|
Advanced Search Options
Case Laws
Showing 61 to 80 of 101 Records
-
1973 (4) TMI 42
Issues Involved:
1. Taxability of remittances made by a "resident but not ordinarily resident" individual.
2. Determination of profits for tax purposes.
3. Applicability of Section 4(1)(b)(ii) and Section 4(1)(b)(iii) of the Indian Income-tax Act, 1922.
4. Interpretation of legislative intent and statutory provisions.
Issue-wise Detailed Analysis:
1. Taxability of Remittances Made by a "Resident but not Ordinarily Resident" Individual:
The assessee, a "resident but not ordinarily resident," carried on business in real properties in Penang and made several remittances to taxable territories during the year. The Income-tax Officer held that the entire sum brought into taxable territories was taxable under the second proviso to Section 4(1) of the Indian Income-tax Act, 1922. The Appellate Assistant Commissioner initially sided with the assessee, stating no surplus was available for remittance if the deductions claimed were allowed. However, the Tribunal overruled this, stating that unless it is shown that the remittances were from borrowed monies, the presumption is that they were from available profits.
2. Determination of Profits for Tax Purposes:
The assessee argued that profits from the sale of estates could only be ascertained after all estates were sold. This contention was rejected, as it would imply that income assessment could only be made after the business was wound up, contrary to the Income-tax Act provisions. The revenue is concerned with income, gains, or profits earned during the year of account, regardless of whether all assets have been sold.
3. Applicability of Section 4(1)(b)(ii) and Section 4(1)(b)(iii) of the Indian Income-tax Act, 1922:
The assessee contended that only remittances from profits accrued prior to the accounting year are taxable under Section 4(1)(b)(iii). The revenue argued that for a "resident but not ordinarily resident," income accruing or arising outside taxable territories is assessable if brought into or received in taxable territories during the year under Section 4(1)(b)(ii) read with the second proviso. The court noted that Section 4(1)(b)(ii) read with the second proviso could bring such remittances to charge, even if they cannot be taxed under Section 4(1)(b)(iii).
4. Interpretation of Legislative Intent and Statutory Provisions:
The court examined various judgments, including those from the Bombay High Court, which held that remittances of profits are possible only when profits have been ascertained and are available for remittance. The court also considered the legislative history and amendments to Section 4(1). It concluded that Section 4(1)(b)(ii) provides for the levy of tax on income accrued outside taxable territories during the year of account, while Section 4(1)(b)(iii) deals with past profits. The second proviso to Section 4(1) imposes conditions for taxing income accrued outside taxable territories for a "resident but not ordinarily resident."
Conclusion:
The court upheld the Tribunal's view that Section 4(1)(b)(ii) read with the second proviso could bring the remittances to charge, provided there were available profits at the time of remittances. The reference was answered in the affirmative and against the assessee, with costs awarded to the revenue.
-
1973 (4) TMI 41
Issues Involved:
1. Registration of the firm under Section 26A of the Income-tax Act, 1922.
2. The genuineness and validity of the partnership firm.
3. The interpretation of evidence by the Appellate Tribunal.
4. The necessity of severance of joint status by partitioning the assets of the Hindu undivided families.
Issue-wise Detailed Analysis:
1. Registration of the Firm under Section 26A of the Income-tax Act, 1922:
The primary issue was whether the firm, M/s. S. S. Ratanchand Darbarilal, Satna, was entitled to registration under Section 26A of the Income-tax Act, 1922, for the assessment year 1958-59. Both the Katni and Satna firms separately applied for registration, which was initially refused by the Income-tax Officer and upheld by the Appellate Assistant Commissioner. The Tribunal, however, accepted the assessee's contention and directed registration. The High Court ultimately concluded that the firm was not entitled to registration, stating that the instrument of partnership dated November 1, 1956, did not constitute a genuine and valid firm.
2. The Genuineness and Validity of the Partnership Firm:
The Income-tax Officer and the Appellate Assistant Commissioner found that the firm was not genuine and was merely a branch of the Katni firm camouflaged as a separate entity for tax purposes. The Tribunal's decision was based on the view that the business at Satna was effectively separated from Katni and constituted a new firm. However, the High Court found that the business at Satna was never discontinued, and the partnership deed was not genuine. The Court highlighted discrepancies such as the interpolation of entries in the account books and the lack of communication about the new partnership to the bank.
3. The Interpretation of Evidence by the Appellate Tribunal:
The Tribunal had concluded that the Satna business should be treated as an independent unit based on the evidence presented. The High Court, however, found that the Tribunal's decision was not supported by the evidence on record. The Court emphasized that the Tribunal had considered material that was partly relevant and partly irrelevant, leading to a conclusion that was inconsistent with the evidence. The Tribunal's findings were deemed to be based on conjectures and surmises.
4. The Necessity of Severance of Joint Status by Partitioning the Assets of the Hindu Undivided Families:
The High Court addressed whether the members of the two Hindu undivided families could enter into a partnership without effecting a partial partition of their respective Hindu undivided families. The Court held that such a partnership was not permissible under the law. The members of a Hindu undivided family cannot simultaneously have an interest in the joint family business as coparceners and as partners in their individual capacity. The Court cited various precedents, including the principles laid down in Firm Bhagat Ram Mohanlal v. Commissioner of Income-tax, to support this view.
Conclusion:
The High Court concluded that the firm, M/s. S. S. Ratanchand Darbarilal, Satna, was not entitled to registration under Section 26A of the Income-tax Act, 1922. The Appellate Tribunal's interpretation of the evidence was flawed, and the partnership deed was not genuine or valid. The members of the two Hindu undivided families could not be partners without first effecting a partition of the family assets. The Tribunal's decision to exclude the profits of the Satna business from the total income of the Katni firm was also incorrect. The questions referred were answered in favor of the revenue, and the Commissioner of Income-tax was awarded costs.
-
1973 (4) TMI 40
Issues Involved:
1. Whether the transactions resulting in losses for the assessment years 1960-61 and 1961-62 were speculative transactions.
2. Whether these transactions were saved from being treated as speculative by clause (a) of the third proviso to section 24(1) of the Indian Income-tax Act, 1922.
Detailed Analysis:
1. Speculative Transactions:
The primary issue was whether the transactions resulting in losses of Rs. 2,04,746 for the assessment year 1960-61 and Rs. 17,000 for the assessment year 1961-62 were speculative in nature. The Income-tax Officer and the Appellate Assistant Commissioner both concluded that these losses were from speculative transactions as defined in Explanation 2 to section 24(1) of the Indian Income-tax Act, 1922. The Tribunal, however, upheld the assessee's contention that the transactions were part of its merchanting business to guard against future price fluctuations and thus should not be considered speculative under sub-clause (a) of the third proviso to section 24(1).
2. Applicability of Clause (a) of the Third Proviso to Section 24(1):
The court examined whether the transactions, admittedly speculative under Explanation 2, fell within the scope of clause (a) of the third proviso to section 24(1). The relevant provision states that a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods shall not be deemed speculative.
Nature of Transactions:
The court analyzed the nature of the transactions for both assessment years. For 1960-61, the losses included Rs. 6,492 from cloth business and Rs. 1,98,254 from yarn business. The Rs. 6,492 loss arose from transactions with two parties, while Rs. 1,98,254 included Rs. 45,754 from price differences (vilaivasi) and Rs. 1,52,500 from transactions without actual delivery of yarn. For 1961-62, the Rs. 17,000 loss was from price differences.
Assessment of Clause (a) Applicability:
The court noted that the assessee conceded the speculative nature of the transactions and had to establish that they were protected by clause (a) of the third proviso. The assessee failed to provide details for the Rs. 45,754 and Rs. 17,000 losses, making it impossible to determine if these transactions were covered by clause (a). Consequently, these sums were treated as speculative losses.
For the remaining amounts, the court considered specific transactions in cloth and yarn business. In both cases, the assessee entered into initial purchase contracts, followed by sale contracts, and later repurchase contracts, ultimately settling the contracts by paying the price difference without actual delivery.
Interpretation of Clause (a):
The court interpreted clause (a) to cover only purchase contracts entered into to guard against loss through future price fluctuations in respect of actual delivery contracts. It rejected the Tribunal's broader interpretation that included both purchase and sale transactions. The court emphasized that the contracts must be specifically intended to guard against loss in respect of actual delivery contracts of the same goods.
Conclusion:
The court concluded that the assessee did not establish that the transactions were covered by clause (a) of the third proviso to section 24(1). The transactions were not intended to guard against future loss but to secure higher profits due to rising prices. Therefore, the reference was answered in the negative, against the assessee, and the revenue was awarded costs.
Judgment:
The reference was answered in the negative, against the assessee. The revenue was awarded costs of Rs. 250.
-
1973 (4) TMI 39
Issues:
1. Reopening of assessment under section 34(1)(b) of the Indian Income-tax Act, 1922.
2. Allowability of the sum of Rs. 13,157 claimed by the assessee under the head 'Rights, Concessions and Privileges' under section 10(2)(xv) of the Indian Income-tax Act, 1922.
Analysis:
Reopening of Assessment (Issue 1):
The case involved the reassessment of an assessee-company for the assessment year 1959-60 under section 34(1)(b) of the Income-tax Act. The Income-tax Officer reopened the assessment to consider certain items of expenditure, including Rs. 13,157 claimed under 'Rights, Concessions, Facilities, and Privileges.' The Appellate Assistant Commissioner upheld the reopening, stating that the Income-tax Officer had reason to believe that the items were not considered in the original assessment. However, the Tribunal held that the Income-tax Officer was justified in reopening the assessment. The High Court emphasized that for reopening under section 34(1)(b), there must be new information justifying the reassessment, not merely a change of opinion. The court referred to precedents stating that the belief must be based on reasonable grounds, not mere suspicion. The court found no material to support the Income-tax Officer's reason to believe that income had escaped assessment, ultimately ruling against the revenue on this issue.
Allowability of Expenditure (Issue 2):
The second issue revolved around the allowability of the Rs. 13,157 expenditure claimed by the assessee. The Income-tax Officer disallowed this amount, considering it of a capital nature. The controversy arose from the reopening of the assessment under section 34(1)(b) and the subsequent disallowance of the claimed expenditure. The High Court highlighted that the reopening was based on a change of opinion rather than new information, which is impermissible under the law. The court emphasized that for a valid reopening under section 34(1)(b), there must be post-assessment information justifying the reassessment, not a reevaluation of existing facts. As the reopening was deemed unjustified, the court did not delve into the specific allowability of the expenditure under section 10(2)(xv), rendering the second issue academic.
In conclusion, the High Court ruled against the revenue on both issues, emphasizing the importance of new information and reasonable grounds for reassessment under section 34(1)(b) of the Income-tax Act. The judgment underscored the legal principles governing the reopening of assessments and the necessity of valid reasons to believe that income had escaped assessment.
-
1973 (4) TMI 38
Issues:
Assessment based on ex parte best judgment, reliance on Investigation Commission's findings, arbitrary and conjectural estimates, independent judgment by Income-tax Officer, appeal before Appellate Assistant Commissioner, appeal before Tribunal, dismissal of appeal by Tribunal, justification of using Investigation Commission's material.
Analysis:
The judgment pertains to reference applications under section 66(2) of the Indian Income-tax Act, 1922, involving an ex parte best judgment assessment against the assessee. The Income-tax Officer initiated proceedings under section 34(1A) due to the assessee's failure to file a return or comply with the notice under section 22(4) of the Act. The Officer conducted an assessment based on undisclosed income from the sale of cloth and yarn, estimating the assessee's concealed income at Rs. 37 lakhs. The assessee appealed before the Appellate Assistant Commissioner, who reduced the estimate relying on the Investigation Commission's findings. Subsequently, an appeal was filed before the Tribunal challenging the Officer's estimate. The Tribunal upheld the reduction made by the Appellate Assistant Commissioner, emphasizing that the Officer's judgment was not solely based on the Investigation Commission's findings but also on independent assessment and various circumstances. The Tribunal dismissed the appeal, stating that the estimate was supported by relevant materials and not arbitrary. The Tribunal rejected the contention that the estimates were arbitrary and conjectural, emphasizing the Officer's consideration of multiple factors beyond the Commission's findings. The judgment highlights the importance of independent judgment by the Income-tax Officer and the admissibility of material collected by the Investigation Commission, even after the Commission was declared ultra vires by the Supreme Court. The Tribunal's decision was based on a thorough analysis of the facts and legal principles, leading to the dismissal of the appeals with costs assessed at Rs. 100.
-
1973 (4) TMI 37
Issues:
- Computation of capital under the Super Profits Tax Act
- Treatment of provision for additional cane price as a reserve forming part of the assessee's capital
- Interpretation of the term "reserve" in the context of tax assessment
Analysis:
The judgment pertains to a reference under section 256(1) of the Income-tax Act, 1961, involving the computation of capital for a limited company under the Super Profits Tax Act, 1963. The assessee claimed a sum of Rs. 8,16,000 as its capital for determining the standard deduction, based on provisions related to sugarcane pricing under the Sugarcane Control Order, 1955. The company set apart sums in its accounts to meet potential liabilities but did not make payments to cane growers, leading to a dispute over the deduction claimed under the Income-tax Act.
The Income-tax Officer and the Appellate Assistant Commissioner did not accept the claim, but the Income-tax Appellate Tribunal allowed it, considering the sum as part of the company's capital base. The central issue revolved around whether the provision for additional cane price could be treated as a reserve forming part of the assessee's capital for super profits tax assessment. The Second Schedule of the Super Profits Tax Act defines rules for computing a company's capital, emphasizing that the amount should not have been allowed as a deduction for income tax purposes and should represent a reserve.
The court analyzed the term "reserve" based on accounting principles and legal precedents. It highlighted that a provision is set aside for existing liabilities, while a reserve is earmarked for future obligations. Referring to Commissioner of Income-tax v. British India Corporation and Commissioner of Income-tax v. Standard Vacuum Oil Co., the court emphasized that a reserve is something specifically kept apart for future use or a specific purpose. In this case, the Tribunal found that the liability for extra sugar price was unreal, and the amount set aside was not a current liability but a provision for a future liability, thus qualifying as a reserve.
Ultimately, the court upheld the Tribunal's decision, ruling in favor of the assessee and against the department. It concluded that the provision for additional cane price amounting to Rs. 8,16,000 was rightly treated as a reserve forming part of the assessee's capital for super profits tax assessment. The judgment underscores the importance of accurately defining reserves in tax assessments and aligning them with accounting principles and legal interpretations to determine a company's capital for tax purposes.
-
1973 (4) TMI 36
Issues Involved:
1. Exigibility of penalty for failure to file a return of income.
2. Validity of service of notice under section 22(2) of the Indian Income-tax Act, 1922.
3. Continuation of proceedings under the new Income-tax Act, 1961, after the repeal of the old Act.
Detailed Analysis:
1. Exigibility of Penalty for Failure to File a Return of Income:
The primary issue referred to the court was whether the penalty was exigible under the facts and circumstances of the case. The Tribunal found that the assessee was in default for not filing a return despite service of notice under section 22(2) of the old Act. The Tribunal upheld the penalty imposed by the Income-tax Officer, which was later reduced by the Appellate Assistant Commissioner. The court, however, concluded that the penalty was not exigible because the service of the notice was not legally valid.
2. Validity of Service of Notice Under Section 22(2) of the Indian Income-tax Act, 1922:
The Tribunal found that the notice for the assessment year 1959-60 was served on an employee, D. B. Thappa, and not on any partner or the general manager of the assessee-firm. The court held that the service of the notice on an unauthorized employee did not constitute valid service. The court emphasized that penalty proceedings are quasi-criminal in nature and require strict compliance with statutory requirements. The court cited section 63 of the old Act, which mandates that notices must be served on a partner, manager, or an adult male member of the firm. Therefore, the service of notice on D. B. Thappa was deemed invalid.
3. Continuation of Proceedings Under the New Income-tax Act, 1961, After the Repeal of the Old Act:
The court addressed the contention that the proceedings under the old Act did not survive after its repeal by the new Act. The court referred to section 297(2)(g) of the new Act, which allows for the continuation of penalty proceedings for assessments completed after April 1, 1962. Since the ex parte assessment order was passed on November 20, 1962, the court held that the proceedings could validly continue under the new Act without requiring a fresh notice. The court found no infirmity in the continuation of the proceedings under the new Act.
Conclusion:
The court concluded that the service of notice under section 22(2) of the old Act was not legally valid, and therefore, the penalty under section 271(1)(a) of the new Act could not be sustained. The reference was answered in the negative, holding that the penalty was not exigible. Each party was ordered to bear its own costs.
-
1973 (4) TMI 35
Failure to maintain proper method of accounting and quantitative details - assessments were made on the basis of estimate - " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not guilty of fraud or gross or wilful neglect within the meaning of the Explanation to section 271(1)(c) of the Act ? " - In the result, in none of the six cases any question of law arises be cause whether the presumption raised by the Explanation to section 271(1)(c) has been rebutted or not is essentially a question of fact and we decline to direct the Tribunal to refer any, question to us
-
1973 (4) TMI 34
Tamil Nadu Agricultural Income Tax Act, 1955 - assessee had income from tea and coffee - assessee in this case claimed a sum of Rs. 2,000 spent as stock exchange listing fee, as a deduction under the provisions of section 5(e) of the Madras Agricultural Income-tax Act
-
1973 (4) TMI 33
Amounts received by the assessee was compensation for the destruction of capital asset, i.e., the right to levy excise duty in his jagir - Whether, Tribunal was right in holding that the sum of Rs. 62,204 received by the assessee in 1958 was a capital receipt not liable to tax ? " - The answer to the question, therefore, is that on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right, in holding that the sum of Rs. 62,204 received by the assessee in 1958 was a capital receipt not liable to tax
-
1973 (4) TMI 32
Interest paid on the loans nad litigation expenses - " Whether, on the facts and in the circumstances of the case, the assessee was entitled to the deduction of interest and litigation expenses from the share of the profit derived by him from Niranjan Lal Bhargava & Co. ? " - Question answered in the affirmative
-
1973 (4) TMI 31
In the year 1956-57, which was the last year of the business of manufacture of soap and oil, the Income-tax Officer had worked out depreciation, which could not be fully set off against the profits, and, as such, a part of the depreciation was left unabsorbed. In the assessment year in dispute the assessee claimed that the unabsorbed depreciation to the extent that it pertained to the old machinery utilised in the new business should be brought forward and set off against the profits of the new business - Whether same business should be carried on for the purposes of carry forward and set-off unabsorbed depreciation and whether depreciable assets of the original business should be utilised in the new business
-
1973 (4) TMI 30
Initiation of penalty - validity – When the satisfaction as to default was recorded in the assessment order whether notice can be validly issued later on =- Whether issue of penalty notice under the old act when the new act has come into force is valid
-
1973 (4) TMI 29
" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the word ' month ' occurring in section 271(1)(a)(i) referred to English calendar month? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the penalty should be calculated with reference to the tax found due on the date of the completion of the assessment after deducting, inter alia, taxes paid by the assessee as advance tax and tax as per provisional assessment ? "We, therefore, answer the first question in the negative and in favour of the Commissioner, and the second question in the affirmative and in favour of the assessee
-
1973 (4) TMI 28
Joint family was converted into limited company with erstwhile members having equal shares. The eldest son was appointed as the managing director. Share income from company was assessed as HUF's income, but the remuneration as managing director was assessed as his individual income. Subsequently, decision of High Court overruling the decision on which assessment was based was received. Whether this decision can be treated as an information for reopening the assessment
-
1973 (4) TMI 27
Gift Tax Act, 1958 - father sets apart properties for family members - " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the transaction evidenced by the deed dated May 7, 1963, was not a gift and that there is no liability to gift-tax ? "
-
1973 (4) TMI 26
This reference raises a short question of construction of section 21, sub-section (1), of the Wealth-tax Act, 1957 - Whether the trust property standing in the name of beneficiary is assessable in the hands of the trustee - test for this purpose is to see whether the asset forms part of the trust property
-
1973 (4) TMI 25
One Palaniappa Mudaliar owned considerable movable and immovable properties. He died on June 14, 1937, leaving behind him his only son Pichai alias Shanmugasundaram. The deceased had executed a will on 4th March, 1936 - Whether an executive-assessee is liable to wealth-tax in respect of the property held by him under will - We have already expressed our view that section 3 as such imposes charge only on those who own the wealth and not on those who merely possess the wealth for specified purposes without any personal or beneficial interest either in the properties or in their income. We are, therefore, clearly of the view that before the introduction of section 19A executors cannot be brought to charge under section 3 of the Wealth-tax Act in respect of the properties held by them as per the directions in the will except as provided under section 19.
-
1973 (4) TMI 24
Issues Involved:
1. Whether the right or interest of the assessee in the annuity policy is exempt from wealth-tax under Section 5(1)(vi) of the Wealth-tax Act, 1957.
2. Interpretation of the terms "any policy of insurance" under Section 5(1)(vi) of the Wealth-tax Act.
3. Applicability of the Supreme Court decision in Chandulal Harjiwandas v. Commissioner of Income-tax.
Detailed Analysis:
1. Exemption under Section 5(1)(vi) of the Wealth-tax Act:
The primary issue was whether the right or interest of the assessees in their respective annuity policies was exempt from wealth-tax under Section 5(1)(vi) of the Wealth-tax Act, 1957. The Wealth-tax Officer had included the value of the annuity policies in the assessees' net wealth, but the Appellate Assistant Commissioner allowed the exemption, which was upheld by the Income-tax Appellate Tribunal. The High Court had to determine if the annuity policies fell within the ambit of "any policy of insurance" under Section 5(1)(vi).
2. Interpretation of "Any Policy of Insurance":
The court examined the definition of "assets" under Section 2(e) of the Wealth-tax Act and noted that the policies in question were assets as they did not preclude commutation into a lump sum. The court then analyzed Section 5(1)(vi), which exempts the right or interest in any policy of insurance before the moneys become due and payable. The court found that the term "any policy of insurance" was not specifically defined in the Wealth-tax Act but referred to the broader definition of "life insurance business" under Section 2(11) of the Insurance Act, 1938, which includes annuities upon human life.
The court rejected the revenue's argument that the lump sum payment for the annuity policies disqualified them from being considered as insurance policies. The court emphasized that the legislative intent behind the exemption was to encourage investments in insurance policies, which contribute to national wealth and public investments.
3. Applicability of Supreme Court Decision:
The court considered the Supreme Court decision in Chandulal Harjiwandas v. Commissioner of Income-tax, which dealt with the exemption of life insurance policies under Section 15(1) of the Income-tax Act, 1922. Although the language of Section 15(1) of the Income-tax Act differed from Section 5(1)(vi) of the Wealth-tax Act, the court noted that the Supreme Court's interpretation that the main purpose of the policy should be considered was relevant. The court concluded that the annuity policies in question were indeed policies of insurance and thus exempt under Section 5(1)(vi) of the Wealth-tax Act.
Conclusion:
The court held that the annuity policies were covered by the exemption under Section 5(1)(vi) of the Wealth-tax Act. However, only the amounts that had become due and payable during the assessment years could be subjected to wealth-tax. Since the specific amounts due and payable were not clear from the records, the wealth-tax authorities were directed to calculate the wealth-tax accordingly, if permissible by law. The questions referred to the court were answered in the affirmative and in favor of the assessees, with no order as to costs.
Separate Judgments:
Both judges concurred with the judgment, and there were no separate judgments delivered.
-
1973 (4) TMI 23
Allowability u/s 10(2)(x) - Money borrowed - assessee borrowed for business purposes and agreed to pay 12 1/2 % of the profits instead of interest - When a claim for allowance under s. 10(2)(xv) is made, the department has to decide whether the expenditure was incurred voluntarily on the grounds of commercial expediency - reasonableness of these expenditures is to be from the point of view of the businessman and not that of the revenue - Whether the commission paid to employee on sale of trucks in addition to salary is deductible - hold that, on the facts and circumstances of the case, the Appellate Tribunal was not justified in disallowing commission on sale to the employee, Parikh, to the extent of Rs. 7,145 ; the whole of the amount was allowable under section 10(2)(x) of the Act.
|
9911796707
Advanced Search 
