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Showing 81 to 93 of 93 Records
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1961 (3) TMI 55
Imposition of sales tax on betel leaves by the Sales Tax Officer, Akola challenged - Held that:- Appeal dismissed. Apart from the fact that the legislature by using two distinct and different items, i.e. item No. 6 "vegetables" and item No. 36 "betel leaves", has indicated its intention, decided cases also show that the word "vegetables" in taxing statutes is to be understood as in common parlance, i.e. denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table. Thus betel leaves are not exempt from taxation.
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1961 (3) TMI 41
Whether the purchase of goods made by petioner inside the State but sold to dealers outside the State be included in the taxable turnover of the petitioner?
Held that:- Appeal dismissed. A purchase made inside a State, for sale outside the State cannot itself be held to be in the course of inter-State trade, and the imposition of a tax thereon is not repugnant to Article 286(2) of the Constitution
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1961 (3) TMI 31
Issues Involved:
1. Oppression of non-trading shareholders.
2. Amendments to the articles of association.
3. Compliance with the Forward Contracts (Regulation) Act, 1952.
4. Voting rights and participation in company affairs.
5. Validity of the extraordinary general meeting and resolutions passed.
6. Powers of the court under sections 397 and 398 of the Companies Act, 1956.
7. Appropriate relief for the non-trading shareholders.
Issue-Wise Detailed Analysis:
1. Oppression of Non-Trading Shareholders:
The petitioners, comprising non-trading and trading members, claimed that the company's affairs were conducted oppressively towards non-trading members. They argued that the directors acted prejudicially to the company's interests by depriving non-trading shareholders of their fundamental rights as shareholders.
2. Amendments to the Articles of Association:
The amendments to the articles of association, particularly the definitions in Article 2, significantly altered the rights of non-trading shareholders. The changes included:
- Exclusion of non-trading shareholders from the definition of "member."
- Restriction of new shares allotment to trading members only (Article 11).
- Voting rights limited to trading members (Article 107).
- Non-trading shareholders excluded from receiving dividends (Article 159).
3. Compliance with the Forward Contracts (Regulation) Act, 1952:
The respondents contended that the amendments were necessary to comply with the Forward Contracts (Regulation) Act, 1952, as amended by Act II of 1957. The Forward Markets Commission suggested these changes to align the company's articles with the regulatory requirements for recognition under the Act.
4. Voting Rights and Participation in Company Affairs:
The non-trading shareholders were deprived of their voting rights, the ability to call meetings, elect directors and auditors, and receive dividends. This was argued to be a fundamental statutory right under sections 87, 181, and 182 of the Companies Act, 1956, which cannot be overridden by any company resolution or amendment.
5. Validity of the Extraordinary General Meeting and Resolutions Passed:
The extraordinary general meeting held on January 9, 1958, where the impugned articles were adopted, was attended by only 28 out of 237 shareholders. The respondents argued that the meeting was valid as proper notice was given, and the resolution was passed unanimously. However, the petitioners contended that the meeting was not adequately represented.
6. Powers of the Court Under Sections 397 and 398 of the Companies Act, 1956:
The court considered whether the amendments called for intervention under sections 397 and 398, which deal with the prevention of oppression and mismanagement. The court held that the non-trading shareholders were subjected to oppressive conduct, as their fundamental rights were trampled upon by the amendments.
7. Appropriate Relief for the Non-Trading Shareholders:
The court directed the company to purchase the shares or interests of the non-trading members within three months, leading to a reduction in the company's share capital. This relief was deemed appropriate under section 403 (b) and (c) of the Companies Act, 1956.
Conclusion:
The court allowed the petition, recognizing the oppressive conduct towards non-trading shareholders and the violation of their statutory rights. The company was ordered to buy out the shares of non-trading members, ensuring their exit from the company with their contributed capital. The court left the parties to bear their own costs and vacated previous orders restraining the company from holding meetings.
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1961 (3) TMI 30
Issues Involved:
1. Registration of the third series of debentures under the Indian Registration Act.
2. Classification of the third series of debentures as secured or unsecured creditors.
3. Applicability of the Indian Registration Act to floating charges.
4. Determination of moveable and immoveable properties under the debentures.
Issue-wise Detailed Analysis:
1. Registration of the Third Series of Debentures under the Indian Registration Act:
The core issue was whether the third series of debentures required registration under the Indian Registration Act, despite being registered under section 109 of the Indian Companies Act, 1913. The court concluded that an ordinary charge created under the Transfer of Property Act is compulsorily registrable under the Indian Registration Act if the amount secured exceeds Rs. 100. The court emphasized that the combined effect of sections 4, 59, and 100 of the Transfer of Property Act makes all charges in respect of immoveable properties compulsorily registrable under the Registration Act. Therefore, the third series of debentures, which created a charge on immoveable property, required registration under section 17(1)(b) of the Indian Registration Act.
2. Classification of the Third Series of Debentures as Secured or Unsecured Creditors:
The appellants argued that the third series of debentures, having been registered under the Companies Act, should be considered secured creditors. However, the court held that the debentures were not registered under the Indian Registration Act, which is necessary for creating a valid charge on immoveable property. Consequently, the debentures were deemed ineffective in creating a charge on immoveable property, rendering the holders of the third series of debentures as ordinary unsecured creditors concerning immoveable property.
3. Applicability of the Indian Registration Act to Floating Charges:
The court discussed the nature of floating charges, which are special charges recognized by the Indian Companies Act. A floating charge remains in a dormant state until a future event, such as the winding up of the company, crystallizes it into a fixed charge on specific property. The court noted that section 109(1)(f) of the Indian Companies Act requires registration of floating charges with the Registrar of Joint Stock Companies. However, this registration does not exempt the charge from compulsory registration under the Indian Registration Act if it involves immoveable property. The court emphasized that the purpose of registration under the Companies Act is to provide a general idea of the company's financial status, while the Registration Act aims to give detailed and reliable information about specific immoveable properties.
4. Determination of Moveable and Immoveable Properties under the Debentures:
The court examined the terms of the debentures, specifically Condition No. 3, which charged the company's undertaking and all its property, present and future. The court clarified that the debentures covered both moveable and immoveable properties. For immoveable property, the court held that the debentures required registration under the Indian Registration Act to be valid. The court distinguished between present immoveable property, which was in the company's ownership at the date of the charge, and future immoveable property, which would come into ownership later. The court did not express an opinion on future immoveable property but focused on present immoveable property, holding that the debentures required registration under section 17(1)(b) of the Indian Registration Act.
The court also addressed the classification of properties as moveable or immoveable. It stated that whether a property affixed to the earth should be treated as immoveable or moveable depends on the manner and intention of affixation. The court left the determination of specific items as moveable or immoveable to the company judge, who would re-determine the matter based on the guidelines provided.
Conclusion:
The appeal was partly allowed. The holders of the third series of debentures were declared secured creditors concerning moveable properties but not immoveable properties in the company's ownership at the date of the debentures' execution or subsequent accretions to those immoveable properties. No order as to costs was made.
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1961 (3) TMI 29
Issues Involved:
1. Validity of Rules 301 to 304 of the Companies (Court) Rules, 1959.
2. Calculation of audit fees under Rule 304.
3. Authority of the Supreme Court under Section 643 of the Companies Act, 1956, to make rules regarding the audit of liquidator's accounts.
Issue-Wise Detailed Analysis:
1. Validity of Rules 301 to 304 of the Companies (Court) Rules, 1959:
The judgment scrutinizes the validity of Rules 301 to 304 of the Companies (Court) Rules, 1959, in light of Section 643 of the Companies Act, 1956. It was contended that these rules are ultra vires the Companies Act, 1956. The court noted that Section 462 of the Companies Act mandates that the court having jurisdiction should cause the liquidator's accounts to be audited "in such manner as it thinks fit." However, Rules 301 to 304 prescribe a detailed procedure for the audit, which includes the Registrar forwarding the accounts to the auditor and the auditor providing a certificate of audit. The court concluded that these rules interfere with the court's discretion as provided under Section 462 and are, therefore, beyond the powers conferred on the Supreme Court by Section 643. The court held that the rules are of no effect as they contradict express provisions in the Companies Act, 1956.
2. Calculation of Audit Fees under Rule 304:
The official liquidator suggested remuneration for the auditor not in accordance with Rule 304, which led to a dispute. Rule 304 states that audit fees should be calculated on the gross amount brought to credit, deducting amounts spent on carrying on the business and amounts paid to secured creditors. The official liquidator argued that the rule should not apply until secured creditors are paid off. However, the court clarified that the fees should be calculated based on actual payments made to secured creditors, not amounts payable. The court also noted that the audit fees calculated as per Rule 304 were significantly higher than previous practices, leading to a substantial portion of the assets being consumed by audit fees. Despite these concerns, the court did not delve deeply into this issue, as it found the rules themselves to be ultra vires.
3. Authority of the Supreme Court under Section 643 of the Companies Act, 1956:
The court examined whether the Supreme Court had the authority under Section 643 to frame Rules 301 to 304. Section 643 mandates the Supreme Court to make rules for matters related to the winding up of companies, but the manner of auditing liquidator's accounts is left to the court having jurisdiction. The court observed that Section 462(3) specifically grants the court the discretion to determine the manner of audit, which cannot be overridden by rules made by the Supreme Court. The judgment emphasized that while the Supreme Court can prescribe the form and frequency of accounts, it cannot dictate the manner of auditing, thus rendering Rules 301 to 304 invalid.
Conclusion:
The judgment concludes that Rules 301 to 304 of the Companies (Court) Rules, 1959, are ultra vires the Companies Act, 1956, as they infringe upon the court's discretion provided under Section 462. Consequently, the court directed the Assistant Registrar (Company) to submit a report on the procedure to be adopted for auditing the liquidator's accounts, indicating that new administrative directions would be issued.
Appeal:
An appeal (No. 129 of 1961) against this judgment was dismissed on the ground of non-maintainability.
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1961 (3) TMI 8
Legality of the imposition of surcharge imposed on the income of the assessees under the Finance Acts of 1942, 1943, 1944 and 1945 challenged
Held that:- the definition in the General Clauses Act the term " Central Government " did not only denote the Governor-General or the Governor-General in Council as the case may be but also included for certain purposes the Provincial Governments acting within the scope of the authority given to them under section 124(1) of the Government of India Act, 1935. This argument, in our opinion, is wholly fallacious.
Under section 124(4) of the Government of India Act, 1935, where powers and duties are conferred by section 124 upon a Province or a Federated State there shall be paid by the Federation to the Province or the Federated State such sum as may be agreed. Hence by the definitions given in the General Clauses Act no different concept of the words " purposes of the Central Government " was intended from what was intended by the use of the words " Federal purposes " in section 138(1)(b) of the Government of India Act, 1935. Appeal dismissed.
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1961 (3) TMI 7
Whether the sums of ₹ 2,12,080 and ₹ 2,31,563 paid by the Government to the assessee in 1945 and 1946 respectively (exclusive of the sums paid specifically for building repairs) were revenue receipts in the hands of the assessee comprising any element of income ?
Whether the whole of the said sums less the expenses incurred by the assessee in tending the tea bushes constituted agricultural income in his hands exempt from tax under the Indian Income-tax Act, 1922 ?
Held that:- Though the payment in question was not made to fill a hole in the capital of the assessee, as in the Glenboig case, nor was it made to fill a hole in the profits of a going business as in the Shamsher Printing Press case, it cannot be treated as partaking the character of profits because business not having been done, no question of profits taxable under section 10 arose. The Privy Council described such a payment as a solatium. It is not necessary to give it a name ; it is sufficient to say that it was not profit of a business.
Once it is held that this was not profit at all, it is clear that rules 23 and 24 of the Indian Income-tax Rules could not apply, and there was no question of apportioning the amount, as laid down in rule 24. The whole of the amount received by the assessee was not assessable. Appeal allowed.
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1961 (3) TMI 6
Whether the assessee firm is entitled to registration under section 26A of the Income-tax Act for the assessment year 1955-56 ?
Held that:- In the present case an instrument of partnership was in existence but it did not specify the shares which was one of the requirements for registration and that condition was fulfilled by the deed of rectification dated September 17, 1955. Therefore, it cannot be said that there was the requisite instrument of partnership specifying the individual shares of the partners during the year of account. The High Court, in our opinion, was right in answering the question in the negative. Appeal dismissed.
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1961 (3) TMI 5
Whether there are materials for the Tribunal to hold that the aforesaid sales tax payments of ₹ 30,221 were unreasonable and unnecessary having due regard to the requirements of the business, and not consequently deductible under rule 12 of Schedule I of the Excess Profits Tax Act ?
Held that:- Reasonableness or the necessity of payments under rule 12, Schedule I of the Excess Profits Tax Act must be ascertained in the light of what may be regarded as commercially expedient and not on any legalistic considerations. It would not be expected of a businessman to start a litigation in respect of a tax which the Legislature of the State was competent to levy on the ground that the method devised for computing the tax liability was ultra vires. The tax was duly assessed and paid and the reasonableness and necessity must be adjudged in the light of the circumstances then prevailing and not in the light of subsequent developments. The High Court was right in answering the question in the negative. Appeal dismissed.
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1961 (3) TMI 4
Whether there was evidence on which the Tribunal could have come to the conclusion that the sum of ₹ 75,820 was the assessee's income from business ?
Held that:- The High Court answered the question correctly. No doubt, this was only a single venture ; but even a single venture may be regarded as in the nature of trade or business. When a person acquires land with a view to selling it later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. Where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit and as he bought it but in parcels, he is dealing with land as his stock-in-trade ; he is carrying on business and making a profit. This is exactly what had happened in the assessee's case. The answer given by the High Court was thus correct. Appeal dismissed.
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1961 (3) TMI 3
Issues:
1. Competency of the assessee to raise a question regarding the determination of loss for a previous assessment year during the proceedings of a subsequent assessment year.
2. Whether the loss suffered by the assessee from his personal business can be set off against his taxed share income from an unregistered firm.
Detailed Analysis:
Issue 1:
The case involved an appeal by the Commissioner of Income-tax against an individual assessee, who had received his share of assets from a firm and started his own business. The assessee had incurred losses in his individual business, and the Income-tax Officer determined the loss to be carried forward. In subsequent years, the assessee claimed a higher loss to be carried forward, which was not accepted by the Department. The High Court held that the assessee was entitled to have the loss re-determined in a subsequent year as the procedure under section 24(3) was not followed. The court noted that since the Income-tax Officer had not notified the loss computed in writing, the assessee had the right to challenge the determination of the loss. The court upheld the High Court's decision, stating that the assessee was entitled to have the loss re-determined in a subsequent year, despite the Department's lack of concern regarding the decision due to the assessee's subsequent losses.
Issue 2:
The second issue revolved around whether the loss suffered by the assessee from his personal business, including his share of loss from another firm, could be set off against his taxed share income from an unregistered firm. The Tribunal had accepted the assessee's contention that the profits from the unregistered firm could not be set off against the loss in his individual business. The High Court also ruled in favor of the assessee on this issue. The Commissioner conceded that this issue had been decided against the Department in a previous case. Therefore, this part of the case was not argued further. The court dismissed the appeals, upholding the High Court's decision on this issue as well.
In conclusion, the Supreme Court upheld the High Court's decision on both issues, ruling in favor of the assessee. The appeals were dismissed with costs, and it was noted that the assessee was entitled to have the loss re-determined in a subsequent year.
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1961 (3) TMI 2
Whether the respondent is " an association of persons " within the meaning of section 3 of the Act?
Held that:- In our view the respondent was an association of persons and was rightly so assessed to income-tax and excess profits tax. Appeal allowed.
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1961 (3) TMI 1
Whether the repayment of excess profits tax made by the Central Government in pursuance of section 10 of the Indian Finance Act, 1942, or section 2 of the Excess Profits Tax Ordinance, 1943, is profits from business for the purposes of section 25(4) of the Indian Income-tax Act ?
Held that:- The amount refunded did not lose its character which it had before the deposit and, therefore, it is an erroneous view to take that the income was assessable under section 12 of the Act and not under section 10. If it was income failing under section 10, as in our opinion it was, then the appellants were entitled to get the benefit of section 25(4) of the Act and the amount was not liable to taxation. Appeal allowed.
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