|
Advanced Search Options
Case Laws
Showing 81 to 93 of 93 Records
-
1962 (2) TMI 24
Issues:
1. Whether the respondent is not liable to be placed on the list of contributories for the amount claimed against him?
2. Whether the claim of the official liquidator is barred by time?
Analysis:
Issue 1: Liability of Contributories
The case involves the settlement of the list of contributories of a company in liquidation under section 184 of the Indian Companies Act, 1913. The official liquidator contended that out of 54 contributories, 32 had paid the share money in full, while the remaining 22 had only paid 10% and were liable for the balance. The principal objection raised was that the objectors had paid the entire share money due from them and were not liable. The official liquidator argued that some shareholders had fraudulently manipulated accounts to appear fully paid. The court framed issues to decide the liability of the contributories based on the objections filed.
Issue 2: Limitation of Claims
Regarding the limitation of claims, the respondents argued that the calls made by directors were payable at intervals, and payments were made before due dates. The respondents relied on Article 112 of the Limitation Act, stating that the period for a suit for call realization is three years from the due date. They contended that the period of limitation started when the final call fell due, and any fraud should have been known by the directors by then. The official liquidator argued that the statutory liability under section 156 of the Companies Act is not subject to contract law limitations. The court held that the liability to contribute under section 156 is statutory and not contractual, allowing recovery of unpaid calls even if barred by limitation. The court rejected the respondents' limitation argument based on fraud and upheld the official liquidator's right to call upon contributories for the deficiency in call money.
In conclusion, the court settled the list of contributories, holding them liable for the amounts noted against each respondent based on the official liquidator's claim. The judgment clarified the statutory nature of liability under the Companies Act, allowing recovery irrespective of contractual limitations, and rejected the limitation defense based on fraud.
-
1962 (2) TMI 12
Whether in an appeal filed by an assessee, the Appellate Assistant Commissioner can find a new source of income not considered by the Income-tax Officer and assess it under his powers granted by section 31 of the Income-tax Act ?
Held that:- In view of the provisions of sections 34 and 33B by which escaped income can be brought to tax, there is reason to think that the view expressed uniformly about the limits of the powers of the Appellate Assistant Commissioner to enhance the assessment has been accepted by the legislature as the true exposition of the words of the section. If it were not, one would expect that the legislature would have amended section 31 and specified the other intention in express words. The Income-tax Act was amended several times in the last 37 years, but no amendment of section 31(3) was undertaken to nullify the rulings, to which we have referred. In view of this, we do not think that we should interpret section 31 differently from what has been accepted in India as its true import, particularly as that view is also reasonably possible.Appeal dismissed.
-
1962 (2) TMI 11
Whether in the facts and circumstances of the case, the assessee, namely, the Hindu undivided family, who is a partner in the partnership business of Hiralal Gulzarilal, is entitled to a deduction of ₹ 3,850 from the assessment of income-tax for the relevant year under section 10(2)(xv) of the Income-tax Act ?
Held that:- If the junior members of the coparcenary were serving the partnership, they were serving an entity, which was separate and distinct from the Hindu undivided family. If the coparcenary had no place in the partnership, any service to the partnership cannot be described as service to the Hindu undivided family, sufficient to attract the application of section 10(2)(xv) of the Income-tax Act, because it cannot be said to be wholly and exclusively for the Hindu undivided family. The answer to the question was rightly stated by the High Court in the negative. Appeal dismissed.
-
1962 (2) TMI 10
Whether High Court correct for granting certificates of fitness under article 133(1)(c)of the Constitution?
Held that:- the appeals have to be dismissed on a short ground which does not involve any consideration of the correctness of the construction adopted by the High Court of section 16(2) of the Income-tax Act.
The only persons who were entitled to be treated as shareholders to whom the provisions of sections 16(2) and 18(5) of the Income-tax Act were attracted were the three partners in whose names the forty shares stood registered, as detailed earlier. An error had therefore been committed by the Income-tax Officer in treating the registered firm as the owner of the shares in respect of the entire number of 40 shares. It was not this initial and fundamental error that was sought to be rectified by the proceedings under section 35 ; but the removal of an anomaly in that error which continued to be affirmed ; in other words the object of the proceedings under section 35 was to carry out to its logical conclusion the error which had been committed in the order of assessment dated October 12, 1955, passed after invoking the provisions of section 34. We consider the submission of learned counsel for the respondents that the Income-tax Officer had jurisdiction under section 35 to rectify errors but not to effect merely readjustments so as to avoid illogicalities in an error which is still permitted to continue is well founded. Appeal dismissed.
-
1962 (2) TMI 9
Issues:
- Appeal against the order of the Tribunal under section 33(4) of the Indian Income-tax Act after the High Court's dismissal of applications under section 66(2).
- Power of the Supreme Court to consider appeals against the Tribunal's order when the High Court's order is not appealed.
- Distinction between cases where no appeal is filed against the High Court's order and cases where appeals are filed against both the High Court and the Tribunal.
Analysis:
The Supreme Court addressed the issue of whether it had the power to consider appeals against the order of the Tribunal when the High Court's order was not appealed. The counsel for the assessees argued that the principle established in a previous case was not applicable in the current scenario where appeals were filed against both the High Court and the Tribunal. However, the Court found no distinction in principle between cases where no appeal was filed against the High Court's order and cases where appeals were filed against both the High Court and the Tribunal. The Court emphasized that no special or exceptional circumstances were presented in the case to warrant a departure from the established rule.
The Court further discussed the limitations on its jurisdiction under article 136, highlighting that it typically does not reevaluate the evidence on which the lower court or Tribunal based its decision. The legislature has entrusted the power of evidence appraisal to the taxing authorities, and their decision is generally considered final. The Court clarified that while it has the authority to review evidence in exceptional cases in the interest of justice, the current case did not present any such circumstances. Therefore, the Appeals filed by the assessees and the Commissioner against the Tribunal's order were dismissed for failing to establish a case for calling for a statement of the case from the Tribunal.
In conclusion, the Supreme Court dismissed the Appeals filed by the assessees and the Commissioner against the order of the Tribunal, emphasizing the importance of adhering to established legal principles and the limited circumstances under which the Court would reevaluate evidence. The Court's decision underscored the need for exceptional circumstances to warrant a departure from the general rule of not interfering with the decisions of the taxing authorities unless necessary in the interest of justice.
-
1962 (2) TMI 8
Whether the loss of ₹ 5,19,590 of the year 1948-49 is liable to be set off against the assessee's business income for the assessment years 1950-51 and 1951-52 ?
Whether the unabsorbed depreciation of the years 1948-49 and 1949-50 is liable to be set off against the income of the assessee for the assessment years 1950-51 and 1951-52 ?
Held that:- For determining the nature of the losses under consideration in the present appeals, the relevant year was 1948-49, the year in which the losses occurred and the High Court rightly took the view that for the application of sub-section (2) of section 24, the losses must be such losses as could have been set off under sub-section (1) of section 24. We agree with the view expressed by the High Court that the loss amounting to ₹ 5,19,590 was not such a loss as could have been set off either under sub-section (1) or sub-section (2) of section 24. Appeal dismissed.
-
1962 (2) TMI 7
Whether on the facts and in the circumstances of the case the Tribunal was justified in law in adding to the total income of the assessee the sum of ₹ 1,45,706 and/or ₹ 48,185 or any part thereof ?
Whether there was any material on record to support the finding that ₹ 1,45,706 and/or ₹ 48,185 or any part thereof represent the income of the assessee ?
Held that:- It was open to the Tribunal in appreciating the evidence to rely upon the statements made by Achaldas and Poonamchand before the Income-tax Officer and to disbelieve the statements made by them before the Appellate Assistant Commissioner.
The jurisdiction of the High Court under section 66 of the Income-tax Act is merely advisory. The High Court does not sit in appeal over the judgment of the income-tax authorities : it is not concerned to decide whether the conclusion of the Tribunal on appreciation of evidence is correct. There was apparently a mass of evidence on which the conclusion of the Appellate Tribunal could be founded and the question which fell to be determined by it was purely one of fact. It is true that a finding of fact which is not supported by any evidence or is unreasonable and perverse may be open to challenge on the ground that it is not supported by any material on the record, but, as we have already observed, there was material on which the Income-tax Tribunal could reasonably arrive at the conclusion which it did. The High Court was, therefore, right in recording the answers to the two questions submitted to it. Appeal dismissed.
-
1962 (2) TMI 6
Whether, the assessee's assessable profit on the sale of shares is the difference between the sale price and the cost price, or the difference between the sale price and the market price prevailing on April 1 1945 ?
Held that:- The approach of the High Court was correct and normally the commercial profits out of the transaction of sale of an article must be the difference between what the article cost the business and what it fetched on sale. So far as the business or trading activity was concerned, the market value of the shares as on April 1, 1945, was what it cost the business. We do not think that there is any question of a notional sale here. The High Court did not create any legal fiction of a sale when it took the market value as on April 1, 1945, as the proper figure for determining the actual profits made by the assessee. That the assessee later sold the shares in pursuance of a trading activity was not in dispute ; that sale was an actual sale and not a notional sale ; that actual sale resulted in some profits. To adopt the language of Lord Radcliffe, the only fair measure of assessing trading profits in such circumstances is to take the market value at one end and the actual sale proceeds at the other, the difference between the two being the profit or loss as the case may be. In a trading or commercial sense this seems to us to accord more with reality than with fiction. The answer given by the High Court to the question of law referred to it was correct. Appeal dismissed.
-
1962 (2) TMI 5
Issues:
1. Challenge to the order of confiscation of diamonds by the Collector of Customs under Section 167(8) of the Sea Customs Act.
2. Interpretation of Section 178A of the Sea Customs Act regarding the reasonable belief for invoking the provision.
3. Burden of proof on the petitioner to establish that the seized goods were not contraband.
Detailed Analysis:
The petitioner, a dealer in diamonds, filed a petition under Article 226 of the Constitution challenging the order of confiscation of 97 pieces of diamonds by the Collector of Customs. The petitioner claimed to be a broker who purchased diamonds from various dealers for resale. However, he failed to produce any vouchers or evidence to support his claim of legitimate purchase. The Customs officials intercepted the petitioner and his friend when the friend returned the diamonds after spotting the officials. Despite multiple opportunities, the petitioner could not produce any evidence of his alleged purchases or the sellers. The Collector of Customs issued a show cause notice, and the petitioner admitted to not having proper records to establish the legality of the diamonds.
The main contention raised by the petitioner's counsel was the lack of material to invoke Section 178A of the Sea Customs Act and shifting the burden of proof to the Department. The judgment emphasized the distinction between 'reasonable belief' and 'suspicion,' highlighting that a reasonable belief must be based on facts and circumstances, not mere conjecture. Referring to a Bombay High Court decision, the judgment explained that a belief requires a solid foundation, unlike a suspicion. The legislative intent behind requiring a 'reasonable belief' was to prevent harassment of innocent individuals by authorities.
The judgment agreed with the interpretation of 'reasonable belief' by the Bombay High Court and stressed that each case's facts and circumstances determine what constitutes a reasonable belief. It rejected the argument that a pre-existing information must be available to the seizing officer, stating that an officer can form a reasonable belief based on the interception and interrogation of the suspect. In this case, the conduct of the petitioner and his friend, along with their immediate statements, justified the customs officials' reasonable belief that the diamonds were smuggled goods. Consequently, Section 178A of the Act was deemed properly invoked, and the petitioner failed to prove the legitimacy of his diamond acquisitions.
Ultimately, the petition was dismissed, and costs were imposed on the petitioner, with the rule Nisi discharged.
-
1962 (2) TMI 4
Issues Involved:
1. Whether the provisions contained in Sections 29A and 29B of the Sea Customs Act are complementary or mutually exclusive.
2. Legality of converting assessments made under Section 29A into provisional assessments under Section 29B.
3. The finality and reassessment conditions of assessments made under Section 29A.
4. The conditions and applicability of provisional assessments under Section 29B.
5. The procedural and legal implications of the Customs Authorities' actions.
6. The appellant's conduct and its impact on the appeals.
Issue-wise Detailed Analysis:
1. Complementary or Mutually Exclusive Provisions:
The primary issue was whether Sections 29A and 29B of the Sea Customs Act are complementary or mutually exclusive. The court held that the provisions of Sections 29A and 29B are not complementary but mutually exclusive. Section 29A allows for assessment of duty prior to examination of goods based on the statements in the bill of entry, which becomes final unless proven untrue. Section 29B, on the other hand, deals with provisional assessments where further proof or tests are required before final assessment. The court emphasized that each section contemplates a distinct set of circumstances and procedures, and they cannot be interchangeably applied.
2. Legality of Converting Assessments:
The court found that converting assessments made under Section 29A into provisional assessments under Section 29B is not permitted by law. Section 29A assessments are final unless the statements in the bill of entry are proven false. Section 29B applies when there is a need for further information or tests before final assessment. The court stated, "We do not think that this procedure is permitted by the law," and reiterated that the two sections are designed for different scenarios and should not be mixed.
3. Finality and Reassessment under Section 29A:
The court clarified that assessments under Section 29A are final unless the statements in the bill of entry are found untrue upon examination or other means. The court stated, "Assessment under Section 29A is final subject to its being reopened only on proof of certain condition." This finality is subject to reassessment only if the basis of the initial assessment is proven to be false.
4. Conditions and Applicability of Section 29B:
Section 29B allows for provisional assessment under three specific conditions: (a) when the owner cannot provide full information, (b) when further proof is required despite full information, and (c) when goods need to be tested. The court emphasized that one of these conditions must be present for provisional assessment to be justified. The court noted, "One or other of these three conditions must be present to authorise provisional assessment of duty."
5. Procedural and Legal Implications:
The court highlighted that the Customs Authorities' actions of converting Section 29A assessments into Section 29B provisional assessments were not legally permissible. The court stated, "Indeed that is the admitted position as will appear from the excerpts we have set out from the affidavit sworn by the Assistant Collector of Customs himself." The court concluded that such actions were not allowed by the law and directed the Customs Authorities to proceed in accordance with the correct legal provisions.
6. Appellant's Conduct and Impact on Appeals:
The Customs argued that the appellant's compliance with the department's requisition for additional deposits indicated acquiescence to the provisional assessments. However, the court found that the appellant's compliance was in pursuance of an interim court order and did not constitute giving up the appeals. The court stated, "We do not think this conduct on the part of the appellant can have the effect of giving up the appeals."
Conclusion:
The appeals were allowed, and the orders of the trial judge were set aside. The court directed the Customs Authorities to proceed based on assessments made under Section 29A and ordered the refund of deposits and discharge of bonds executed by the appellant. The court issued writs of mandamus directing the Customs Authorities to forbear from giving effect to the contested orders and ruled that there would be no order as to costs in these appeals.
-
1962 (2) TMI 3
Issues Involved:
1. Legality of the search and seizure under Section 165 of the Code of Criminal Procedure and Section 18 of the Central Excises and Salt Act, 1944.
2. Admissibility of the statement (Ext. R2) under Article 20(3) of the Constitution.
3. Denial of opportunity to the petitioner to adduce evidence regarding the statement Ext. R2.
Issue-Wise Detailed Analysis:
1. Legality of the Search and Seizure:
The petitioner contended that the search and seizure conducted by the Customs authorities on 27-1-1960 were contrary to Section 165 of the Code of Criminal Procedure, read with Section 18 of the Central Excises and Salt Act, 1944. The court acknowledged that the provisions of Section 165 were not complied with. However, it was held that non-compliance with Section 165 does not render the entire proceedings, including the orders Exts. P3 and P4, illegal and void. The court referred to the Full Bench decision in C. Velayudhan v. State of Kerala, which held that an illegal search does not vitiate the trial or make the evidence inadmissible. The Supreme Court decision in State of Rajasthan v. Rahman was also considered, which emphasized compliance with Section 165 but did not invalidate subsequent proceedings due to non-compliance.
2. Admissibility of the Statement (Ext. R2) under Article 20(3):
The petitioner argued that the statement recorded (Ext. R2) should not have been relied upon as it contravened Article 20(3) of the Constitution, which protects against self-incrimination. The court found that the petitioner was not formally accused of any offense at the time the statement was recorded on 27-1-1960. The formal accusation was considered to have been made only on 13-2-1960 when the show-cause notice was issued. Thus, the court concluded that Article 20(3) was not applicable, and Ext. R2 could be used as evidence.
3. Denial of Opportunity to Adduce Evidence:
The petitioner claimed that he was denied the opportunity to substantiate his contention that Ext. R2 was obtained under duress. The court found no merit in this claim, noting that the petitioner was given a personal hearing, represented by counsel, and had the opportunity to submit a full statement. The counter-affidavit by the Collector of Customs and Central Excise confirmed that the petitioner did not request any further opportunity to adduce evidence. The court accepted the Collector's statements and concluded that there was no denial of opportunity.
Conclusion:
The court dismissed the writ petition, upholding the orders Exts. P3 and P4. The search and seizure, despite non-compliance with Section 165, did not invalidate the proceedings. The statement Ext. R2 was admissible as there was no formal accusation at the time it was recorded, and the petitioner was not denied the opportunity to present evidence.
-
1962 (2) TMI 2
Whether the power of exemption conferred upon the Union Government violates Articles 14 and 19(1)(f) & (g) of the Constitution on the ground that it is uncontrolled and unguided?
Whether, assuming that the power is not unconstitutional, the exemption granted by the nofications, aforesaid, is in excess of the power granted by Rule 8?
Held that:- There is no substance in either of the two contentions. Rule 8 is as much a part of the Statute as Section 37(2) clause (xvii). It is always open to the State to tax certain classes of goods and not to tax others. The legislature is the best judge to decide as to the incidence of taxation, as also to the amount of tax to be levied in respect of different classes of goods.
The respondent No. 5 has been exempted from payment of excise duty in respect of goods produced by the weavers. It has not been exempted from the payment of a personal tax, like income-tax. The exemption must, therefore, have reference to the same kind of tax which would otherwise have been leviable but for the exemption. From the notifications set out above, it is manifest that the Government has exempted cotton fabrics produced on powerlooms owned by a co-operative society, and in the present instance owned by the members of the Co-operative Society. It has not been contended before us that the conditions laid down for granting the exemption have not been fulfilled by the members of the Co-operative Society, the respondent No. 5. Hence, the exemption granted is within the terms of the notifications aforesaid, which have effect as if enacted as a part of the Statute. The vires of the Statute as already indicated, has not been questioned. Appeal dismissed.
-
1962 (2) TMI 1
Issues Involved:
1. Whether the interim dividend of Rs. 42,500 credited in the accounts of the shareholders was a distribution of dividend as contemplated by the Finance Act of 1956.
Issue-wise Detailed Analysis:
1. Interim Dividend Credited as Distribution:
The central issue is whether the interim dividend of Rs. 42,500 credited in the accounts of the shareholders constitutes a "distribution of dividend" under the Finance Act of 1956. The assessee, a private limited company, declared a total dividend of Rs. 1,02,000, which included an interim dividend of Rs. 42,500 resolved by the board of directors on 28th December 1955. This interim dividend was credited to the shareholders' accounts but was paid after the accounting year ended on 31st December 1955. The Income-tax Officer applied the provisions of the Finance Act of 1956, reducing the rebate due to the excess dividend distribution. The assessee contended that there was no distribution within the accounting year, thus the interim dividend should not be considered in computing the tax liability. The Appellate Assistant Commissioner upheld the Income-tax Officer's view, but the Tribunal disagreed, stating that mere credit entries do not amount to distribution.
2. Interpretation of "Distributed to its Shareholders":
The interpretation of the phrase "distributed to its shareholders" under the Finance Act of 1956 is crucial. The Finance Act of 1956 stipulates that if a company distributes dividends in excess of 6% of its paid-up capital, the rebate is reduced. The relevant part of the provision reads: "the amount of the rebate... shall be reduced... in the case of a company... which has distributed to its shareholders, during the previous year dividends in excess of 6 per cent. of its paid-up capital..." The court examined whether the credited interim dividend amounts to distribution.
3. Legal Precedents and Mercantile System:
The court considered various legal precedents and the mercantile system of accounting adopted by the company. The assessee accepted that crediting the dividend to shareholders' accounts acknowledged the company's liability. However, they argued that the interim dividend declaration does not create an enforceable debt, as it can be rescinded by the general body. The Commissioner argued that the board's declaration, followed by credit entries, amounted to distribution, conferring a right on shareholders to recover the amount.
4. Company Law and Articles of Association:
The company adopted Table A in the Schedule to the Companies Act of 1913, allowing the board to declare interim dividends justified by profits. The board resolved to pay the interim dividend and credited the shareholders' accounts, which prima facie appears to be a distribution. The assessee contended that the board's action is provisional and revocable by the general body, thus not constituting distribution.
5. Case Law Analysis:
The court referenced several cases:
- *In re Severn and Wye and Severn Bridge Railway Company*: Declared dividends credited to shareholders' accounts constituted debts due to shareholders.
- *Lagunas Nitrate Co. Ltd. v. Schroedar and Co. and Schmidi*: Directors could reconsider the payment of interim dividends, but once credited, it creates a debt.
- *Dalmia v. Commissioner of Income-tax*: Interim dividends declared and warrants issued within the accounting period are assessable in that period.
- *Commissioner of Income-tax v. Laxmidas Mulraj Khatau*: Declared dividends become assessable income from the date of declaration.
6. Conclusion and Judgment:
The court concluded that the interim dividend declaration on 28th December 1955, followed by crediting shareholders' accounts, amounted to distribution. The company's acceptance of liability and shareholders' right to sue for the amount indicated distribution. The Finance Act of 1956 applied, justifying the rebate reduction. The question was answered in favor of the department, and costs were awarded to the department.
Summary:
The court determined that the interim dividend of Rs. 42,500 credited to shareholders' accounts constituted a distribution of dividend under the Finance Act of 1956, leading to a reduction in the rebate. The court's interpretation was based on legal precedents, the company's accounting system, and the Articles of Association, concluding that the credited interim dividend created an enforceable right for shareholders.
|
9911796707
