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Case Laws
Showing 41 to 60 of 129 Records
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1976 (12) TMI 115
Whether the administrative ceiling imposed by the Board on September 28, 1967, on the remuneration payable to the managing directors by the company is ultra vires or illegal ?
Whether the refusal by the Board to enhance the remuneration of the managing directors above the ceiling of Rs. 50,000 for the loss year was bad because the company was not granted adequate hearing and because the order of refusal did not state the reasons there for ?
Held that:- Appeal allowed.The High Court was in error in quashing the order of the Board. According to the affidavit filed on behalf of the appellant-Board, since 1959 the said Board has been imposing a maximum administrative ceiling on the total amounts payable to a managing director. The basic principle that has been kept in view by the Board is that no individual should be paid remuneration exceeding Rs. 1,20,000 per annum or Rs. 10,000 per month. A large number of instances have also been given by the Board and it would appear there from that the maximum remuneration which has been allowed by the Board to the managing director of any company is Rs. 1,20,000.
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1976 (12) TMI 101
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... ... ..... sion of amusement to client, customer or constituent by way of hospitality or otherwise will always be entertainment. With respect were prefer to follow the above dictum of there Lordships of the Gujarat High Court to that of the Allahabad High Court and of the Kerala High Court on which reliance was placed for the Department. The provision of coffee and other refreshments to the customers in the instant case appears to us to be in the nature of bare necessity or ordinary courtesy having regard to the nature of the business carried on by the assessee. The expenditure incurred was modest and quite reasonable compared to the huge turn-over of the assessee rsquo s business. We are therefore, of the view that the expenditure in question cannot be characterised as entertainment at all. In this view of the matter the disallowance of the above expenditure is unsustainable. We, therefore, confirm the order of the AAC on this point. 7. The appeal of the Revenue fails and is dismissed.
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1976 (12) TMI 99
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... ... ..... entertainment. With respect we prefer to follow the above dictum of their Lordships of the Gujarat High Court to that of the Allahabad High Court and of the Kerala High Court, on which reliance was placed by the department. The provision of coffee, cool-drinks and other refreshment to the customers in the instant case appears to us to be in the nature of bare necessity or ordinary courtesy having regard to the business of the assessee. The expenditure incurred was modest and quite reasonable compared to the income of the assessee. We are, therefore, of the view that the expenditure in question cannot be characterised as entertainment at all. In this view of the matter the disallowance of the above expenditure is unsustainable. We set aside the disallowance of the claim of Rs. 99,990 in its entirely. In this view of the matter it is not necessary for us to consider the alternative contention raised by the assessee on the basis of s. 37(2B) of the Act. 6. The appeal is allowed.
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1976 (12) TMI 98
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... ... ..... annot be stated that he is not a manufacturing unit. At best, the assessee is not a commercial unit but that industrial production has been done cannot be denied. Thus, so far as the personal business is concerned, the assessee satisfies all the conditions necessary for exemption under s. 5 (1)(xxxi). The WTO has correctly excluded the sum of Rs. 79,933 from the assessment. To this extent the order of the Commissioner is set aside. 6. As regards the assets of the undertaking carried on by the firm, the firm is not the owner of the plant and machinery. Admittedly these belong to the assessee. The conditions necessary for the application of s. 5(1) (xxxii) are not satisfied in the present case. The Commissioner rsquo s order, therefore, in so far as enhancing the net wealth by Rs. 37,266 is concerned, should be upheld. We, therefore, allow the assessee s appeal in part and direct that the taxability of the assessee be determined on the above basis. The appeal is partly allowed.
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1976 (12) TMI 95
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... ... ..... owance, there must in the year of account be a present obligation capable of commercial valuation. The above observation lay down the principle that the present value on commercial valuation of money payable in future under a definite obligation would be permissible outgoing or deduction. In the case before the Supreme Court it was held that the liability to pay retrenchment compensation arose for the first time after the closure of the business and not before, that it arose not in the carrying on of the business but on account of the transfer of the business and that during the entire period that the business was continuing there was no liability to pay retrenchment compensation. 8. In the present case the gratuity based upon actual valuation is a definite obligation and as such is a permissible outgoing or deduction as laid down by the Supreme Court in the above case. For the foregoing reasons we uphold the order of the AAC. The appeal of the Revenue fails and it dismissed.
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1976 (12) TMI 94
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... ... ..... ortgages, as in the instant case, where the period of redemption is six years or less and the mortgages are not redeemed in that period, the interest would continue to be available to the assessee even after the expiry of the period of six years. Further as pointed out earlier if loans advanced by the assessee are liable to be included in the assessees rsquo assets, we fail to see how the loans which are advanced on the security of property would be liable to be excluded from the assets of the assessee. We have, therefore, no hesitation in holding that the relief granted by the Appellate Assistant Commissioner in respect of the inclusion of the principal amount of the loans advanced on mortgages and other by the assessee is unwarranted and should be set aside and we direct accordingly. 7. Consequently the interests on such loans advanced by the assessee are also liable to be included. In the result the appeals of the Revenue are allowed and the cross-objections are dismissed.
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1976 (12) TMI 91
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... ... ..... under the old provision) of the amount by which such capital gain exceeds Rs. 5,000. (ii) In regard to long term capital gains relating to other capital assets, the deduction will be allowed in an amount equal to Rs. 5,000 50 percent... (as against 65 per cent under the old provision) of the amount by which such capital gain exceeds Rs. 5,000. These amendments came into force with effect from 1st April, 1972. rsquo rsquo A plain reading of the above provision clearly indicates that deductions admissible in respect of buildings and lands and other capital assets are to be calculated at different rates and should be computed separately. In the instant case, the assessee had derived capital gains of Rs. 7,13,000 on the sale of lands. In terms of s. 80T of the Act deduction as provided therein is clearly admissible on Rs. 7,13,000. We have, therefore no hesitation in upholding the order of the Appellate Assistant Commissioner. 5. The appeal of the Revenue fails and is dismissed.
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1976 (12) TMI 90
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... ... ..... ppear to be a charitable object. But if we retrace out steps 35 years back, when the trust was created and taking into account the social custom, community outlook and the religious beliefs prevailing at that time, we have no difficulty in coming to the conclusion that creating a trust and setting apart funds for meeting marriage expenses of the needy and the poor is for a charitable object. An endowment for giving cash grants for the needy and the deserving persons to meet marriage expenses is the outcome of benevolence and piety born out of religious beliefs and the income from such a trust is, therefore, exempt under s. 4(3)(i) of the IT Act, 1922. We also make it clear that the income attributable to the trust created under the deed, dt. 28th Nov., 1941, is exempt under s. 4(3)(i) of the IT Act, 1922. The point is answered in favour of the appellant. 14. In the result, the appeals are allowed to the extent indicated above and the assessments should be revised accordingly.
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1976 (12) TMI 85
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... ... ..... ed the matter to go out of their hands. It is in that context that the decision was to be made to completely discharge the workers and the only way was to make the payments to them. It was open to them to have continued the business even after 15th March, 1969 but after mature and due consideration it was found that it would not be desirable to continue the business. In the light of the above facts and circumstances of the case, we find that not only the liability had arisen before the actual closure of the business but also for the purpose of the business. Therefore, the payments are clearly revenue in nature and admissible under s.37. Accordingly we are of the view that the lower authorities have not appreciated the facts of the case fully and had erred in disallowing the payments for gratuity and retrenchment compensation. We, therefore, set aside their orders and direct the ITO to modify the order by restoring the allowance. In the result, the appeal is allowed on merits.
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1976 (12) TMI 84
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... ... ..... an asset of a pre-existing joint family the income therefrom would be assessable in the hands of the family of the assessee, his wife and his Unmarried daughters, which is clear from the following observation at page 795 mdash Thus Kathoke Lodge may be usefully described as the property of the family after it was thrown into a common stock but it does not follow that in the eye of Hindu law it belongs to the family, as it would have, if the property were to devolve on the appellant as a sole surviving coparcener . In the case before us the Rs. 10 lakhs worth of shares admittedly belonged to a pre-existing joint family and therefore the income arising out of the said shares is assessable in the hands of the family of Shri S. Balasubramanian, his wife and his unmarried daughters. 12. For the foregoing reasons we have no hesitation in rejecting the contentions raised by the learned Special counsel for the Revenue. In the result the appeals of the Revenue fail and are dismissed.
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1976 (12) TMI 83
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... ... ..... penalty proceedings the burden is on the revenue to show that the amount added represented the income of the assessee earned during the relevant year of account and concealed by him. As pointed out earlier, on the facts of this case, there is no material on record to show that the amounts ultimately sustained by the appellate authorities in this case represented the income earned by the assessee during the relevant accounting year under appeal and concealed by it. In the absence of such proof the penalty levied is unsustainable. The assessee cannot also be deemed guilty of concealment under the explanation to s. 271(1)(c), in so far as, in our opinion, on the facts of the case as set out above, the assessee can be said to have discharged the onus cast on him. We, therefore, hold that there is no justification for the levy of penalty on the basis of the facts and materials before the Inspecting Assistant Commissioner. We, therefore cancel the penalty. 6. The appeal is allowed.
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1976 (12) TMI 79
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... ... ..... Central Government Departments, the tax shall be levied only at 3 per cent with effect from 1st July, 1967. The assessee has produced a letter dated 5th November, 1975 signed by the Assistant Controller of stores in the Integral Coach Factory, wherein he has signed for and on behalf of the President of India. It is clear therefore, that Integral Coach Factory, which is a section of the Indian Railways is a department of the Central Government. The fact cannot be disputed. Hence, we find on this point that sales-tax should be levied only at concessional rate of 3 per cent on the sale turnover of Rs. 35,026-30. 7. In the result, the appeal is allowed in part, the order of the learned Appellate Assistant Commissioner is modified and the rate of tax is ordered to be levied at 9 per cent on the turnover of telephone cables viz. Rs. 53,681-88 and at 3 per cent on a turnover Rs. 35,026-30 and in other respects, the order of the learned Appellate Assistant Commissioner is confirmed.
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1976 (12) TMI 77
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... ... ..... the Act, It was under the impression that there was change of the opinion and, as such, the assessee did not think it proper to file the return within time as required u/s 148 of the Act. Later on, when the assessee came to know that in quantum matter this matter became final, then the return was filed. Thus, it is clear that there were preponderance of probabilities which prevented the assessee from filing the return in time. At least, on behalf of the department, no convincing evidence was brought on record to establish that the assessee in conscious disregard of its obligation failed to file the return in time. In support of this conclusion I am fortified by the ratio of decision in the case of The Additional Commissioner of Income-Tax, Gujarat, Ahmedabad vs. M/s I.M. Patel and Co., Khambalaj, Taluka Anand, Dist Kaira. Thus in my opinion the impugned penalty order should be cancelled. Accordingly the same is cancelled. 14. In the result, all the three appeals are allowed.
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1976 (12) TMI 76
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... ... ..... g any finding about the future possible conduct of the assessee. 6. Following the principle laid down in CIT vs. Anwar Ali (1) we hold that though the explanation about the sources of investment was not accepted in the assessment proceedings, no inference about concealment of income could be drawn on that basis alone. The nature of the explanation in the assessment proceedings and in the penalty proceedings is not the same. In the former, the assessee has to fully discharge the burden of proving the sources of his income whereas in the latter, he has only to furnish a plausible explanation. 7. The learned Appellate Asst. Commissioner observed that the case fell within the Explanation to s.271(1)(c) of the Act. We believe that from the material on record, no inference of fraud or wilful neglect could be drawn against the assessee nor was any such finding recorded by the authorities below. 8. Taking into consideration all these facts, we allow the appeal and cancel the penalty.
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1976 (12) TMI 75
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... ... ..... t could not be inferred that she concealed the particulars of her income in the original return. 16. We may in passing observe that the authorities below thought that the case of the assessee was covered by the Explanation to s. 271(1)(c) of the Act. This is not correct because if her revised return is taken as the basis then the assessed income did not exceed 80 of the total income as shown. In any case, even if the Explanation is invoked, there was nothing to indicate that the assessee was guilty of fraud or gross or wilful neglect. 17. Thus, keeping in view the principles laid down by Their Lordships of the Supreme Court in Hindustan Steel Ltd. vs. State of Orissa(5) and CIT vs. Khoday Eswara and sons(6), we hold that the burden to prove that the Act of the assessee came within the mischief of s. 271(1)(c) of the Act was on the Revenue and in the instant case the department failed of discharge this burden. 18. The appeal is, therefore, allowed and the penalty is cancelled.
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1976 (12) TMI 74
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... ... ..... raj Krishna Rao vs. Darsu(3) with the observations that s. 5 (old) of the Limitation Act giving the court a discretion which is to be exercised in the way in which judicial power and discretion ought to be exercised upon principles which are well understood, the word sufficient cause receiving a liberal construction. In our opinion, the letter written by the assessee to the counsel at Kanpur is a sufficient proof showing the bonafide impression that the due date of filing the appeal was 29th April, 1974. We are, therefore, satisfied that delay in filing the appeal was due to this wrong impression. In such a case the citation given by the learned departmental representative does not help the department. We accordingly condone the delay, particularly when it was a small delay of four days, and direct the Appellate Assistant Commissioner to decide the matter on merits. The appeal is accordingly restored to his file for disposal on merits. 7. In the result, the appeal is allowed.
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1976 (12) TMI 73
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... ... ..... f the Contracts (135 out of 148) involving delivery of 2,112 tonnes of oil as against 2,318 tonnes contracted to be sold. The manner in which these contracts were executed shows that the payment of price difference for the unfulfilled contracts was not such as would make the transactions constitute a different and distinct business. In the circumstances, we hold that the transactions in question did not constitute a business different from the ready business to which they related as required by Expln. 2 to s. 28. Therefore, the loss incurred by the assessee by payment of price differences cannot be treated as loss from a speculation business to which s. 73(1) would apply. They have to be treated as losses arising from ready business of the assessee and have to be set off against the profit therefrom. We accordingly direct that the sum of Rs. 85,643 be allowed as a deduction against the income of the assessee form its regular business. 11. In the result, the appeal is allowed.
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1976 (12) TMI 72
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... ... ..... ies of the firm the converse is not true, for, more co-ownership does not indicate that the property belongs to the firm unless there is an intention to treat the property as that of the firm. The partners are, therefore, free to treat the property as that of the firm or not and any arrangement of their affairs in such a manner as to reduce the incidence of tax can not for that reason alone be held to be invalid. We are, therefore, convinced that as a matter of fact the partners of the assessee firm took out the immovable properties from the firm and thereafter they could not be treated as the properties of the firm. It follows that the income arising from those properties could not be assessed as part of the total income of the assessee firm, We, therefore, direct the deletion of the said income of Rs. 14,046. We direct the ITO to recompute the income of the firm accordingly and we authorise him to amend the assessment of the partners as a consequence. The appeal is allowed.
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1976 (12) TMI 71
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... ... ..... cts of that case. In fact their Lordships have gone on record to say that as a proposition of law it may be correct that where a revised return, as contemplated under S. 139(5), is submitted before the assessment is made, after the assessee had discovered some omission or some wrong statement in the original return, a penalty proceeding for concealment for the particulars of income or furnishing inaccurate particulars of such income as contemplated under S. 271(1)(c) of the Act, may not be attracted. The only condition that they laid down was that the revised return must be within the correct ambit and scope of S. 139(5). In the case of the assessee we have already found that all finally revised returns were in order. The facts are in favour of the assessee and even on the basis of preponderance of probabilities, the benefit must go to the assessee. We, therefore, cancel all the penalties levied by the Inspecting Assistant Commissioner. 11. In the result, appeals are allowed.
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1976 (12) TMI 70
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... ... ..... nstalments before the dates of September and December, 1973, and March, 1974. The assessee duly intimated this to the Income Tax Officer in her reply dated15th January, 1974when she received the notice u/s 221. Thus she had substantially compiled with her obligations to pay the advance tax, though she did not technically file a formal estimate of advance tax as required by s. 212. A paltry amount of Rs. 132 towards tax had remained left. We do not think that for such default the assessee should have been visited with penalty u/s 221, more so when she is a lady. It is to such cases when the assessee had no ulterior object of any personal gain nor the Revenue was put any loss that the ratio of the decision of the Supreme Court in the case of Hindustan Steel (1) is attracted. Penalty need not essentially be imposed for every technical or venial breach of law. We are therefore unable to sustain the levy of any penalty rsquo s 7. The result therefore is that the appeal is allowed.
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