relevant valuation dates corresponding to the A.Y. 1974-75 & 1975-76 the corpus of the trust fund cannot be said to have been held in trust for charitable/religious purposes in India - assessee-trust is not entitled to exemption u/s 5(1)(i), in respect of the corpus of the trust fund

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• 2000 (4) TMI 2
  

  Loan granted to an employee who is a director or who has a substantial interest in the company without charging any interest - ITO found that the assessee, which was a company, was borrowing large sums by paying interest at 15 per cent per annum. This interest was claimed by the assessee as deductible expenditure - Tribunal is right in law in holding that non-charging of interest on the debit balance in the running account of the directors would not constitute a perquisite

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• 2000 (4) TMI 1
  
  Issues Involved:
  Jurisdiction of the High Court to entertain a writ petition challenging the levy of service tax on architects residing outside the jurisdiction of the court.
  
  Analysis:
  The appellant filed a writ petition challenging the provisions of the Finance Act, 1998, and the Rules framed thereunder, levying service tax on architects as ultra vires of the Constitution of India. The appellant, represented by the Indian Institute of Architects, sought a writ of declaration. An interim stay was granted earlier, but a contempt application was filed due to non-compliance in other states. The learned Single Judge dismissed the writ petition, citing lack of jurisdiction, as the petitioner's registered office was not in Chennai. The appellant argued that the cause of action arose in Chennai, where the impugned provisions were to be implemented. However, the High Court held that no part of the cause of action arose within its jurisdiction, as the appellant's registered office was in Mumbai, and the respondents were not amenable to the court's jurisdiction. The writ petition was found to challenge the levy on all members nationwide, not specifically within the court's jurisdiction.
  
  The appellant relied on Article 226 of the Constitution, arguing that the cause of action partially arose within the court's jurisdiction. The Supreme Court's interpretation of "cause of action" was discussed, emphasizing the facts pleaded in the petition. The High Court found that the residence of the appellant's President in Chennai was irrelevant to determining jurisdiction. The court noted that the writ petition did not represent the Tamil Nadu Chapter of the Institute of Architects but challenged the levy on all members nationwide. Referring to precedent, the court emphasized the importance of filing petitions where the registered office is located.
  
  The court distinguished cases cited by the appellant, highlighting the importance of the cause of action's territorial connection. The decisions of the Allahabad and Bombay High Courts were discussed in this context. Ultimately, the High Court affirmed the Single Judge's decision, concluding that the writ petition was not maintainable due to lack of territorial jurisdiction. The appeal was dismissed, and no costs were awarded. The court did not express an opinion on the case's merits due to the jurisdictional issue.

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