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2002 (5) TMI 34
Issues:
1. Interpretation of the term "regular assessment" under the Income-tax Act, 1961.
2. Application of Explanation 2 to section 139(8) in determining a "regular assessment."
3. Assessment under section 147 of the Act and its classification as a regular assessment.
4. Levying of interest under sections 139(8) and 217 during reassessment.
Analysis:
1. The primary issue in this case revolves around interpreting the term "regular assessment" as defined in section 2(40) of the Income-tax Act, 1961. The Supreme Court in Modi Industries Ltd. v. CIT clarified that "regular assessment" refers to the first assessment made under section 143 or section 144, and any subsequent modified or revised assessment constitutes a fresh order.
2. The insertion of Explanation 2 to section 139(8) by the Taxation Laws (Amendment) Act, 1984, introduced a provision where an assessment made for the first time under section 147 is considered a "regular assessment." This Explanation expanded the scope of "regular assessment" to include assessments under section 147, previously not categorized as such.
3. Section 147 of the Act empowers the Assessing Officer to conduct assessments or reassessments in cases where income has escaped assessment. The distinction between initial assessments and reassessments is crucial in determining whether an assessment falls under the purview of a "regular assessment." In this case, the assessment under section 147 on November 30, 1990, was a reassessment following an initial assessment under section 143(1) in 1986, thus not meeting the criteria for a regular assessment as per the law.
4. The controversy surrounding the levying of interest under sections 139(8) and 217 during reassessment stems from the classification of the assessment as a regular or non-regular assessment. The cancellation of interest by the Commissioner of Income-tax (Appeals) and subsequent affirmation by the Tribunal was based on the finding that the reassessment under section 147 did not qualify as a regular assessment, hence the interest levied was not justified.
In conclusion, the court dismissed the Revenue's petition seeking a reference to the High Court, as the reassessment under section 147 did not meet the criteria of a "regular assessment" despite the insertion of Explanation 2 to section 139(8). The judgment underscores the importance of distinguishing between initial assessments and reassessments in determining the applicability of interest charges under the Income-tax Act.
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2002 (5) TMI 33
Special Deduction, Remuneration For Services Rendered Outside India - The petitioner had claimed the entitlement of deduction under section 80RRA of the Income-tax Act, 1961, which provision had been incorporated therein by the Finance (No. 2) Act, 1977, with effect from April 1, 1978. His representation was rejected for the reason that the petitioner was "working as an independent contractor acting as consultant, rather than an employee, as envisaged in section 80RRA of the Act." - we are satisfied that the petition is well founded. The impugned orders dated March 27, 1976, and January 28, 1978, are, therefore, quashed holding that the petitioner is fully entitled to the benefits in section 80RRA
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2002 (5) TMI 32
Writ, Powers Of High Court - Aggrieved by an order passed under section 271D of the Income-tax Act, 1961, imposing penalty on account of violation of acceptance of loan in cash exceeding Rs.20,000 prohibited under section 269SS, the petitioner had preferred an appeal under section 246 of the Income-tax Act. He has also made an application under section 249, sub-section (3), for admission of the appeal, which was preferred beyond the limitation provided in sub-section (2) of section 249. This has since been dismissed by the Commissioner of Income-tax. This order has since been challenged before this court on various grounds, particularly, on the ground that the order is perverse and this court should interfere with the same. Relying on section 273B, he contends that the failure to comply with section 269SS was supported by reasonable cause and as such no penalty could be imposed upon the petitioner. - The Appellate Tribunal will decide the question of granting of stay or the appeal according to its own wisdom and discretion without being influenced by any of the observations made in this order.
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2002 (5) TMI 31
Business Income, Sale Of Shares, Income From House Property, Annual Charge - "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that for ascertaining the trading result on the sale of shares, the value of the opening stock would continue to be taken at cost as followed by the assessee from year to year? - 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in allowing the amount of Rs.3,000 as a charge on the income from property received by the assessee on partition and hence 'deductible under section 24(1)(iv) of the Income-tax Act, 1961'?" - we answer the questions referred to for our opinion in the negative, i.e., in favour of the Revenue and against the assessee.
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2002 (5) TMI 30
Recovery Of Tax, Stay Of Recovery - The present writ petition has been filed by the petitioner seeking a writ, order or direction to direct the respondents to grant stay of the disputed demand of Rs.1,10,43,910 and not to treat the humble petitioner as the defaulter and not to recover the said amount or any part of it from the petitioner. The petitioner further seeks a writ order or direction to the effect that pending hearing of this petition this court pass appropriate order for prohibiting/restraining the respondents and their successor-in-office from taking any further steps or proceedings to recover the disputed demand of Rs.1,10,43,910. - I am of the view that the respondents be directed to dispose of the application dated February 7, 2002, as early as possible but not later than one month in view of the judgment referred to before me and strictly in accord ance with the provisions of law
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2002 (5) TMI 29
Issues Involved:
1. Validity of searches and seizures.
2. Jurisdiction of the Additional Director (Investigation) to authorize searches.
3. Sufficiency of materials for authorizing searches.
4. Validity of the notification dated September 6, 1989.
5. Recording of reasons for retention of books of account after 15 days.
6. Whether the provisions of section 132(9A) are directory in nature.
Detailed Analysis:
1. Validity of Searches and Seizures:
The court examined the validity of the searches and seizures conducted on the premises of the petitioners. The primary contention was whether the searches were conducted following the legal requirements and whether the authorizing officers had the requisite jurisdiction.
2. Jurisdiction of the Additional Director (Investigation) to Authorize Searches:
The court analyzed whether the Additional Director (Investigation) had the jurisdiction to authorize searches under section 132 of the Income-tax Act. It was noted that the power to authorize searches was conferred upon specific high-ranking officers like the Director-General, Director, Chief Commissioner, or Commissioner. The court concluded that the Additional Director (Investigation) did not have the jurisdiction to issue such authorizations as per the statutory provisions.
3. Sufficiency of Materials for Authorizing Searches:
The court scrutinized whether there were sufficient materials before the appropriate authority to justify the issuance of search authorizations. It was emphasized that the "reason to believe" based on information in possession is a sine qua non for authorizing a search under section 132. The court found that the reasons recorded for converting survey operations into search and seizure were not adequately substantiated, and there was no independent application of mind by the authorizing officer.
4. Validity of the Notification Dated September 6, 1989:
The court examined the validity of the notification dated September 6, 1989, which authorized the Director (Investigation) to perform functions across India. The court upheld the notification's validity, stating that the Board's power to authorize such an officer was within the statutory provisions. However, it was clarified that the notification did not extend the power to the Additional Director (Investigation).
5. Recording of Reasons for Retention of Books of Account After 15 Days:
The court addressed whether reasons for retaining books of account beyond the statutory period of 15 days must be recorded. It was concluded that the statutory requirement to record reasons for retention beyond 180 days was mandatory. The court emphasized that the retention of books of account without recording reasons and obtaining approval from the Commissioner would render the retention unlawful.
6. Whether the Provisions of Section 132(9A) are Directory in Nature:
The court analyzed whether the provisions of section 132(9A) are directory or mandatory. It was concluded that the provision is mandatory, and the books of account or documents seized must be handed over to the Income-tax Officer having jurisdiction within 15 days. The court highlighted that substantial compliance with this provision is necessary, and failure to do so would invalidate the retention of seized documents.
Judgment:
The court concluded that the searches and seizures conducted in the premises of Dr. Nalini Mahajan and Ram Lal Mahajan Charitable Trust were illegal and could not be sustained. However, the searches and seizures conducted in the premises of Mr. Rakesh Mahajan, Pan Foods Ltd., and Mahajan Industries P. Ltd. were held to be valid. The writ petitions filed by Dr. Nalini Mahajan and Ram Lal Mahajan Charitable Trust were allowed, while those filed by Mr. Rakesh Mahajan, Pan Foods Ltd., and Mahajan Industries P. Ltd. were dismissed. The parties were directed to bear their own costs.
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2002 (5) TMI 28
Transfer Of Assets, Revocable Gift - In ordinary practice, a person who sells a share keeps the bonus shares which he has got. The bonus shares do not accompany the original "share" when it is sold. Even the Revenue has not suggested that the dividend which had accrued during the period when the gift was in force should also be deemed to have reverted to the assessee on the revocation of the gift. If the dividend belongs to the donee, the bonus shares cannot be treated differently. - No other point has been raised. - In view of the above, we find no merit in this appeal. It is, consequently, dismissed.
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2002 (5) TMI 27
"1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that depreciation on a vehicle which is not registered in the name of the assessee was an allowable deduction in the hands of the assessee?" we are of the opinion that the question must be answered in the affirmative, i.e., against the Revenue and in favour of the assessee.
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2002 (5) TMI 26
Wealth Tax, Validity Of Provisions - petitioner has challenged the legality, validity and the vires of rule 2 of the Wealth-tax Rules, 1957 - Citing a decision of the Supreme Court reported in State of Andhra Pradesh v. McDowell and Co., , he says that the law enacted by the Legislature as opposed to Part III of the Constitution of India can be struck down. It can also be struck down for lack of legislative competence, but arbitrariness and unreasonableness are no ground to strike down legislative enactment.
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2002 (5) TMI 25
Capital Or Revenue Expenditure, Expenditure On Renovation - "(i) On the facts and in the circumstances of the case and in view of the detailed findings of the Assessing Officer, whether the Tribunal was justified in law in treating the expenditure on extensive renovation and extension resulting in the new assets of enduring nature as revenue expenditure? - (ii) On the facts and in the circumstances of the case, whether the Tribunal was justified in allowing the commission payment as high as 20 per cent. to the managing director and senior executives without assessee's being able to establish the business exigency or expediency justifying the said payment?" - we find that the Tribunal has taken a possible view. No substantial question of law arises. Thus, we find no ground to interfere. - there is no merit in this appeal. It is, consequently, dismissed in limine.
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2002 (5) TMI 24
Double Taxation Avoidance, Deduction Of Tax At Source - The Tribunal correctly observed which reads as under: "On a careful consideration of the facts of the case, we are in agreement with the learned Commissioner of Income-tax (Appeals) that the foreign company, Rotomac (SPA), cannot be held to have a permanent establishment and since the period of stay of their technicians in India is not more than three months in each of the two years, in view of the provisions of article 15 read with article 5(2)(h) of the DTAA, the said company is not liable to pay tax in India. Incidentally, this view finds support from the Income-tax Appellate Tribunal's order dated September 10, 1991, relied upon by the assessee. We, therefore, hold that the assessee was not liable to deduct tax under section 195(2) of the Act on the amounts remitted by it to the foreign company in the two years under consideration." - In our considered opinion no interference is called for. The appeal is dismissed.
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2002 (5) TMI 23
Wealth Tax, Exemption - It clearly held that the portion of the building belonging to assessee was in fact used by Dior International for its own use of manufacturing activity and consequently it cannot be said that such portion of building was used by the assessee for the purpose of its own business of manufacturing as factory. Therefore, such portion of the building was rightly included in the wealth of the assessee-company. - This is also not disputed that the petitioner-company had let out that portion of the property to Dior International and that portion was in fact used by the Dior International and not by the assessee. The assessee, is obviously not entitled to receive benefit for that portion.
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2002 (5) TMI 22
Depreciation, Balancing Charge - "Whether the learned Tribunal was right in law in holding that the amount of Rs. 2,75,000 received by the assessee-company from Coca-Cola Export Corporation was liable to be taxed as income within the meaning of section 41(2) of the Income-tax Act, 1961?" - "Whether the learned Tribunal was right in law in holding that the amount of Rs. 38,500 received by the assessee-company from Coca-Cola Export Corporation was liable to be taxed as income within the meaning of section 41(2) of the Income-tax Act, 1961?" - we answer the question referred to us in each case in the affirmative, that is to say, in favour of the Revenue and against the assessee and hold that the amount received by the assessee-company from Coca-Cola Export Corporation as a compensation for destruction of Coca-Cola and Fanta bottles, was liable to be taxed as income of the previous year relevant to the assessment year in which such amount was received under section 41(2) of the Income-tax Act as it was existing during the relevant assessment years.
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2002 (5) TMI 21
Business Expenditure, Deduction Only On Actual Payment - "Whether, on the facts and in the circumstances of the case, the Income tax Appellate Tribunal was legally justified in: (i) holding that the royalty does not partake the character of 'tax', 'duty', 'cess' or 'fee' for the purpose of applicability of the provisions of section 43B of the Income-tax Act?" - we answer the reference in favour of the Revenue and against the assessee.
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2002 (5) TMI 20
"Whether, on the facts and in the circumstances of the case, the Income tax Officer was justified in passing order under section 154 of the Income-tax Act, 1961?" - Rectification Of Mistakes, Representative Assessee, Trustee - Tribunal was right in holding that since such an issue was not raised by the assessee-trust during the assessment proceedings by stating that the income in question was not taxable, it could not be raised now in the rectification proceedings. - For the reasons that we have given hereinabove, we hold that the Income tax Officer was justified in passing the rectification order under section 154 of the said Act.
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2002 (5) TMI 19
The question which survives for consideration now is as to whether by reason of the impugned order the Central Government issued any direction to the statutory authorities. In the instant case no action had been taken as a result whereof the quasi-judicial authorities became denuded of their quasi-judicial power. Merely communicating the impugned judgment to the effect that such exemption had been withdrawn is communication of a foundation of fact. If, according to the petitioner, the order of the quasi-judicial authority suffers from any illegality they could have carried the matter higher up. - There cannot be any doubt whatsoever that the assessing authority and the appellate authority are quasi-judicial authorities. By reason of the order impugned in the writ petition the Central Government has in no way curtailed the power of a judicial or quasi-judicial authority. - It is well known that the jurisdiction of judicial review of this court is limited. Having regard to the facts and circumstances, we do not find that there exists any illegality, irrationality or procedural impropriety in the decision. This court is not concerned with the merits of the decision.
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2002 (5) TMI 18
In this appeal the Revenue has challenged the order of the Income-tax Appellate Tribunal relating to the assessment year 1990-91 on the issue of disallowance of Rs. 15,84,216 made under section 43B of the Act while processing the return under section 143(1)(a) of the Act. - We are in respectful agreement with the judgment of S. R. F. Charitable Trust's case in which their Lordships have held that the stage of furnishing of proof is reached as and when the proof is demanded by the Income-tax Officer on a notice under section 143(2) being issued. If no proof in support of the claim was available with the Income-tax Officer, he could have issued a notice under section 143(2), but he could not have unilaterally made this disallowance by seeking to invoke the provisions of the first proviso to section 143(1). - We have carefully perused the impugned judgment of the Tribunal. In our considered opinion, no interference is called for. Consequently, the appeal is accordingly dismissed.
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2002 (5) TMI 17
The prayers in the petition are: (a) that the search and seizure proceedings initiated under section 132 of the Act may be declared as illegal and invalid; (b) that the entire seized material including the cash of Rs. 1,40,000 may be ordered to be released forthwith; (c) that the cash amounting to Rs. 2,80,000 extorted by the search party may be ordered to be returned to the petitioners forthwith; (d) that the restraint order under section 132(3) in respect of the premises at 605, Hemkunt Tower, 6, Rajendra Place, New Delhi, may be directed to be withdrawn by the respondents forthwith and the seals be removed to enable the petitioners to resume their business; (e) that due cost and compensation may be suitably awarded to the petitioners for all the harassment and hardships caused to them by the respondents; and (f) that any other order or direction may be passed in favour of the petitioners as it may deem fit and proper. - At this stage, it is not possible for this court to arrive at the conclusion that the stand adopted by the petitioners is unimpeachable. It is thus not possible at this stage to grant the relief claimed for by exercising the extraordinary powers under article 226 of the Constitution of India. - Normally, we would have preferred not to enter into details to the extent that we have done so as not to prejudice the case of the petitioners. This has, however, been necessitated because of the specific request made by counsel for the petitioner.
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2002 (5) TMI 16
Sale of immovable properties - capital gain - we allow this reference application and direct the Income-tax Appellate Tribunal Jaipur, to draw up the statement of facts and refer the following question of law for the opinion of this court: "Whether the learned Tribunal had material and was right in law in holding, (i) memorandum of undertaking dated January 12, 1973; (ii) reversal of entry for Rs. 2,30,000 on March 31, 1973; (iii) letting out of upper portion of Lake Shore Palace Hotels Co. Pvt. Ltd. under lease deed dated December 14, 1978; (iv) execution of cancellation deed dated October 9, 1984; (v) assessment of lease income and value of impugned property in income-tax and wealth-tax assessments by the Revenue during various years; (vi) certificate dated March 15, 1989, of Lake Palace Hotels and Motels Pvt. Ltd. are self-serving documents and the upper portion of Shiv Nivas Palace Stood transferred on June 16, 1972, making the appellant liable to capital gain under section 45 of the Act?"
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2002 (5) TMI 15
"Whether, Tribunal was justified in cancelling the penalty levied under section 271(1)(c)? - Whether, Tribunal was justified in holding that the claim of higher deductions under Chapter VI-A by way of revised return was bona fide being based on legal opinion obtained by the assessee notwithstanding that the claim was not in accordance with the provisions of law and also that no such plea of having obtained legal opinion was raised during the course of assessment proceedings? - Whether, Tribunal was justified in holding that there was no difference in the figures of income returned originally, revised income and assessed income? - Whether, Tribunal was justified in holding that the assessee had successfully discharged the burden of proof which lay on it in terms of Explanation to section 271(1)(c)?" - The finding of the Tribunal that when the assessee has claimed some amount though that is debatable, in such cases, it cannot be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of the tax. In view of the findings of the Tribunal, no case is made out for interference by this court. - In the result, we answer all the four questions in the affirmative, i.e., in favour of the assessee and against the Revenue.
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9911796707
