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Showing 81 to 100 of 114 Records
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1971 (9) TMI 34
Transfer of shares to wife and children before declaring dividend – whether transfer is to avoid tax - Whether Income-tax Officer was justified in applying the provisions of section 94(2) – Held, yes - Whether assessee was entitled to the benefit of the provisions of section 94(3)(b) of the Income-tax Act, 1961 which says that the provisions of s. 94(2) would apply only if the avoidance of income-tax was exceptional and not systematic or regular practice of assessee – Held, yes
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1971 (9) TMI 33
Appellate Assistant Commissioner holding that there is no concealment of income - Whether it was competent in law for the Inspecting Assistant Commissioner of Income-tax to impose penalty under section 271(1)(c) for concealment of income - held that, Inspecting Assistant Commissioner had no jurisdiction to impose a penalty
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1971 (9) TMI 32
Issues Involved:
1. Jurisdiction of the Appellate Assistant Commissioner (AAC) to entertain a new claim for exemption not raised before the Income-tax Officer (ITO).
2. Scope and ambit of the powers of the AAC under Section 251 of the Income-tax Act, 1961.
3. Interpretation of the term "assessment" in the context of Section 251.
4. Applicability of judicial precedents in determining the powers of the AAC.
Issue-wise Detailed Analysis:
1. Jurisdiction of the AAC to Entertain a New Claim for Exemption:
The primary issue in this case was whether the AAC could entertain a new claim for exemption under Section 84, which was not raised before the ITO during the initial assessment. The assessee, a company engaged in copper engraving and manufacturing of labels, failed to claim an exemption for a portion of its profit during the assessment year 1963-64. This omission led to the profit being taxed. The assessee included this claim in its memorandum of appeal against the assessment order. The AAC refused to entertain this claim, stating that it was not raised before the ITO. The Tribunal, however, found that the AAC should have entertained the claim, leading to the reference question for the High Court's opinion.
2. Scope and Ambit of the Powers of the AAC under Section 251:
Section 251 of the Income-tax Act, 1961, outlines the powers of the AAC in disposing of an appeal. The AAC can confirm, reduce, enhance, or annul the assessment, or set aside the assessment and refer the case back to the ITO. These powers are almost identical to those under Section 31 of the Indian Income-tax Act, 1922. The judgment emphasized that the AAC's powers are not limited to the points of grievance raised by the assessee but extend to the entire subject-matter of the assessment. The AAC can revise any part of the assessment, whether in favor of or against the assessee.
3. Interpretation of the Term "Assessment":
The term "assessment" was a crucial point of contention. The assessee argued that "assessment" means the ultimate amount the assessee is liable to pay, allowing the AAC to entertain new claims not raised before the ITO. The revenue contended that "assessment" refers to the process of determining the various items of income or deductions considered by the ITO. The court, referencing several judicial precedents, including the Supreme Court's decision in Commissioner of Income-tax v. Shapoorji Pallonji Mistry, concluded that "assessment" refers to the items of income or deductions subjected to the assessment process by the ITO. The AAC's power is limited to revising these items and does not extend to new claims not considered by the ITO.
4. Applicability of Judicial Precedents:
The court examined various judicial decisions to determine the scope of the AAC's powers. The leading decision was Narrondas Manordass v. Commissioner of Income-tax, which established that the AAC's powers extend to revising the entire assessment, not just the points of grievance raised by the assessee. The court also considered the Supreme Court's decision in Commissioner of Income-tax v. Kanpur Coal Syndicate, which affirmed the AAC's plenary powers in disposing of an appeal. However, the court clarified that these powers are confined to the subject-matter of the assessment and do not allow the AAC to entertain new claims not raised before the ITO.
Conclusion:
The High Court concluded that the AAC has the jurisdiction to entertain claims related to items of income or deductions that have been subjected to the assessment process by the ITO. In this case, the portion of profit exempt under Section 84 was processed and taxed by the ITO, making it part of the subject-matter of the assessment. Therefore, the AAC had the power to consider whether this portion of the profit was rightly taxed, despite the claim not being raised before the ITO. The court answered the reference question in the affirmative, stating that the AAC should have entertained the claim for exemption under Section 84. The Commissioner was directed to pay the costs of the reference to the assessee.
Judgment:
Question answered in the affirmative.
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1971 (9) TMI 31
Issues Involved:
1. Whether the receipt of Rs. 9,060 from the sale of earth dug out from agricultural land is agricultural income.
2. Whether the said receipt amounts in law to a receipt of capital nature or revenue nature.
Issue-wise Detailed Analysis:
1. Agricultural Income:
The first issue was whether the receipt of Rs. 9,060 constituted agricultural income. This issue was not pressed by the learned counsel for the assessee in view of the Supreme Court's decision in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy. Therefore, the court did not address this issue further.
2. Capital Receipt vs. Revenue Receipt:
The core issue debated was whether the receipt of Rs. 9,060 was a capital receipt or a revenue receipt. The court noted that the determination of whether a particular receipt is capital or revenue is a frequent question in income tax cases and often falls on the borderline. The court referred to several precedents to establish the principles guiding this determination.
The court emphasized that merely because the earth would be consumed and exhausted in the process of digging and removal, it would not automatically mean that the consideration received is a capital receipt. The principle established in Coltness Iron Co. v. Black, and applied in various cases involving wasting assets, was that profits derived from such assets could still be taxable as income.
The court then referred to the test formulated by Lawrence J. in Greyhounds case, which states that if the sum in question is received for the user of capital assets and not for their realization, it is a revenue receipt. This test was adopted by the Privy Council in Kamakshya Narain Singh's case and approved by the Supreme Court in Chintamani Saran Nath Sah Deo v. Commissioner of Income-tax.
Applying this test, the court examined whether the amount received by the assessee was for the occupation and use of the land for digging and removal of earth or for the realization of the value of the earth, which was part of the capital asset. The court found that the transaction was a simple sale of earth, with Messrs. Dalwadi and Company authorized to dig and remove the earth, and the consideration was calculated based on the volume of earth removed.
The court concluded that the transaction was one for the sale of earth and the amount received was by way of realization of the value of the earth, thus constituting a capital receipt. The court distinguished this case from others where the transaction involved more complex arrangements, such as setting up a brick kiln on the land, which might have indicated a revenue receipt.
Judgment:
The court held that the amount of Rs. 9,060 realized by the assessee from the sale of earth dug out from the agricultural land represented a capital receipt and not a revenue receipt. Consequently, the first question did not need to be answered, and the Commissioner was ordered to pay the costs of the assessee in both references.
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1971 (9) TMI 30
Payment by the assessee to liquidator of the society for the benefit of members of the society - claim of the assessee was that the money was spent for the welfare of its employees - held that the expenditure was laid out wholly and exclusively for the purpose of assessee's business so entitled to deduction
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1971 (9) TMI 29
Interim compensation paid to assessee when govt. acquires the land - held that such interim compensation an be treated as an asset within the meaning of S.2(e) for wealth-tax purposes
contention of the assessee that the unpaid agricultural income-tax as a debt was deductible while computing his net wealth, is not acceptable
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1971 (9) TMI 28
Whether the provision of Rs. 2,99,21,841 made by the assessee for its tax liability, less the amount of the last installment of advance tax constituted a debt owed by the assessee within the meaning of clause (m) of section 2 of the Wealth-tax Act on the relevant valuation date - question is answered in favor of assessee
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1971 (9) TMI 27
Whether on the facts and the circumstances of the case the Tribunal was right in holding that the income-tax liabilities amounting to Rs. 1,994,270 was not allowable as a deduction in the computation of net wealth of the assessee-company in view of the provisions of section 2(m)(iii) of the Wealth-tax Act, 1957 - answer of the question is given in favour of the department
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1971 (9) TMI 26
Whether Tribunal was justified in holding that the interest of the assessee under the trust had no value - even if the property in question is incapable of being sold in the open market, being a personal estate, in that event also the interest of the assessee has to be valued by the Wealth-tax Officer
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1971 (9) TMI 25
Whether Tribunal acted rightly in holding that the sum of Rs. 64,020 was not assessable as income of the assessee - held that the amount of the consideration not received by the assessee but which the purchasers agreed to pay in future and for which lands were mortgaged by them in favour of the assessee, could not be considered to be revenue receipts for the assessment periods, and the assessee was liable to be taxed only on the actual realisations in cash
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1971 (9) TMI 24
Whether the disallowance of commission paid to sole selling agent is justified when there is a finding that the selling agent did not render any service - question of fact - High Court was justified in declining to give direction to the Appellate Tribunal to state a case and refer those questions
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1971 (9) TMI 23
Capital ;gains - Whether the amount of Rs. 2,344 was rightly included as dividend in the total income of the assessee for the assessment year 1949-50 - This question is concluded by the decision of this court in Commissioner of Income-tax v. Nalin Behari Lall Singha - Following that decision this revenue's appeal is dismissed
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1971 (9) TMI 22
Proceedings under s. 34(1)(b) of Indian Income-tax Act, 1922 were pending - whether fresh notice could be issued under Income-tax Act, 1961 - Officer could not have issued notice under s. 148 - department cannot take any support from section 150(1) - order of the High Court is set aside. The writ petition is allowed and the impugned notices quashed
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1971 (9) TMI 21
Whether the profits and gains in respect of the sales to the Government of India, were received by the assessee in the taxable territories - HC had no jurisdiction to go beyond the findings recorded in the original judgment - appeals, accordingly, are held to be not maintainable and are dismissed
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1971 (9) TMI 20
Undistributed Profits - company - dealing in investment - shares - whether the assessee company comes within the scope of section 23A - held that assessee was not a company whose business consisted mainly in dealing in or holding of investments as per section 23A
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1971 (9) TMI 19
Issues Involved:
1. Legitimacy of penalty under section 28(1)(c) of the Indian Income-tax Act, 1922.
2. Whether the Income-tax Appellate Tribunal was correct in canceling the penalty of Rs. 35,000.
3. Whether the High Court was justified in dismissing the appellant's application under section 66(2) of the Income-tax Act, 1922.
Detailed Analysis:
Legitimacy of Penalty Under Section 28(1)(c) of the Indian Income-tax Act, 1922:
The respondent firm was engaged in manufacturing various products, including silk and chemicals. For the assessment year 1955-56, the respondent declared a taxable income of Rs. 51,214. However, upon examination, the Income-tax Officer (ITO) increased the assessable income to Rs. 3,30,474, later reduced to Rs. 2,09,575 on appeal. The ITO identified two significant additions: Rs. 77,518 for the pharmaceuticals section and Rs. 9,900 for the chemicals section, citing forged sale bills and unaccounted sales of ethyl acetate. The ITO inferred that the firm sold alcohol illicitly and concealed income.
Whether the Income-tax Appellate Tribunal Was Correct in Canceling the Penalty of Rs. 35,000:
The ITO issued a notice under section 28(1) for concealing income and furnishing inaccurate particulars, proposing a penalty of Rs. 35,000, which included additional items totaling Rs. 32,267. The Appellate Assistant Commissioner (AAC) deleted these additional items but upheld the penalty for the pharmaceuticals and chemicals sections. The respondent argued that the ITO and AAC did not independently assess whether the omissions fell under section 28(1)(c). The Tribunal set aside the penalty, stating that the department did not establish that the respondent sold alcohol illicitly or deliberately concealed income. The Tribunal noted the presence of excise authorities and proper permit numbers on sale bills, indicating no deliberate concealment.
Whether the High Court Was Justified in Dismissing the Appellant's Application Under Section 66(2) of the Income-tax Act, 1922:
The Commissioner of Income-tax sought a reference to the High Court, which the Tribunal rejected, stating the findings were based on facts, not law. The High Court upheld this, noting the Tribunal's findings were factual. The appellant argued that the High Court erred in not recognizing a legal question. However, the Supreme Court agreed with the High Court, emphasizing that penalty proceedings are penal in nature and require the department to prove conscious concealment or deliberate furnishing of inaccurate particulars. The Supreme Court cited the case of Commissioner of Income-tax v. Anwar Ali, stressing that mere falsity of the assessee's explanation does not justify penalty without additional evidence.
The Supreme Court concluded that the ITO and AAC did not provide independent discussion or evidence beyond the original assessment reasons. The Tribunal's approach was deemed correct and judicial, leading to the dismissal of the appeal. The Supreme Court affirmed that the High Court was justified in rejecting the application under section 66(2), as no question of law arose from the Tribunal's factual findings.
Conclusion:
The appeal was dismissed, with the Supreme Court supporting the High Court's decision and the Tribunal's findings that the department failed to prove deliberate concealment or inaccurate particulars by the respondent. The penalty proceedings were found to lack independent and cogent evidence beyond the original assessment reasons.
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1971 (9) TMI 18
Held that refund granted by the Income-tax Officer under section 48 of the Mysore Income-tax Act, 1923 amounted to an assessment - Held that there could not be two assessments in respect of the income of an assessee for one year, one under the Mysore Act in respect of the income disclosed by the assessee and the other under the Indian Act in respect of the other income - revenue's appeal is dismissed
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1971 (9) TMI 17
The Supreme Court dismissed an appeal regarding a penalty imposed on an assessee for submitting a wrong income tax return. The High Court set aside the penalty, citing a lack of evidence showing deliberate wrongdoing by the assessee. The appeal was dismissed with no costs. (Case citation: 1971 (9) TMI 17 - Supreme Court)
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1971 (9) TMI 16
Transfer of assets to a firm as partner's share of capital - writing up of the value of machinery in the account books - When assets are transferred to a firm to become a partner in the firm, the transaction cannot be considered to be a sale- certificate granted by the High Court as the same is not supported by any reason. Hence this appeal is not maintainable
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1971 (9) TMI 15
Issues:
- Inclusion of dividends and interest in the taxable income of the assessee.
- Interpretation of Section 16(3)(a)(iii) of the Income-tax Act.
- Nexus between income earned and transfer of assets.
Analysis:
The Supreme Court heard appeals regarding the inclusion of dividends and interest in the taxable income of the late Karam Chand Thapar. The issue revolved around whether the department was entitled to include these amounts in the assessee's income. The case involved cash gifts made by Thapar to his wife, who then invested the funds in shares and other assets, resulting in dividends and interest. The Income-tax Officer, Appellate Assistant Commissioner, and Tribunal all upheld the inclusion of these amounts in Thapar's income, leading to the appeals to the Supreme Court.
The key provision in question was Section 16(3)(a)(iii) of the Income-tax Act, which deals with the inclusion of income arising directly or indirectly from assets transferred to a spouse. The court considered whether the dividends and interest earned by Thapar's wife could be linked back to the cash gifts made by Thapar. The court noted that the assets transferred were the cash gifts, which were then invested by the wife. The revenue argued that the income earned indirectly from these investments should be included in Thapar's taxable income, a position supported by the court based on the plain language of the section.
The court rejected the argument that there needed to be a direct nexus between the income earned and the assets transferred. It held that income indirectly arising from the transferred assets could also fall under Section 16(3)(a)(iii). The court distinguished a previous case where the connection between gifts and income was found to be remote, emphasizing that in the present case, there was a proximate connection between the income and the assets transferred by Thapar to his wife. The court concluded that the income in question had a direct or indirect nexus with the transferred assets, justifying its inclusion in Thapar's taxable income.
In light of the above analysis, the Supreme Court dismissed the appeals, upholding the inclusion of dividends and interest in Thapar's taxable income. The court emphasized the need for a proximate connection between the transferred assets and the income earned, as per the provisions of Section 16(3)(a)(iii) of the Income-tax Act. The appeals were dismissed with costs awarded against the appellants.
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9911796707
