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Showing 61 to 80 of 85 Records
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1972 (1) TMI 26
Applications under section 66(2) of the Indian Income-tax Act, 1922, were filed by the Commissioner of Income-tax, Rajasthan, in this court on January 18, 1966, and March 30, 1966, respectively, against His Highness Maharaja Shri Sawai Man Singh of Jaipur. During the pendency of the applications the respondent died on June 24, 1970 – held that a pending reference under s. 66(1) does not abate on the assessee's death
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1972 (1) TMI 25
Member of Hindu Joint Family becomes partner with his separate assets with the karta of the joint family - partnership is entered into between the karta of a Hindu undivided family and an undivided member of the family – held that validity of the partnership cannot be questioned where the undivided member brings in his separate property - Tribunal was right in holding that the partnership formed by the karta of the Hindu undivided family, with an undivided junior member of the same family, quoad his separate property was valid in law and, therefore, entitled to registration under the Income-tax Act
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1972 (1) TMI 24
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee's brick kiln business was not a cottage industry within the meaning of section 14(3)(i)(b) of the Indian Income-tax Act. 1922, as it stood after the amendment in 1960 – held that brick kilns run by the could not be treated as cottage industry - Question answered in the affirmative
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1972 (1) TMI 23
Whether on the facts and in the circumstances of the case and on a proper interpretation of section 16(3) of the Indian Income-tax Act, 1922, and of section 64 of the Income-tax Act, 1961 the share of the losses of the wife of the assessee in registered firms where the assessee is also a partner could be set off against the income of the assessee while computing the total income – Question is answered in the affirmative and in favour of the assessee
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1972 (1) TMI 22
Issues:
- Interpretation of section 271(1)(c) of the Income-tax Act, 1961 regarding the levy of penalty on the assessee.
- Justification of penalty proceedings against the assessee based on the findings of the Tribunal.
- Examination of whether the ingredients of section 271(1)(c) have been satisfied to impose the penalty.
Analysis:
The judgment delivered by the High Court of Kerala pertains to a reference under section 256(1) of the Income-tax Act, 1961, questioning the legality of imposing a penalty on the assessee under section 271(1)(c) of the Act. The case involved the assessment year 1960-61, where the account books of the assessee were rejected, and various additions were made to his income by the assessing authorities. The Appellate Assistant Commissioner added sums representing discrepancies in closing stock valuation and the value of raw nuts pledged with a bank. The Tribunal sustained most additions and initiated penalty proceedings under section 271(1)(c) based on alleged concealment of income by the assessee.
The court examined the provisions of section 271(1)(c) which allow for the imposition of a penalty if a person has concealed income or furnished inaccurate particulars. The Tribunal's findings indicated that the assessee had deliberately understated stock values and concealed income, justifying the penalty. However, the court referenced the Supreme Court's decision in Commissioner of Income-tax v. Anwar Ali, emphasizing that the burden lies on the department to establish that the disputed amount indeed represents income and was deliberately concealed by the assessee.
The court scrutinized the evidence and explanations provided by the assessee regarding the discrepancies in stock valuation and the pledge of raw nuts. It noted the rejection of the assessee's explanations and emphasized the lack of clear evidence linking the discrepancies to deliberate concealment of income. The court highlighted the necessity for the department to prove that the disputed amount represents income and that the assessee consciously concealed particulars or furnished inaccurate details.
Ultimately, the court ruled in favor of the assessee, citing the Anwar Ali case and recent decisions by the Supreme Court. It concluded that apart from the falsity of the assessee's explanations, there was insufficient material to support the imposition of a penalty under section 271(1)(c). The judgment favored the assessee, emphasizing the department's burden to prove deliberate concealment of income, and directed a reduction in the penalty amount imposed by the Tribunal.
In conclusion, the court's detailed analysis focused on the interpretation of section 271(1)(c) and the stringent burden of proof required to justify the imposition of penalties for income concealment. The judgment underscored the importance of concrete evidence and clear links between discrepancies and deliberate attempts to hide income, aligning with established legal principles outlined in previous Supreme Court decisions.
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1972 (1) TMI 21
Whether the wealth-tax levied on the legal representative of the deceased who is the assessee, is in accordance with law - Tribunal is justified in coming to the conclusion that the assessee acquired the entire jewels of Rs. 1,00,000 possessed by her brother at the time of his death - As the assessee has not produced any acceptable evidence to substantiate her case that her brother left jewels worth only Rs. 3,350 and that she inherited only those jewels, and to displace the evidentiary value of the final orders passed under the Wealth-tax Act against the deceased and under the Estate Duty Act against the assessee herself, assessments made under the Wealth-tax Act is upheld - assessee is in a position to produce any acceptable material to support her plea that she in fact inherited only jewels worth about Rs. 3,350 from the deceased, she is not estopped in putting forward that plea in the subsequent years
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1972 (1) TMI 20
Conversion of proprietory concern into a partnership firm - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the gift in question was exempt under section 5(1)(xiv) of the Gift-tax Act, 1958 – Held, yes
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1972 (1) TMI 19
Property acquired by government - Compensation from govt. with interest - whether the interest is to be apportioned in respect of the years in which it accrued - method of accounting of the assessee being mercantile, the accrual of interest will have to be spread over the year between the date of acquisition and the date of actual payment
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1972 (1) TMI 18
An application was filed praying for issue of summons on the Income-tax Officer, requiring him to produce certain documents as mentioned in the application. This application has been rejected by the learned subordinate judge on the ground that in view of certain provisions of the Income-tax Act, he could not direct the production of those documents – held that After s. 137 is repealed there is no bar in the way of a civil court in directing the production of documents which were filed before an Income-tax Officer
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1972 (1) TMI 17
Tribunal rejected the first application of the assessee for referring the case to the High Court on the ground that it was barred by time because the remittance of Rs. 100 was not received within time. It was also held that this application for reference was not sufficient for referring all the questions asked for in the application as they related to two cross-appeals and that a second application for reference was also necessary - held that Tribunal was wrong in asking the petitioner to make a choice and also rejecting the first application as time-barred
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1972 (1) TMI 16
Under the Act the Board has a fund. There are various sources of income constituting the fund. One of the sources of income is earning profits by compilation, publication, printing and sale of text books. The profits so earned enter into the Board fund. The income and expenditure of the Board is controlled and the entire expenditure is to be directed towards development and expansion of educational purposes. Even if there is some surplus it is not appropriated by others but remains as a part of the sinking fund to be devoted to the cause of education as and when necessary. This being the objective and there being various ways of control of the income and expenditure, the Board of Secondary Education cannot be said to be existing for purposes of profits. It exists solely for purposes of education. The income of the Board cannot, therefore, be computed in the total income of the previous year under section 10(22) of the Income-tax Act, 1961.
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1972 (1) TMI 15
Issues Involved:
1. Whether the business carried on by U. G. Krishnaswami Naidu was his own or that of Ramaswami Naidu.
2. Justification for treating the business as belonging to Ramaswami Naidu for the assessment years 1952-53, 1953-54, and 1954-55.
3. Legality of the cancellation of the assessment on U. G. Krishnaswami Naidu.
Issue-Wise Detailed Analysis:
1. Whether the business carried on by U. G. Krishnaswami Naidu was his own or that of Ramaswami Naidu
The court examined the substantial question of whether the business conducted by U. G. Krishnaswami Naidu was genuinely his or whether it belonged to Ramaswami Naidu. The business in question involved a ginning factory initially intended to be run by Kadiri Mills Ltd., but due to the refusal of a license, it was purportedly leased to U. G. Krishnaswami Naidu. However, no formal lease agreement was executed. The court noted several factors indicating that Ramaswami Naidu had a proprietary interest in the business:
- Ramaswami Naidu signed day books, cash receipts, and contracts related to the business.
- He issued instructions concerning the business operations, including insurance and pricing.
- Financial transactions, including advances and overdrafts, were facilitated by Ramaswami Naidu.
- The financial records showed that Ramaswami Naidu had drawn significant sums from the business profits.
2. Justification for treating the business as belonging to Ramaswami Naidu for the assessment years 1952-53, 1953-54, and 1954-55
The Income-tax Officer, Appellate Assistant Commissioner, and the Tribunal all concluded that the business ostensibly run by U. G. Krishnaswami Naidu was, in reality, the business of Ramaswami Naidu. The reasons included:
- U. G. Krishnaswami Naidu was brought in to circumvent the refusal of a license.
- Ramaswami Naidu's significant involvement in the business operations.
- Letters and documents indicating Ramaswami Naidu's proprietary interest.
- Financial transactions and arrangements made by Ramaswami Naidu.
The Tribunal's findings were based on substantial evidence, and the court held that these findings were sufficient to establish a close nexus between Ramaswami Naidu and the business. The court emphasized that the Tribunal's conclusion was a finding of fact, supported by ample material, and thus not open to challenge under section 66 of the Income-tax Act.
3. Legality of the cancellation of the assessment on U. G. Krishnaswami Naidu
The Tribunal had canceled the protective assessments made against U. G. Krishnaswami Naidu, concluding that the business income should be included in the income of Ramaswami Naidu. The court found that the Tribunal's decision was justified based on the evidence and circumstances presented. The court also addressed the assessees' contention regarding the burden of proof, stating that the Tribunal had not shifted the onus onto the assessee but had made its decision based on the materials on record.
Conclusion:
The court answered the reference in T.C. No. 66 of 1965 in favor of the revenue, affirming that the business carried on by U. G. Krishnaswami Naidu indeed belonged to Ramaswami Naidu. Consequently, the cancellation of the protective assessments against U. G. Krishnaswami Naidu was upheld, and the question in T.C. No. 17 of 1965 was answered in the affirmative and against the revenue. The revenue was entitled to costs in T.C. No. 66 of 1965, and T.C.P. No. 54 of 1965 was dismissed.
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1972 (1) TMI 14
Whether, the Tribunal was right in holding that the deduction under section 80E has to be worked out on the adjusted total income of the year, after setting off the losses brought forward from the preceding year – question is answered in the negative, that is in favour of the assessee and against the department
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1972 (1) TMI 13
Issues Involved:
1. Taxability of the right to receive dividends as an asset under the Wealth-tax Act.
2. Correctness of the valuation method adopted by the Wealth-tax Officer.
Issue-Wise Detailed Analysis:
1. Taxability of the Right to Receive Dividends as an Asset
The primary issue was whether the right of the assessee to receive dividends declared by Chrome Leather Company (Private) Ltd. was a taxable asset under the Wealth-tax Act, 1957. The assessee argued that her interest in the estate was contingent and subject to conditions such as the company making profits and declaring dividends, and thus could not be evaluated. The Tribunal initially held that the right to receive dividends was a valuable right but did not constitute "property" under the Act, likening it to future maintenance excluded from property under section 6(dd) of the Transfer of Property Act. However, the court clarified that the assessee was entitled to the entirety of the dividends declared by the company during her lifetime, as per the court's order in C.S. No. 165 of 1942.
The court then examined the definition of "net wealth" under section 2(m) and "assets" under section 2(e) of the Wealth-tax Act. It was concluded that the right to receive dividends is not an annuity, as it is not a predetermined sum payable annually. The court referred to several Supreme Court judgments, including Ahmed G. H. Ariff v. Commissioner of Wealth-tax, which held that the term "property" is of the widest import and includes every possible interest a person can hold. Therefore, the right to receive dividends was deemed a taxable asset under the Wealth-tax Act.
2. Correctness of the Valuation Method
The second issue was whether the valuation method adopted by the Wealth-tax Officer was correct. The Tribunal had not given due consideration to the aspect of valuation, having initially ruled out the right to receive dividends as property. The court pointed out that Rule 1B of the Wealth-tax Rules, 1957, provides the method for valuing a life interest by multiplying the average annual income by a prescribed formula. The valuation should also consider the premium rates that a life insurance company might demand for insuring the assessee's life, ensuring that the value does not exceed the market value of the corpus from which the life interest is derived.
The court referenced the Inland Revenue Commissioners v. Crossman case, which held that the market value of shares should be considered even if there are restrictions on transfer. The Supreme Court in Ahmed G. H. Ariff v. Commissioner of Wealth-tax also emphasized that the words "if sold in the open market" in section 7(1) imply a hypothetical open market scenario. Therefore, the Tribunal's view that the life interest in dividends had no market value was incorrect.
The court concluded that the right to receive dividends was a taxable asset and remanded the case to the Tribunal for fresh consideration of the valuation, instructing it to give the parties an opportunity to present their case on this aspect.
Conclusion
The court answered the first question in favor of the revenue, establishing that the right to receive dividends is a taxable asset. The second question was also answered in favor of the revenue, but the Tribunal was directed to reconsider the valuation method afresh. The revenue was awarded costs of the reference, with counsel's fee set at Rs. 250.
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1972 (1) TMI 12
Whether Appellate Tribunal was legally correct in holding that the accumulated profits (the purpose of distribution of dividends) will not include current profits for the purpose of section 2(6A) of the Indian Income-tax Act, 1922 - question is answered in affirmitive in favour of assessee
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1972 (1) TMI 11
Imposition of penalty for delayed payment of cess and purchase tax levied under the U.P. Sugarcane Cess Act, 1956 – held that imposition of penalty was on account of failure on the part of the assessee to comply with a statutory obligation and as such any payment made by the assessee was not incidental to its business nor was there any commercial expediency for its payment – therefore amount was not an allowable expenditure under section 10(2)(xv)
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1972 (1) TMI 10
Assessee, a partner in a registered firm appointed a person for looking after his interests in the partnership – assessee derived share income - from the share income received by him, the assessee claimed as deduction under section 10(2)(xv) of the Income-tax Act, 1922, of the salary paid - even though the share income was arrived at after giving deductions under s. 23(5)(a), such expenditure is allowable under section 10(2)(xv)
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1972 (1) TMI 9
Issues Involved:
1. Status of the deceased's property as Hindu undivided family (HUF) property or self-acquired property.
2. Applicability of section 9 of the Estate Duty Act, 1953.
3. Interpretation of "disposition" under section 27(1) of the Estate Duty Act.
4. Creation of rights under Explanation 1 to section 2(15) of the Estate Duty Act.
5. Extinguishment of rights under Explanation 2 to section 2(15) of the Estate Duty Act.
Issue-wise Detailed Analysis:
1. Status of the deceased's property as Hindu undivided family (HUF) property or self-acquired property:
The court examined whether the deceased had thrown his self-acquired properties into the common stock of the joint family prior to the assessment year 1955-56. The accountable person argued that the deceased had treated his properties as HUF properties since 1946-47, supported by income-tax assessments made in the status of a HUF. The court noted that the deceased had published a statement in Tamil dailies on May 7 and 8, 1957, declaring his intention to treat his self-acquired properties as joint family properties. The Assistant Controller and the Central Board of Direct Taxes considered this statement as a unilateral declaration made on that day. However, the court concluded that the assessment orders prior to 1955-56 and the statement published in the dailies established that the deceased had thrown his self-acquired properties into the common stock long before two years of his death.
2. Applicability of section 9 of the Estate Duty Act, 1953:
The accountable person contended that section 9 of the Act did not apply as the properties were already HUF properties. The court agreed, stating that even if the properties were self-acquired and only thrown into the common stock by the 1957 declaration, the act did not constitute a "disposition" under section 27(1) or a creation of "other right" under Explanation 1 to section 2(15) or an "extinguishment" under Explanation 2 to section 2(15) of the Act. Therefore, the properties were not subject to estate duty under section 9.
3. Interpretation of "disposition" under section 27(1) of the Estate Duty Act:
The court discussed the meaning of "disposition" in section 27(1), referencing the Supreme Court's decision in Goli Eswariah v. Commissioner of Gift-tax, which held that "disposition" refers to a bilateral or multilateral act, not a unilateral one. The court concluded that the unilateral act of throwing self-acquired property into the common stock of a joint family did not constitute a "disposition" under section 27(1).
4. Creation of rights under Explanation 1 to section 2(15) of the Estate Duty Act:
The revenue argued that the deceased's act created enforceable rights against him or his property, constituting a "disposition" under Explanation 1 to section 2(15). The court rejected this argument, stating that under Hindu law, the right of a coparcener to demand partition is a birthright and not conferred by the father. The court cited the Full Bench decision in Commissioner of Gift-tax v. P. Rangasami Naidu, which held that the son's interest in the father's property becomes real upon the father's waiver of his rights. Therefore, the act did not create a new right enforceable against the deceased.
5. Extinguishment of rights under Explanation 2 to section 2(15) of the Estate Duty Act:
The court also addressed whether the act constituted an "extinguishment" of the deceased's rights under Explanation 2 to section 2(15). The court concluded that after the act of throwing the property into the common stock, the property vested in the joint family, and the deceased's interest extended over the whole property as a coparcener. Therefore, there was no extinguishment of the deceased's rights and creation of a right in favor of another.
Conclusion:
The court answered the reference in favor of the assessee, concluding that the properties should not be included in the estate duty assessment as properties passing or deemed to pass on the deceased's death. The court awarded costs to the assessee, with counsel's fee set at Rs. 250.
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1972 (1) TMI 8
The High Court of Madras ruled in favor of the assessee in a reference under section 66(1) of the Income-tax Act, 1922. The issue was whether interest payment of Rs. 12,413 for the assessment year 1960-61 should be disallowed. The court held that the interest paid on borrowed capital for business purposes should be allowed as a deduction under section 10(2)(iii) of the Act, even if the interest rate on lending was lower. The court cited a similar decision by the Madhya Pradesh High Court in Birla Gwalior Private Ltd. v. Commissioner of Income-tax.
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1972 (1) TMI 7
Issues:
1. Inclusion of insurance policies in the estate of the deceased.
2. Interpretation of section 14 of the Estate Duty Act, 1953.
3. Payment of premiums from joint family funds.
4. Applicability of the judgment in Seethalakshmi Ammal v. Controller of Estate Duty.
Analysis:
1. The main issue in this case was whether the value of insurance policies taken out by the deceased on his life, and nominated in favor of his wife, should be included in the estate of the deceased. The total value of the policies was Rs. 92,520, and the question was whether this amount belonged to the Hindu undivided family or the deceased individually.
2. The Deputy Controller of Estate Duty initially held that the insurance policies, being nominated in favor of the wife, should be considered as taken for her benefit and included in the free estate of the deceased. However, the Appellate Controller of Estate Duty and the Tribunal both ruled in favor of the accountable person, stating that the premiums for the policies were paid from joint family funds. The judgment highlighted the interpretation of section 14 of the Estate Duty Act, which determines who "kept up" the policies.
3. The court referred to a previous judgment in Seethalakshmi Ammal v. Controller of Estate Duty, where a similar situation was addressed. The Division Bench held that insurance policies paid from joint family funds are considered joint family property, even if the physical act of payment was done by the deceased. The court agreed with this interpretation and applied it to the current case, emphasizing that the source of premiums is determinative of ownership.
4. Ultimately, the court ruled in favor of the accountable person, stating that the insurance policies should not be included in the estate of the deceased as they were paid from joint family funds. The judgment clarified the application of section 14 of the Estate Duty Act and upheld the decision based on the precedent set by the previous case. The accountable person was awarded costs, including counsel's fee.
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