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1964 (10) TMI 74
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... ... ..... filed along with the petition. No attempt has been made by the State to contradict its authenticity. No affidavit from any responsible officer of the State Trading Corporation has been filed to show that the real nature of the transaction was different from what the document in fact discloses. This letter really clinches the matter in favour of the petitioner. Mr. Nehra further contended that I should not decide the matter but send back the case to the authority for re-decision. I see no merit in this contention. The entire material has been placed before me and the same was also before the Assessing Authority. In these circumstances no useful purpose would be served by remanding the case to the Assessing Authority, for it had arrived at a decision on its basis. For the reasons given above, this petition is allowed. The order of the Assessing Authority is quashed. In view of the difficult nature of the question involved, there will be no order as to costs. Petition allowed.
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1964 (10) TMI 73
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... ... ..... r, to a foreign buyer resulting in the export of the cotton sold, the petitioner is entitled to deduct the purchase price thereof from the gross turnover under sub-clause (vi) of clause (a) of sub-section (2) of section 5 of the Act. It is not necessary for us to determine what that amount would be because that shall have to be determined by the Assessing Authority after taking into consideration all the facts established before it. For the reasons given above, therefore, the rule is made absolute and the order of the Assessing Authority is quashed to the extent to which it runs counter to the observations made above. The Assessing Authority will reconsider the whole matter and proceed in accordance with law after hearing the petitioner. In view of the fact that the points involved, particularly the one with regard to the cotton seeds extracted out of unginned cotton, were far from clear, the parties are left to bear their own costs. JINDRA LAL, J.-I agree. Petition allowed.
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1964 (10) TMI 72
Whether the certificate which the appellant-company gave to the local dealers was complied with or not?
Whether the proviso to section 5(2)(a)(ii) of the Orissa Sales Tax Act, applied?
Held that:- Appeal dismissed. Section 5(2)(a)(ii) as enacted by the 1950 amendment with that enacted in 1951 which came into force from November 25, 1951. He pointed out that the words "in Orissa" were added in the operative part after the quarter involved in this case and, therefore, the export of the sleepers and timber outside the State did not affect the company as prior to the 1951 amendment exemption was available if the goods were for resale irrespective of the place of sale. This is not correct. The tax was always leviable on the first sale and it would have been so levied but for the certificate which was furnished by the company when making purchases from the local dealers. The certificate was that the sleepers and timber were for resale in Orissa and when that condition was not fulfilled, the tax became payable even under section 5(2)(a)(ii) before the 1951 amendment
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1964 (10) TMI 64
Whether the Deputy Commissioner of Commercial Taxes has jurisdiction under section 12(2)(i) of the Madras General Sales Tax Act, 1939, read with the relevant rule, rule 14-A, to make the order he did?
Whether the revisional jurisdiction conferred under section 12 of the Act enables the authority concerned to make a fresh enquiry after issuing notice to the dealer concerned and determine the question of assessment on merits?
Held that:- Appeal allowed and case remanded. In accordance with the opinion of the majority, the order of the High Court declaring rule 14-A to be ultra vires is set aside and the proceedings are remanded to the High Court to be dealt with according to law.The High Court will have to make enquiry whether in the circumstances of the case the Deputy Commissioner, Coimbatore Division, was competent to proceed in the manner he has done and to pass the order which was impugned before the Sales Tax Appellate Tribunal. The order passed by the High Court declaring rule 14-A to be ultra vires is set aside, and the proceedings are remand- ed to the High Court to be dealt with according to law.
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1964 (10) TMI 57
Jurisdiction on the revising date on which the revising authority passed his order - Held that:- Appeal dismissed. Power could be exercised under the first proviso within a further period of one year if a notice under sub-section (2) was served within four years of the end of the year of assessment and without limit of time when it was made in consequence of, or to give effect to, any finding or direction contained in an order of the appellate or revisional authority or under an order of the High Court under section 11. In initiating proceeding for assessment, pursuant to the direction of the revising authority, the Sales Tax Officer was, by virtue of section 21 as amended, subject to no restrictions as to the period within which the order of assessment could be made. The order passed by the High Court must therefore be confirmed.
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1964 (10) TMI 56
Whether the present sales are outside sales?
Held that:- Appeal allowed. Carefully considering all the rules under which sales in question have been held by public auction, and we are satisfied that title to the goods passed to the buyer under section 64(2) of the Act as soon as the sale was completed by the auctioneer announcing its completion by the fall of the hammer. The initial auction cannot, be treated as an executory contract which became a conditional contract on the fall of the hammer. The auction was an auction sale in respect of ascertained goods and it was concluded in every case on the fall of the hammer. On that view of the matter, we must hold that the High Court was in error in coming to the conclusion that the Sales Tax Authorities were justified in imposing sales tax against the appellants in regard to the transactions which have given rise to the present appeals.
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1964 (10) TMI 53
Whether the sale was made in the course of inter-State trade, the case must be remitted to the High Court. Although Mr. Tewari has opposed the raising of the question at this stage whether the supply of coal amounted to sale, we are inclined to allow this point to be raised because the question is one of law which can be decided on the material on the records of the case, in the light of the decision of this Court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar [1962 (11) TMI 21 - SUPREME COURT OF INDIA] which was decided after the judgment of the High Court in this case. We express no opinion whether the said decision covers the present case or not.
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1964 (10) TMI 45
Whether the company complied with the Punjab General Sales Tax Act, 1948 and the Rules in the present case?
Held that:- Appeal dismissed. The contention that the charging section is incomplete without the prescription of the proper Form for the certificate of registration need not detain us. We have already shown that the old Form must be deemed to be modified and even otherwise the section and the Rules did not depend on the new Form. They were complete and effective. The registration certificate was only the evidence that the company was registered dealer for purposes of certain commodities to be used in manufacture, one of them being cotton. The omission to prescribe the new Form or to issue it did not render section 5 and the Rules ineffective.
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1964 (10) TMI 43
Whether the principle of constructive res judicata can be invoked against a writ petition filed by the appellant, Devilal Modi, who is the proprietor of M/s. Daluram Pannalal Modi, under Article 226 of the Constitution?
Held that:- Appeal dismissed. We are, satisfied that the second writ petition filed by the appellant in the present case is barred by constructive res judicata
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1964 (10) TMI 41
Inclusion in certificate of registration - Held that:- Appeal partly allowed. The order passed by the High Court will therefore be modified. Items (i), (ii) and (vi), laboratory fittings out of item (iii) used for sampling and analysis of the ore and other raw materials in the mining operations and in the process of manufacture for sale and cane baskets out of item (vii) used for carrying ore and other materials used in the course of manufacture, will be specified in the certificate of registration. Household, hospital equipment with furnishings and fittings [part of item (iii)], medical supplies [item (iv)], stationery [item (v)] and cane baskets used for collecting refuse to protect the health and cleanliness in the colony of workmen [part of item (vii)] will not be included in the certificate of registration.
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1964 (10) TMI 21
Whether the assessee was properly assessed on ₹ 4,25,050 as profits under the proviso to section 10(2)(vii) of the Act?
Whether there were materials for the Tribunal estimating the sale value of the buildings at ₹ 2,32,963 ?
Held that:- By the fiction, if the business must be deemed to be in existence during the previous year and that the buildings sold must be deemed to have been used for the business during that year, the amendment was not necessary. If it existed, there could not have been a cessation of it during the previous year. If the argument was correct, there would be no time-limit for the assessment of the surplus. Whenever a building was sold, whatever might be the time lag, by fiction, the business, as well as the user of the building in that business would be in the previous year by the year of assessment. We cannot accept a contention yielding such a result unless it is so clearly expressed. Indeed, the expressed intention of the legislature is the other way. We therefore hold that the amendment only removed one of the conditions for the exigibility of the said surplus to tax, namely, the cessation of the business and in other respects, the construction put upon the proviso by the earlier decisions of this court is still good law. In our view, the answers given by the High Court to the questions propounded are correct. Appeal dismissed.
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1964 (10) TMI 20
Whether the loss claimed in the present case was a trading loss which is deductible in computing the profits of the company?
Held that:- Find no difficulty in holding that the said debt which had become irrecoverable was a trading loss deductible in computing the profit of the appellant-company in the assessment year. It was a loss incidental to the appellant's business and is certainly sanctioned by commercial practice and trading principles. We, therefore, hold that the High Court went wrong in holding that the said amount represented loss incurred by the appellant dehors its business. Appeal allowed.
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1964 (10) TMI 19
Whether the income from property owned by the assessee is exempt under section 4(3)(i) for the aforesaid six years of assessment ?
Whether the activities of the assessee amount to a trade or business, the profit or loss from which is assessable under section 10 ?
Held that:- It is true that in this case there is in fact no trust in respect of the income derived from the building owned by the assessee. But the property and the income therefrom is held under a legal obligation, for, by the terms of the permission granted by the Government to the assessee to exclude from its name the use of the word " limited ", and by the express terms of clause 4 of the memorandum of association, the property and its income are liable to be utilised solely for the purposes set out in the memorandum of association.
In the present case the primary purpose of the assessee was not to urge or oppose legislative and other measures affecting trade, commerce or manufactures. The primary purpose of the assessee is, as we have already observed, to promote and protect trade, commerce and industries, to aid, stimulate and promote the development of trade, commerce and industries and to watch over and protect the general commercial interest of India or any part thereof. It is only for the purpose of securing these primary aims that it was one of the objects mentioned in the memorandum of association that the assessee may take steps to urge or oppose legislative or other measures affecting trade, commerce or manufactures. Such an object must be regarded as purely ancillary or subsidiary and not the primary object. Appeal dismissed.
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1964 (10) TMI 18
Whether the reassessment under section 34 (of the Indian Income-tax Act, 1922) completed on 30th June, 1953, for the year 1944-45 is valid?
Held that:- Some confusion has crept into this branch of the income-tax law by the use of the words " voluntary return " and a " non-voluntary return ". Section 22(3) does not use this expression and whatever the impelling cause or motive, if a return otherwise valid is filed by an assessee before the receipt of a valid notice under section 34, it is to be treated as a return within section 22(3) for it falls within the language of the sub-section.
We agree with the High Court that the question referred to the High Court must be answered in the negative. Appeal dismissed.
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1964 (10) TMI 17
Whether the Income-tax Officer could initiate proceedings over again under section 34 of the Act in derogation of the finding given by the Tribunal that the Income-tax Officer did not " discover " that the income had escaped assessment.?
Held that:- The finding of the Tribunal is, therefore, binding on the Income-tax Officer and he cannot, in the circumstances of the case, reopen the assessment and initiate proceedings over again. If that was not the legal position, we would be placing an unrestricted power of review in the hands of an Income-tax Officer to go behind the findings given by a hierarchy of Tribunals and even those of the High Court and the Supreme Court with his changing moods.
High Court of Judicature at Allahabad was correct in holding that the Income-tax Officer, in the circumstances of the case, went wrong in initiating proceedings under section 34(1) of the Indian Income-tax Act, 1922, hereinafter called the Act, in respect of the assessment year 1942-43. Appeal dismissed.
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1964 (10) TMI 16
Whether section 12(1B) read with section 2(6A)(e) was constitutionally valid?
If the impugned section treats the loan received by a shareholder as a dividend paid to him by the company, has the legislature in enacting the section exceeded the limits of the legislative field prescribed by the present entry 82 in List I ?
Held that:- As we have already noticed, the word "income" in the context must receive a wide interpretation ; how wide it should be it is unnecessary to consider, because such an enquiry would be hypothetical. The question must be decided on the facts of each case. There must no doubt be some rational connection between the item taxed and the concept of income liberally construed. If the legislature realises that the private controlled companies generally adopt the device of making advances or giving loans to their shareholders with the object of evading the payment of tax, it can step in to meet this mischief, and in that connection, it has created a fiction by which the amount ostensibly and nominally advanced to a shareholder as a loan is treated in reality for tax purposes as the payment of dividend to him. In our opinion, it would be difficult to hold that in making the fiction, the legislature has travelled beyond the legislative field assigned to it by entry 82 in List I.
In our opinion, there is no scope for arguing that the fundamental rights of the shareholder under article 19(1)(f) and (g) have been contravened by the impugned provision. Therefore, we must reject Mr. Pathak's argument that the impugned provision is invalid on the ground that it contravenes article 19(1)(f) and (g). There is obviously no scope for suggesting that the impugned provision contravenes article 14. Appeal dismissed.
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1964 (10) TMI 15
Whether on the facts and in the circumstances of the case the disallowance of the loss of $ 67,764 as claimed and the computation of the profit at $ 382 is valid in law ?
Held that:- The principle adopted by the High Court appears to be unexceptionable that to ascertain the real profits the department was right in computing the cost price of the properties in Malayan currency in accordance with the Schedule appended to the Ordinance. It accords with our view.
Adverting to the second argument that the Schedule to the Ordinance should be confined only to the scaling down of debts we are unable to hold that the department and the Tribunal were in error in adopting the conversion table furnished in the Schedule to the Malayan Ordinance. Appeal dismissed.
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1964 (10) TMI 14
Whether on the facts and circumstances of the case the bank was entitled to claim the deduction of the entire interest paid by it on fixed deposits, either under section 10(2)(iii) or 10(2)(xv) ?
Held that:- The High Court correctly answered the question in favour of the assessee on the ground that the entire interest paid by the bank was a permissible deduction under section 10(2)(iii) of the Act.Appeal dismissed.
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1964 (10) TMI 13
Whether the result of the Ordinance was to revive the old debts and the question of the exigibility of the said income to tax can only be decided on the provisions of the Income-tax Act and not by the terms of the scheme of the Ordinance?
Held that:- We hold, agreeing with the High Court, that under the Ordinance the discharged debts became enforceable to the extent of the balance of the amount due after the scaling down of the payments. If so, the Income-tax Officer could only impose tax on the income recovered by the assessees thereafter towards their debts if such income was taxable under the provisions of the Act.
The High Court correctly held that the assessees who had received repayments would not be liable to tax in respect of amounts they had received towards principal but they would be so liable in respect of moneys which they had received towards interest. It further held that those assessees who had made payments towards the debts would be entitled to deduct from their income and claim exemption from tax only such amounts as they had paid on account of interest but they would not be entitled to deduct any payment made on account of principal. The High Court also gave a direction that in the case of open payments the respective amounts paid towards principal or interest should be ascertained in accordance with the law of appropriation of payments. Neither the learned Solicitor-General, who appeared for the revenue, nor the learned counsel, who appeared for the assessees, questioned the correctness of the said directions if the construction we placed on the Ordinance was correct. The directions given by the High Court will, therefore, stand. Appeal dismissed.
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1964 (10) TMI 12
Whether on the facts and in the circumstances of the case the said sum of ₹ 2,74,610 and ₹ 2,86,823 being the interest paid by the assessee is allowable as a deduction under the Income-tax Act under any of the sections 10(2)(iii), 10(2)(xv) or 10(i) ?
Held that:- We are, therefore, of the view that the allowance claimed is a permissible deduction under section 10(2)(xv). Appeal allowed.
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