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Showing 61 to 75 of 75 Records
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1970 (12) TMI 15
The High Court of Calcutta ruled that the Appellate Tribunal was not justified in calculating the market value for unsold paddy based on the average price but should use the maximum rate fixed by the government order. The judgment was agreed upon by Judges K. L. Roy and Sankar Prasad Mitra. Each party will bear its own costs.
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1970 (12) TMI 14
Issues:
Interpretation of section 23A(1) of the Indian Income-tax Act, 1922 regarding the declaration of dividends by a private limited company not substantially interested by the public.
Consideration of factors like losses incurred in earlier years and smallness of profit made in the previous year in determining the justification of the Income-tax Officer's order.
Impact of outstanding tax liabilities on the declaration of dividends by the company.
Applicability of the Supreme Court's interpretation in Commissioner of Income-tax v. Gangadhar Banerjee & Company Ltd. on the Income-tax Officer's decision-making process.
Detailed Analysis:
The case involved a reference under section 66(1) of the Indian Income-tax Act, 1922, where the Tribunal questioned the justification of the Income-tax Officer's order under section 23A(1) for the assessment year 1959-60. The company in question, a private limited company not substantially interested by the public, had declared a dividend lower than the statutory percentage due to outstanding tax liabilities. The Income-tax Officer's decision was based on the lack of grounds like losses in earlier years or smallness of profit in the previous year for not declaring a higher dividend.
The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld the Income-tax Officer's decision, emphasizing that outstanding liabilities should not affect the assessment of distributable surplus for dividend declaration. The Tribunal specifically highlighted the amended section 23A(1) post the Finance Act, 1955, which focused on the smallness of profit in the previous year, excluding consideration of outstanding tax liabilities.
The legal counsel for the assessee referred to previous court decisions, including Commissioner of Income-tax v. Bangodaya Cotton Mills Ltd., and Commissioner of Income-tax v. Gangadhar Banerjee & Company Ltd., to argue that the Income-tax Officer's assessment should consider factors like losses incurred in earlier years and the smallness of profit made in the previous year. The Supreme Court's interpretation emphasized the need for the Income-tax Officer to assess dividend declarations based on business considerations and the financial position of the company.
The High Court judges, K. L. Roy and Sankar Prasad Mitra, concluded that the Income-tax Officer's decision should consider outstanding tax liabilities in determining the distributable surplus available for dividend declaration. They disagreed with the Tribunal's narrow interpretation of section 23A(1) and emphasized the need for a comprehensive assessment of all relevant factors by the Income-tax Officer. The judges ruled in favor of the assessee, stating that outstanding tax liabilities should be considered in determining the justification for not declaring a higher dividend, as per the guidance provided by the Supreme Court. The question was answered in the negative, favoring the assessee.
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1970 (12) TMI 13
Issues Involved:
1. Validity of notices under section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer to assess in the status of Hindu undivided family (HUF).
3. Legitimacy of revised returns filed by the petitioner.
4. Allegations of suppression of material facts and misrepresentation.
Detailed Analysis:
1. Validity of Notices under Section 148:
The petitioner, Mahabir Prosad Poddar, initially received notices under section 148 of the Income-tax Act, 1961, for the assessment years 1957-58 to 1961-62, requiring him to file returns as his income had escaped assessment. These notices were addressed to him as an individual. The petitioner filed returns in response to these notices, also in the status of an individual. The Income-tax Officer later assessed the petitioner in the status of a Hindu undivided family (HUF).
2. Jurisdiction of the Income-tax Officer:
The petitioner contended that the Income-tax Officer lacked jurisdiction to make assessments in the status of HUF when the notices were addressed to him as an individual. The petitioner relied on the Supreme Court decision in Commissioner of Income-tax v. K. Adinarayana Murty, arguing that the officer should have issued fresh notices if the original ones were found to be invalid. The court, however, found that the petitioner himself had filed revised returns in the status of HUF and that the officer had accepted these revised returns on their merits.
3. Legitimacy of Revised Returns:
The petitioner initially filed returns as an individual but later submitted revised returns showing the status as HUF. The Income-tax Officer accepted these revised returns and completed the assessments accordingly. The court noted that the petitioner did not claim the business income belonged to HUF until after the search and seizure in October 1964. The court also observed that the application for voluntary disclosure under section 271(4A) did not initially indicate it was on behalf of HUF, suggesting an interpolation in the petition.
4. Allegations of Suppression of Material Facts and Misrepresentation:
The court found that the petitioner had suppressed material facts and misrepresented certain details to obtain interim stay orders. The court noted that the petitioner had amassed significant wealth without paying due taxes and had filed revised returns to avoid tax liability. The court referred to a decision by the Gujarat High Court in Chooharmal Wadhuram v. Commissioner of Income-tax, emphasizing that a wrong description of status could be corrected during assessment proceedings and did not invalidate the proceedings.
Conclusion:
The court dismissed the petition, holding that the application was without merit and mala fide. It concluded that the Income-tax Officer had jurisdiction to assess the petitioner in the status of HUF based on the revised returns filed by the petitioner. The court discharged the rule, vacated any interim orders, and ordered the petitioner to pay costs to the respondents.
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1970 (12) TMI 12
Benami transaction - income from properties which are in name of wife which were bought with moneys given by the husband - whether such property belongs to husbands family and whether income from such property can be included in income of family
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1970 (12) TMI 11
In its books of account for the current year which were maintained on the mercantile system of accounting the assessee made the provisions for its liability under the Sales Tax Act - demand notice for the sales tax of earlier years were received by the assessee in the accounting year - demand was not disputed by assessee - held that amounts demanded have to be allowed as deduction
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1970 (12) TMI 10
Whether the Tribunal was right in holding that there was no partial partition as claimed by the assessee - whether the share of profit paid to Ghanshyam and the interest paid to Rameshwar Lal and Saraswati Devi by the firm M/s. Brij Mohan Lal Rameshwar Lal was rightly included in the income of the assessee, Hindu undivided family
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1970 (12) TMI 9
Issues:
Determining whether two activities of an assessee constitute one business or two businesses.
Analysis:
The judgment delivered by the High Court of Allahabad pertained to the assessment years 1950-51, 1951-52, and 1952-53, involving the question of whether the managing agency of a company and dealing in its shares constitute one business or separate businesses. The case involved B. R. Sons (P.) Ltd., Kanpur, as the assessee, which acquired the managing agency of Meyer Mills Ltd. The Income-tax Officer disallowed the claimed loss on revaluation of shares as capital loss for previous years. The subsequent assessment years saw the assessee seeking set off for unabsorbed losses, which was largely disallowed on the premise that managing agency and share dealing were distinct businesses. The Appellate Tribunal, however, viewed the two activities as constituting one business, leading to a reference to the High Court by the Commissioner of Income-tax, U. P.
The court considered the interconnection and interdependence of the ventures to determine if they formed a single business. Citing precedents like Setabganj Sugar Mills, Ltd. v. Commissioner of Income-tax and Standard Refinery & Distillery Ltd. v. Commissioner of Income-tax, the court emphasized the need for interlacing and interdependence to establish a unified business entity. It also referred to cases like Manilal Dahyabhai v. Commissioner of Income-tax and Ramnarain Sons (Pvt.) Ltd. v. Commissioner of Income-tax to illustrate factors influencing the classification of activities as one business.
The court noted the arguments presented by both sides, highlighting the twin objectives behind the purchase of shares and the acquisition of managing agency. While the department contended that the activities could be carried out separately, the assessee pointed out various factors favoring the unity of the two operations. The court acknowledged the Tribunal's finding that the company effectively combined the two activities, leading to the conclusion that they constituted one business.
In light of the circumstances and probabilities favoring the assessee, the court answered the reference question affirmatively, ruling in favor of the assessee. The Commissioner of Income-tax, U. P., was directed to pay the assessee costs of the reference. The judgment underscored the importance of examining the interconnectedness and unity of operations to determine the existence of a single business entity, thereby resolving the issue at hand comprehensively.
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1970 (12) TMI 8
Issues:
1. Interpretation of section 7(2)(ii) of the Income-tax Act, 1922 regarding the deductibility of entertainment allowance.
2. Whether the entertainment allowance received by the assessee is deductible under section 7(2)(ii) of the Act.
Analysis:
The judgment dealt with the interpretation of section 7(2)(ii) of the Income-tax Act, 1922, regarding the deductibility of entertainment allowance. The case involved the late Shri Prem Nath, who was receiving a salary as a governing director and included an entertainment allowance in his income tax return for the assessment year 1957-58. The Income-tax Officer initially disallowed the claim, but the Appellate Assistant Commissioner allowed a deduction of Rs. 4,800 under section 7(2)(ii). The Income-tax Appellate Tribunal went further, allowing the entire entertainment allowance to be deducted. However, the revenue contended that the entertainment allowance was not deductible as the assessee had not received it before April 1, 1955, leading to the reference to the High Court.
The judgment highlighted the legislative changes brought about by the Finance Act, 1955, which excluded entertainment allowance from section 4(3)(vi) and introduced a new provision under section 7(2)(ii) for the deduction of entertainment allowance from salary. The court emphasized that only entertainment allowances received before April 1, 1955, were eligible for deduction under section 7(2)(ii), subject to a limit of one-fifth of the salary or Rs. 7,500, whichever is less. The legislative intent was to restrict the deduction of entertainment allowances received after April 1, 1955, and limit the extent of deduction for allowances received before that date.
The court's interpretation focused on the language of section 7(2)(ii), emphasizing that only entertainment allowances received before April 1, 1955, were qualified for deduction, subject to the specified limits. The judgment noted a drafting flaw in the clause but affirmed that entertainment allowances not received before the specified date were not eligible for deduction. The court answered the referred question in favor of the revenue, concluding that the entertainment allowance in question was not deductible under section 7(2)(ii) of the Act. The judgment provided a detailed analysis of the legislative history and the specific provisions governing the deductibility of entertainment allowances under the Income-tax Act, 1922.
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1970 (12) TMI 7
Trust - building of residential quarters for workmen in general - but trustees had discretion to spend the entire income for the benefit of the workmen belonging to a particular company - whether object of the trust cannot be said to be a charitable object
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1970 (12) TMI 6
Petitioner preferred an appeal before the AAC - in the meantime ITO forwarded a certificate to the Tax Recovery Officer - held that when the assessee had already been granted a stay without imposing any condition, the Income-tax Officer cannot exercise his discretion any further unless there is anything in the conduct of the assessee which disentitled him to further stay till the disposal of appeal
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1970 (12) TMI 5
Issues Involved:
1. Assessability of dividend income in the assessment year 1958-59.
2. Valuation of dividend received in specie.
Detailed Analysis:
1. Assessability of Dividend Income in the Assessment Year 1958-59:
The primary issue was whether the income from dividend should be assessed during the assessment year 1958-59. The assessee, a general reinsurance company, received dividends in the form of shares from two sugar companies, M/s. Raza Sugar Company Ltd. and M/s. Buland Sugar Company Ltd., declared on January 16, 1952. The dividend was to be paid in specie (shares of Dalmia Cement Ltd.). However, due to objections from some shareholders, an injunction was issued on February 22, 1952, restraining the distribution of the dividend in specie. This issue was resolved by a compromise on January 18, 1957, and the assessee received the shares.
The Tribunal held that the income from the dividend was assessable in the assessment year 1953-54, not in 1958-59, relying on the Supreme Court's decision in J. Dalmia v. Commissioner of Income-tax. The court agreed, stating that the dividend was declared and made unconditionally available to the shareholders on January 16, 1952. The companies had done all that was required to distribute the dividend, and the trustees were empowered to distribute the shares. The injunction did not negate the fact that the dividend had been declared and made available. Thus, the income from the dividend was assessable in the assessment year 1953-54.
2. Valuation of Dividend Received in Specie:
The Income-tax Officer valued the dividend in specie at the market rate on the relevant date, relying on the Supreme Court's decision in Kantilal Manilal v. Commissioner of Income-tax. The assessee objected to this valuation method. The Appellate Assistant Commissioner upheld the Income-tax Officer's decision, confirming that the specie had to be valued at the market rate when received. The Tribunal did not specifically address this valuation issue, as it focused on the assessment year.
The court affirmed that the market value of the specie should be adopted for computing the actual dividend income, in line with the Supreme Court's ruling. However, since the dividend was unconditionally available in 1952, it should be taxed in the assessment year 1953-54, not 1958-59.
Conclusion:
The court concluded that the income from the dividend was not assessable during the assessment year 1958-59 but was assessable in the assessment year 1953-54. The valuation of the dividend in specie should be based on the market rate at the time it was received. The question was answered in favor of the assessee and against the revenue, with no order as to costs.
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1970 (12) TMI 4
Issues:
- Whether the tax payable on concealed income can be included in the total wealth of the assessee for the assessment year 1960-61?
- Whether the assessee is entitled to deduction of income-tax payable on the concealed income included in his wealth for the assessment year under consideration?
Analysis:
The judgment pertains to Wealth-tax References where the assessees, partners in the same firms, were found to have undervalued their stocks and concealed income by introducing fictitious hundi loans. The key issue was whether the tax payable on concealed income should be included in the total wealth of the assessee for the assessment year 1960-61. The Wealth-tax Officer initially disallowed the deduction of tax payable on concealed income, considering it not a debt owed by the assessee. The Appellate Assistant Commissioner upheld this decision. However, the Income-tax Appellate Tribunal allowed the deduction based on the Supreme Court's decision in Kesoram Industries case, emphasizing that the liability to pay tax arises on true income, whether disclosed or undisclosed.
In the Kesoram Industries case, the Supreme Court had held that the liability to pay income tax is a present liability, even if it becomes payable after quantification, and is deductible in computing the net wealth. The Tribunal in the present case followed this precedent, stating that the principles apply irrespective of the intention of the assessee on the relevant valuation date. The liability to pay tax is based on the earning of income, not on the intention to disclose or conceal it. Therefore, the assessee was entitled to deduction of tax payable on concealed income assessed for the relevant year.
The Commissioner of Wealth-tax challenged the Tribunal's decision, arguing that the liability to tax on undisclosed income differs from disclosed income. However, the court disagreed, citing the Supreme Court's decisions in Kesoram Industries and H. H. Setu Parvati Bayi cases. These cases established that wealth-tax liability crystallizes on the valuation date and should be deducted from the estimated value of assets. The court reiterated that the tax liability arises on the last day of the accounting year and should be treated as a debt owed by the assessee.
The court further analyzed Section 2(m) of the Wealth-tax Act, which defines 'net wealth' and includes tax liability as a debt to be deducted from the assessee's wealth. The tax liability in this case did not fall under the exceptions provided in Section 2(m), reinforcing the assessee's entitlement to the deduction. Consequently, the court answered the referred question in favor of the assessee, emphasizing the importance of deducting tax liabilities to arrive at the net wealth.
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1970 (12) TMI 3
Issues:
Calculation of depreciation on a motor truck for the assessment year 1962-63 based on the cost price of the truck.
Analysis:
The judgment pertains to a reference under section 256 of the Income-tax Act, 1961, involving the calculation of depreciation on a motor truck purchased by the assessee for Rs. 30,000 in May 1958. The Income-tax Officer estimated the net income from the truck at Rs. 2,000 for the assessment year 1962-63 and calculated the written down value at Rs. 13,360 with depreciation at 25%. The Appellate Assistant Commissioner did not accept the assessee's claim for depreciation based on the cost price of the truck, but the Appellate Tribunal ruled in favor of the assessee, allowing depreciation on the cost price of Rs. 30,000.
The key question referred to the court was whether depreciation on the motor truck should be calculated on the cost price of Rs. 30,000 or the lower amount of Rs. 13,360. The interpretation of "written down value" under section 43(6)(b) of the Act was crucial in determining the depreciation calculation. The court analyzed the provision and the requirement of actual depreciation allowed to the assessee in previous years under the Act or the Indian Income-tax Act, 1922.
Referring to the decision in Vankadam Lakshminarayana v. Commissioner of Income-tax, the court emphasized that written down value necessitates actual depreciation allowed, not any notional allowance. Citing Commissioner of Income-tax v. Dharampur Leather Co. Ltd., the court reiterated that notional allowances are not considered in determining depreciation. The court found that no actual depreciation was allowed in the earlier assessment years, and notional allowances were considered. As a result, the written down value for the assessment year 1962-63 had to be accepted at the cost price of Rs. 30,000.
In conclusion, the court ruled in favor of the assessee, directing the calculation of depreciation on the motor truck at Rs. 30,000. The Commissioner of Income-tax, U.P., was ordered to pay the assessee Rs. 200 as costs for the reference.
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1970 (12) TMI 2
Issues Involved:
1. Validity of search and seizure under section 132(1) of the Income-tax Act, 1961.
2. Retention period of account books and documents under section 132(8) of the Income-tax Act, 1961.
3. Application of retrospective amendments to section 132 of the Income-tax Act, 1961.
4. Impact of interim orders on the retention period of seized documents.
Issue-wise Detailed Analysis:
1. Validity of Search and Seizure under Section 132(1) of the Income-tax Act, 1961:
The petitioners challenged the validity of the search and seizure of their account books and other documents conducted by the income-tax department on June 7 and 8, 1963. Initially, the High Court allowed the petitions on the grounds of abuse of power and mala fide action by the income-tax authorities. However, the Supreme Court remanded the case, emphasizing that the allegations had been denied by the income-tax authorities and that evidence should be taken viva voce if the High Court deemed it necessary.
2. Retention Period of Account Books and Documents under Section 132(8) of the Income-tax Act, 1961:
The primary issue on remand was whether the income-tax department could retain the seized account books and documents beyond the statutory period as per section 132(8) of the Income-tax Act, 1961. The court noted that originally, there was no provision limiting the retention period. However, subsequent amendments introduced by the Finance Act of 1964 and the Income-tax (Amendment) Act of 1965 imposed a retention limit of 180 days unless extended with the Commissioner's approval.
3. Application of Retrospective Amendments to Section 132 of the Income-tax Act, 1961:
The court examined whether the amendments to section 132, introduced by the Finance Act of 1964 and the Income-tax (Amendment) Act of 1965, applied retrospectively to searches conducted before their enactment. Section 6 of the Amendment Act, 1965, was identified as a curative or validating provision, ensuring that all searches made before its commencement would be deemed conducted under the amended section 132(1). Thus, the searches in June 1963 were to be treated as if conducted under the amended provisions, thereby attracting the retention limits specified in section 132(8).
4. Impact of Interim Orders on the Retention Period of Seized Documents:
The court addressed the contention that the retention period should exclude the duration of interim orders issued by the Supreme Court and the High Court, which restricted the income-tax department's access to the documents. The court clarified that section 132(8) focused solely on the retention period, not on the opportunity to examine the documents. The Income-tax Officer retained custody of the documents until they were deposited with the Supreme Court on May 9, 1964. Despite the interim orders, the officer had the opportunity to seek the Commissioner's approval for extended retention post-July 15, 1969, but failed to do so.
Conclusion:
The court concluded that the petitioners were entitled to the return of their account books and documents, as the income-tax department had not obtained the necessary approval for their extended retention. The petitions were allowed, and the respondents were directed to return the seized documents within six weeks. The decision was influenced by subsequent legal enactments, and no order as to costs was made.
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1970 (12) TMI 1
Whether the income from the letting of the building by the assessee to the Export Promotion Council is assessable under the head 'Income from house property 'and not under the head " Income from other sources " - held that question referred is answered in the affirmative and against the assessee
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9911796707
