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1976 (7) TMI 45
Debts And Incumbrances, Estate Duty, Principal Value Of Estate ... ... ... ... ..... ly (1) Several restrictions contained in the instrument of partnership dated November 12, 1958, by themselves had not rendered the partnership void in law but the said restrictions taken along with several facts and circumstances that emerged on record are sufficient to come to the conclusion that the partnership was not a genuine partnership. (2) There was sufficient evidence on record to support the finding of the Tribunal that the status of the partners was no more or higher than dignified employees and for a further finding that the agency of the partners inter se had not been established. Answers to the two questions having gone in favour of the department, the remaining two questions in I. T. Application No. 35 of 1964 are answered thus (1) In the affirmative in favour of the department. (2) In the affirmative, that is to say, individual, Shri Dhanji Lalji, was liable to be taxed on the entire profits of M/s. Dhanji Lalji. Assessees will pay the costs of the reference.
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1976 (7) TMI 44
A Firm, A Firm, Partnership Deed, Partnership Deed ... ... ... ... ..... and the Tribunal were justified in relying upon the same for granting registration and renewal of the firm. Though it appears from the order of the Tribunal that some High Courts might have taken a different view, so far as we are concerned we are bound by the decision of a court of co-ordinate jurisdiction unless our attention is drawn to a decision of the Supreme Court where a contrary view is taken. Mr. Joshi has not even informed us that the Supreme Court has taken a view contrary to the one taken by this court in Chhotalal Devchand s case 1958 34 ITR 351 (Bom). In that view of the matter, both having regard to the particular facts of this case as well as the decision of this court in Chhotalal Devchand s case 1958 34 ITR 351 (Bom) the firm was rightly registered for the year 1958-59 and its registration was rightly renewed in the year 1959-60. In the result, our answer to the question referred to us is in the affirmative. The revenue shall pay the costs of the assessee.
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1976 (7) TMI 43
Computation Of Capital Reserves, Computation Of Capital Reserves, Development Rebate Reserve, Development Rebate Reserve, General
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1976 (7) TMI 42
Minor Admitted To Benefits Of Partnership, Minor Child, Share Income ... ... ... ... ..... 16(3)(a) of the 1922 Act, to leave out of the scope of that section a person who was already within the net of that statutory provision, particularly when the legislature was trying to rectify a lacuna pointed out by the Supreme Court with reference to the language contained in section 16(3) of the 1922 Act. This interpretation of ours derives support from a judgment of the Allahabad High Court in Smt. Priti Lata Samanta v. Commissioner of Income-tax 1971 79 ITR 18 (All). In that case also, an identical argument was advanced and that was rejected by the Allahabad High Court. Under the above circumstances, we answer the questions covered by T.Cs. Nos. 8 of 1971 and 369 of 1975 in the affirmative and against the assessee. In view of this answer to the questions covered by T.Cs. Nos. 8 of 1971 and 369 of 1975, we answer the questions covered by the other tax cases also in the affirmative and against the department. There will be no order as to costs in any of these references.
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1976 (7) TMI 41
Income Tax, Net Wealth, Total Income ... ... ... ... ..... wealth-tax. The ratio of this decision is clearly applicable to the facts of the present case. From one point of view the facts of the, present case are stronger because the trustees are given the power not only to utilise the net income of the trust estate and all accumulations of the income and profits thereof, but even the corpus of the trust estate for the benefit of the minor child until he attains the age of 21 years. To preserve uniformity in taxing statute it is customary for the High Court in respect of an all India statute to follow a decision of another High Court even though it may be of persuasive value. Thus, as the facts in the present case are much stronger than those in the case before the Gujarat High Court, the decision will be clearly applicable. Question No. 2, accordingly, has to be answered in favour of the revenue. Question No. 2 accordingly is answered in the affirmative and in favour of the revenue. The assessee shall pay the costs of the reference.
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1976 (7) TMI 40
Capital For Surtax, Dividend Reserve ... ... ... ... ..... o be regarded as making a provision for contingent liability, the present discounted value whereof had not been ascertained. In the circumstances, we are of the view that these three items which were found credited in the gratuity reserve will have to be regarded as amounts retained not intended to provide for any known or existing liability and as such these will have to be regarded as reserves. Having regard to the above discussion, our answer to the first question would be in the affirmative and in favour of the assessee. So far as the second question is concerned, the same is covered by our decisions rendered in I. T. References Nos. 49 of 1972 (Commissioner of Income-tax v. Bharat Bijlee Ltd. 1977 107 ITR 30 (Bom) and 316 of 1975 (Commissioner of Income-tax v. Marrior(India) Ltd. 1977 107 ITR 35 (Bom) on 28/29-7-1976 and 29-7-1976, respectively, and that question will have to be answered in the negative and in favour of the department. There will be no order as to costs.
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1976 (7) TMI 39
Capital For Surtax, General Reserve ... ... ... ... ..... looking at the matters commercially, if the current income is sufficient to meet the expenses to be incurred and for disbursement to be made in respect of that year, the said current income should be utilised for the discharge of such expenses and disbursement and the past savings would not be touched unless it is expressly otherwise stated while doing so. This principle we have already followed earlier while deciding Income-tax Reference No. 49 of 1972 Commissioner of Income-tax v. Bharat Bijlee Ltd. 1977 107 ITR 30 (Bom) to-day. Unless express provision is made while making a recommendation for utilising particular fund for payment of dividend this principle has to be followed. Following the said principle, in both the years the sums of Rs. 2,10,000 and Rs. 2,25,000 cannot be included in the computation of capital of the company. In the result, our answer to the question referred to us is in the affirmative and in favour of the revenue. There will be no order as to costs.
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1976 (7) TMI 38
Computation Of Capital, Dividend Reserve ... ... ... ... ..... rring the expenditure or making disbursements. In the present case there is no doubt that, ordinarily, if the current profits are sufficiently available, then the same will be utilised for the purpose of payment of the dividend and, looked at from that point of view, the sum of Rs. 2,30,000 should be regarded as having been paid out of the sum of Rs. 4,35,000. The aggregate amount thus standing to the credit of the dividend reserve account would be Rs. 3,60,000 after payment of the dividend amount of Rs. 2,30,000. Thus, our answers to the questions referred are as under Question No. 1 is answered in the affirmative, but the quantum of the amount which should be treated as reserve includible in the computation of capital of the assessee-company will depend upon the facts of the case. Question No. 2 The dividend reserve includible in the computation of the capital of the assessee-company as on July 1, 1964, was in the amount of Rs. 3,60,000. There will be no order as to costs.
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1976 (7) TMI 37
Capital Of Company, Computation Of Capital, S. 13 ... ... ... ... ..... evident that the various items which are mentioned therein are items of reserves under the heading Reserves and surplus . As, therefore, this case supports the submissions that have been made by Mr. Joshi before us, in respect of an all India statute it is a well-recognised convention that, to avoid uncertainty in law, one High Court should follow the decision of another High Court though it should be regarded as a persuasive authority. We have taken the same view as taken by the Mysore High Court in this case upon relevant consideration of the provisions of rule 1 read with the Explanation to the Second Schedule to the Surtax Act and the view taken by us is supported by the view taken by the Mysore High Court in the above case. Thus, our answer to question No. 3 is in the affirmative and our answer to question No. 4 is in the negative. As the assessee as well as the revenue have partly succeeded in this reference, each party will bear its respective costs of the reference.
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1976 (7) TMI 36
1961 Act, Assessment Year, Delay In Filing, Law Applicable, Levy Of Penalty ... ... ... ... ..... 4, the non-filing of the return on the due date was a continuing default. In the ultimate analysis, we hold that the non-filing of the return on 30th June of the corresponding assessment year is a completed default and not a continuing default and what all clause (i) of section 18(1) as amended by the Wealth-tax (Amendment) Act, 1964, and by section 24 of the Finance Act, 1969, provides is for the scale of penalty that should be levied for every month during which the return was not filed. Hence, the view taken by the Wealth-tax Appellate Tribunal is correct. In the light of what we have held on the first question, it is not necessary for us to probe into the second question formulated by the Wealth-tax Appellate Tribunal in R. C. No. 14/75. Hence, we answer the question. in R. C. No. 51/74 and question No. 1 in R. C. 14/75 in the affirmative and against the revenue with costs. Answer to question Nos. 2 in R.C. No. 14/75 is not necessary. Advocate s fee Rs. 250 in each case.
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1976 (7) TMI 35
Estate Duty, Income Tax, Wealth Tax ... ... ... ... ..... erred to an earlier decision of Das J. in North Bengal Stores Ltd. v. Member, Board of Revenue, Bengal 1938-50 1 STC 157 (Cal). It is not necessary for us to consider the ambit and scope of the word manufacture in view of the decision of the Supreme Court in Devi Dass Gopal Krishnan v. State of Punjab 1967 20 STC 430 (SC), wherein it has been categorically held that conversion similar to the one that has taken place in this case is a process of manufacture. In the light of the above we confirm the judgment of this court in ITR Nos. 74 to 76 of 1973 Commissioner of Income-tax v. Mittal Steel Re-Rolling and Allied Industries (P.) Ltd 1977 108 ITR 207 (Ker) and answer the question referred to us in the affirmative, that is, in favour of the assessee and against the department. We direct the parties to bear their respective costs. A copy of this judgment under the seal of the court and the signature of the Registrar will be sent to the Income-tax Appellate Tribunal, Cochin Bench.
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1976 (7) TMI 34
Bad Debt, Computation Of Capital For Surtax Purposes, Dividend Reserve, General Reserve ... ... ... ... ..... n the circumstances, we are clearly of the view that ,the Tribunal was right in taking the view that the amounts in the doubtful debt reserve account were includible in the computation of the capital of the company for the purpose of the Companies (Profits) Surtax Act, 1964. The first question is, therefore, answered in the affirmative and in favour of the assessee. So far as the second question is concerned, in view of the judgment which has been delivered by us today in I. T. Reference No. 316 of 1975 (Commissioner of Income-tax v. Marrior (India) Ltd. 1977 107 ITR 35 (Bom)) it was fairly conceded by counsel for the assessee, so far as this court was concerned, that the question will have to be answered against the assessee. The question is, therefore, answered thus The amounts in the dividend reserve account were not includible in the computation of the capital of the company for the purposes of the Companies (Profits) Surtax Act, 1964. There will be no order as to costs.
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1976 (7) TMI 33
Burden Of Proof, Deemed Income, Total Income, Undisclosed Income ... ... ... ... ..... ngly answer the question by saying that, in the facts and circumstances of the case and on a true interpretation of section 271(1)(c) read with sections 68 and 2(24) of the Income-tax Act, 1961, the Appellate Tribunal was not right in requiring the revenue to prove that the amount added under section 68 of the Act was in fact income of the assessee so as to warrant assessment for concealment of the same in the return of income (sic). It is appropriate at this stage to bring to the notice of the Income-tax Appellate Tribunal the fact that while penalty was being imposed by the Inspecting Assistant Commissioner he had taken into consideration the total amount of Rs. 69,900. Ultimately, the addition of a sum of Rs. 19,900 only has been sustained and if penalty is to be imposed, this fact has to be kept in view. We would recommend to the Appellate Tribunal to take this aspect into consideration while disposing of the appeal. There shall be no direction for costs. DAS J--I agree.
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1976 (7) TMI 32
Additional Grounds, Appeal To Tribunal, Revenue Receipt ... ... ... ... ..... late Assistant Commissioner or in the absence of any plea before them in that behalf it was impossible for the Tribunal to hold that either of the two authorities erred in taking the view which they took. Reliance was placed by Mr. Dwarkadas upon the decision of this court in the case of J. S. Parkar v. V. B. Palekar 1974 94 ITR 616 (Bom). In this case one of the questions that was argued before the Bench was whether a plea of set-off could be decided on the facts existing on record. The Division Bench has pointed out that such a plea did not require any fresh facts. The case before us is not similar. On the contrary, as stated by the Tribunal, the plea which was sought to be raised by additional grounds of appeal could not be decided by the Tribunal in the absence of material before either the Income-tax Officer or the Appellate Assistant Commissioner. In the result, the question referred to above is answered in the negative. The assessee shall pay the costs of the revenue.
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1976 (7) TMI 31
Computation Of Capital ... ... ... ... ..... . It may be that different considerations may arise if such a situation occurs. But, in the instant case before us, no material has been placed before us to show that the recommendation of the board of directors had been modified or rejected by the shareholders in their general meeting. On the admitted facts which are available on record it seems to us clear that the directors as on the crucial date had not set apart the amount of Rs. 11,83,050 as and by way of any reserve to become available to the assessee-company for business in future but had in fact by their conduct set it apart avowedly for the purpose of payment of proposed dividends which would be destructive of making it or converting it into a reserve. Having regard to the aforesaid discussion the questions referred to us are answered thus Question No. 1 In the negative, in favour of the department. Question No. 2 Affirmative, in favour of the department. Assessee to pay the costs of the reference to the department.
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1976 (7) TMI 30
Enduring Advantage, Municipal Taxes, Revenue Expenditure ... ... ... ... ..... occupy the additional rooms for a period of ten years, or after exercising the option for a further period of ten years, is a right of enduring benefit, though not everlasting. In the instant case also it could be said that by incurring the expenditure of Rs. 27,284 the assessee acquired the right to occupy the additional floor for a period of seven years which could be regarded as a right of enduring benefit, though not everlasting. Having regard to the above conclusion to which we have arrived it is not necessary to refer to the other two decisions to which our attention was invited, viz., the decision of the Punjab High Court in Uttar Bharat Exchange Ltd. v. Commissioner of Income-tax 1965 55 ITR 550 (Punj) and the decision of the Madras High Court in M. Subbiah Nadar v. Commissioner of Income-tax 1953 23 ITR 58 (Mad). In the result, the question that is referred to us is answered in the negative and against the assessee. The assessee will pay the costs of the reference.
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1976 (7) TMI 29
1961 Act, Actual Cost, Local Authority ... ... ... ... ..... he question as to whether details of the expenditure claimed to have been made by Shri Khopkar had been furnished or not furnished, the Tribunal has recorded a finding of fact that there is not even indirect evidence of any expenditure incurred by Shri Khopkar on behalf of the company. In other words, the finding is clear that the assessee-company has failed to discharge the burden that Rs. 26,288 which was purported to have been paid to Shri Khopkar had been expended by the assessee-company for entertainment, presents and commission to push up sales as suggested by the assessee-company. It would not be possible for us to go behind this finding of fact recorded against the assessee-company. It is, therefore, clear that the claim for deduction that was made by the assessee-company was rightly disallowed. In the result, the question that has been referred to us is answered in the negative and against the assessee. Assessee will pay the costs of the reference to the department.
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1976 (7) TMI 28
Sales Tax Liability ... ... ... ... ..... e agreement, is an expenditure laid out wholly and exclusively for the purpose of business. This would be more so in a case where the managing director himself who had served faithfully for the entire duration of the agreement was not likely to get anything more nor was his widow in case of his death after the duration of the agreement entitled to any payment. Thus, in our opinion, the payment of Rs. 1,500 per month to Lady Chandavarkar under the provisions of clause 14 of the agreement cannot be regarded as expenditure laid out wholly and exclusively for the purpose of business. For the same reasons the other amounts payable to Lady Chandavarkar under the provisions of clause 14 of the agreement cannot be regarded as permissible deductions either under section 10(2)(xv) of the Indian Income-tax Act, 1922, or under section 37 of the Income-tax Act, 1961. Accordingly, our answer to the question referred to us is in the negative. The assessee shall pay the costs of the revenue.
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1976 (7) TMI 27
Cash Credits ... ... ... ... ..... estion of fact to be ascertained and established and it is not possible to hold that the point raised for the first time by the assessee before the Tribunal was a simple question of law. Under these circumstances, we are of the opinion that the decision of the Punjab and Haryana High Court referred to above cannot be relied upon in support of the order of the Tribunal in the present case. For these reasons, we are of the opinion that the Tribunal completely erred in relying upon the decision of this court in S. Kuppuswami Mudaliar v. Commissioner of Income-tax 1964 51 ITR 757 (Mad) as an authority for deleting the addition of Rs. 31,000 made by the Income-tax Officer and affirmed by the Appellate Assistant Commissioner in the present case. Consequently, we answer the first question extracted above in the negative and against the assessee. In view of our answer to the first question, it is not necessary for us to answer the second question. There will be no order as to costs.
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1976 (7) TMI 26
Accounting Year, Computation Of Capital ... ... ... ... ..... ovember 1, 1964, constituted part of the capital for the purpose of business and having regard to the peculiar provisions of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act and the provisions contained in the charging section 4, it is quite clear that this sum of Rs. 3,40,000 should be regarded as capital as on the first day of the previous year, viz., November 1, 1964. Thus, our answers to questions referred to us are as under So far as question No. 1 is concerned, the sum of Rs. 3,40,000 out of the dividend equalisation reserve account was includible in the computation of capital for surtax purposes as a reserve as on November 1, 1964. So far as question No. 2 is concerned, the sum of Rs. 5,20,000 out of dividend equalisation reserve account, being the amount transferred to the said account during the current year, was not includible in the computation of capital for surtax purposes as a reserve as on November 1, 1964. Each party will bear its own costs.
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