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1978 (6) TMI 31
Benami Income, Benami Transaction, Income From Business, Speculative Transactions ... ... ... ... ..... ve been taken by a director or any other person from a company without any claim of right had to be repaid or returned to the company if the company on discovery of such unauthorised taking sought to enforce restitution. In the instant case, the Tribunal has found that the assessee had control over the company and was enjoying the use of the car and has also held that the notional income on this account should be deemed to be income from other sources. Therefore, it appears that the Tribunal impliedly accepted the position that there was no contractual obligation of the company to provide the use of the motor car as a perquisite or benefit. We are in respectful agreement with the principles of law laid down by the Madras High Court in CIT v. Adaikappa Chettiar 1973 91 ITR 90. Therefore, following the same, we answer the question No. 2 in the negative and in favour of the assessee. In the facts and circumstances, there will be no order as to costs. C. K. BANERJEE J.--I agree.
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1978 (6) TMI 30
Business Expenditure, Manufacture And Sale ... ... ... ... ..... t to maintain an office at Kanpur for rendering of such service whenever it may be required. It is nobody s case that the control as was imposed by the Central Government in 1959 was meant to continue permanently. The bona fides of the agreement between the assessee and its agent have also not been challenged. For the reasons given above, we hold that the commission paid to the agent was backed by adequate commercial consideration and that the expenditure incurred by the assessee under the agreement was expedient for the purpose of the business of the assessee. The brokerage paid to Singhania was ancillary to the agreement between the assessee and its agent. If payment of commission to the sole selling agent was justified, the brokerage paid to Singhania must necessarily be allowed. For the reasons given above, we answer question No. 2 in the negative and in favour of the assessee. In the facts and circumstances, there will be no order as to costs. C. K. BANERJI J.--I agree.
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1978 (6) TMI 29
Assessment Year, Business Expenditure, Gratuity Liability ... ... ... ... ..... served a copy of his order on the Commissioner on May 12, 1972, even though the AAC supplied a copy of his order to the ITO. The Tribunal had undoubtedly jurisdiction to condone the delay and it is not for this court to consider how the Tribunal was satisfied in the matter, viz., whether it was at the instance of the appellant or the Tribunal was satisfied out of its own from the materials on record. Even assuming that the exercise of the jurisdiction by the Tribunal was not in accordance with the provision of sub-s. (5) of s. 253, we are not inclined to exercise our discretion in the matter in favour of the petitioner by setting aside the order of the Tribunal on that ground. But as we have already held that the appeal was filed within the period of limitation, the question of condonation of delay does not arise. We therefore, uphold the order of the Tribunal in admitting the appeal. The Rule is discharged, but there will be no order for costs. D. C. CHAKRAVORTI J.-I agree.
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1978 (6) TMI 28
Original Assessment ... ... ... ... ..... even the contention of Dr. Pal that the above decision of the Kerala High Court is either distinguishable on facts or is inapplicable to the facts of the case. We, accordingly, in view of the normal convention, follow the said decision with a view to avoid uncertainty in the law and decide the question referred to us in the light of what was held by the Kerala High Court. The item of Rs. 5 lakhs was already included in the computation of net wealth when the original assessment was made by the WTO for the assessment year 1959-60. Accordingly, when reassessment proceedings are initiated at the instance of the revenue in respect of any item the taxing authority and the Tribunal will have no jurisdiction to consider the question of inclusion or exclusion of Rs. 5 lakhs in the computation of the net wealth at the stage of reassessment. The question referred to us is, therefore, answered in the negative and in favour of the revenue. The assessee shall pay the costs of the revenue.
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1978 (6) TMI 27
Income Tax, Indian Company ... ... ... ... ..... es is that the assessee had been engaged by the Corporation. The certificate does not also record as to from whom the remuneration is payable to the assessee. No deduction on account of the salary payable to the assessee was made by the Corporation nor did the ITO at any time ask the Corporation to explain why such deductions were not made. In the premises, it appears that a relationship of employer and employee has not been established between the Corporation and the assessee. In any event, if it be held that it is the Corporation who is the employer of the assessee and not Ansaldo, the Italian company, then there is no agreement between the Corporation and the assessee that the assessee would be paid a tax-free salary. For the reasons given above, the assessee succeeds in this reference. The questions referred Nos. 3 and 4 are both answered in the negative and in favour of the assessee. In the facts and circumstances, there will be no order as to costs. BANERJI J.-I agree.
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1978 (6) TMI 26
Actual Cost, Purchase Price ... ... ... ... ..... pinion, not only the amount paid by way of guarantee commission and stamp charges formed part of the actual cost of plant and machinery, but even the interest paid on the unpaid balance of consideration of the plant and machinery by reason of deferred payment basis also formed part of the actual cost of the assets to the assessee. Thus, our answers to the questions referred to are as under Question No. 1 In the affirmative. Question No. 2 In the affirmative. Question No. 3 In the negative. The interest paid on unpaid price of plant and machinery on deferred payment basis formed part of the actual cost of the assets to the assessee within the meaning of s. 43 of the I.T. Act, 1961, and for the purposes of claiming depreciation and development rebate it has to be treated as part of the actual cost of plant and machinery. In view of our answers to questions Nos. 2 and 3 above, questions Nos. 4 to 7 do not arise for determination. The revenue shall pay the costs of the assessee.
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1978 (6) TMI 25
Levy Of Penalty ... ... ... ... ..... cancelled the penalty imposed by the revenue. According to us, the respondent did not disclose any reasonable or sufficient or justifiable cause for having delayed the wealth-tax returns for 14 months when similar returns of her sisters handled by the same auditor were filed in time, no particular reason is assigned as to why her returns alone were kept back. In the absence of any acceptable explanation, we are of the view that the penalty was rightly levied by the revenue and the Tribunal was wrong in having found that the assessee had reasonable cause for not filing the returns in time and that the entire period of default has to be excused as if there are valid materials for doing so. In the light of this conclusion, we are also of the view that the Tribunal was not right in cancelling the penalty under s. 18(1)(a) of the W.T. Act, 1957. In the result, questions Nos. 3 and 4 are answered in favour of the revenue and against the assessee with costs. Counsel s fee Rs. 250.
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1978 (6) TMI 24
Best Judgment Assessment ... ... ... ... ..... . 13,000 for keeping irregular accounts and the department not content with this, has also taken criminal proceedings against the accused, and the learned Magistrate has awarded sentence on the firm (accused 1) and also on accused 2, 3 and 9. The learned Magistrate after considering the evidence and perusing the documents in this case has awarded the sentences and I do not think that this court can interfere in the sentence awarded by the learned Magistrate. In these circumstances, I dismiss this appeal. Mr. C.K. Venkatanarasimhan, the learned counsel appearing for the department, has been fair in placing all the materials before this court and this court records its appreciation. Tr. Crl. A. No. 447 of 1976 This is filed by accused 1 to 3 against the sentence imposed by the judicial First Class Magistrate, Salem. Counsel appearing for the appellants in this appeal has made an endorsement to the effect that he is not pressing this appeal. Therefore, this appeal is dismissed.
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1978 (6) TMI 23
Computation Of Capital, Super Profits Tax ... ... ... ... ..... be construed in the context of the S.P.T. Act, 1963. For the reasons above, following the earlier decisions of this court in Braithwaite and Co. (India) Ltd. s case 1978 111 ITR 729 (Cal) and Duncan Brothers and Co. Ltd. s case 1978 111 ITR 885 (Cal), we hold that the provision for taxation in the present case cannot qualify as a reserve within the meaning of r. 1 of the Second Schedule of the S.P.T. Act, 1963. It only remains for us to consider the nature of the other amount of Rs. 11,41,689. Even accepting the contentions of Mr. Roy in their entirety this amount cannot be held to be a reserve . After providing for taxation, reserves and dividend this amount was left unappropriated and without being set apart for any purpose. We hold that this amount was unappropriated profits and not reserve. Accordingly, we answer the question referred in the affirmative and in favour of the revenue. In the facts and circumstances, there will be no order as to costs. BANERJI J.--I agree.
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1978 (6) TMI 22
Bad Debt, Write Off ... ... ... ... ..... is the successor or transferee to claim deduction even without himself writing off the debt after he took over the business as the conditions set out in that provision are satisfied. Admittedly, there has been a writing off of the debt as a bad debt by the transferor but that claim was not accepted by the ITO on the ground that it has not been established to have become a bad debt in the assessment year in which the claim was made. Since the debt has already been written off as irrecoverable in the accounts of the earlier previous year, there is no necessity for a further or fresh writing-off of the debt by the assessee after he took over the business in view of the above provision. In our view, therefore, the Tribunal was right in allowing the deduction in a sum of Rs.16,363 as a bad debt in the year 1966-67. The above two questions are, therefore, answered in the affirmative and against the revenue. The assessee will have his costs. Counsel s fee Rs. 250 from the revenue.
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1978 (6) TMI 21
Burden Of Proof, Capital Or Revenue Expenditure, Expenditure Incurred ... ... ... ... ..... assessee to produce the relevant materials that were asked for, which could assist the taxing authority and the Tribunal to decide the question. When such is the position, we have to decide the question on such material as has been produced by the assessee before the taxing authority and the Tribunal and we see no reason why the case should be remanded to the Tribunal for taking additional evidence as, according to us, the onus that lies upon the assessee of showing that the particular item of expenditure claimed by way of deduction is not of a capital nature has not been discharged. The sum of Rs. 1,00,000 paid to the Industrial Aid International cannot be regarded as a permissible deduction. Accordingly, our answer to question No. 2 is as under Having regard to the observations made in the judgment, the assessee will not be entitled to the deduction in the sum of Rs. 1,00,000 as an item of expenditure under s. 37 of the Act. The assessee shall pay the costs of the revenue.
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1978 (6) TMI 20
Business Expenditure, Capital Expenditure, Carrying On Business, Commencement Of Business ... ... ... ... ..... having set up its business by 19th August, 1961, which would mean that it would be entitled to the expenses incurred thereafter as expenses incurred in the course of its business. The result of the foregoing discussion would be that the order of the Tribunal, which sustained the order of the AAC giving directions to the ITO as found in para. 5 of his order cannot be sustained. The admissible business loss will have to be calculated by the ITO bearing in mind the aforesaid date we have indicated (i.e., 19th August, 1961) and on the same basis he will determine the depreciation and development rebate admissible to the assessee-company. In the result, the question referred to us is answered as follows On the facts and in the circumstances of the case, the assessee must be regarded as having set up its business by 19th August, 1961, and not in February, 1961. The fair order as to costs would be to direct both the sides to bear their own costs of the reference. Order accordingly.
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1978 (6) TMI 19
Bonus Shares, Cost Of Acquisition, Equity Shares ... ... ... ... ..... investor in shares is different from that of a dealer in shares. It is quite apparent that if the principle laid down by the Supreme Court in Dalmia Investment Co. Ltd. s case 1964 52 ITR 567 is borne in mind, then the method of calculation of capital gains canvassed on behalf of the assessee cannot be accepted. The method that has been adopted by the ITO, which has been approved by the Tribunal is on the average basis and having regard to the facts and circumstances of the case and the principle laid down by the Supreme Court in Dalmia Investment Co. Ltd. s case 1964 52 ITR 567, the amount of capital gains calculated by the ITO is correct. Thus, in our opinion, the Tribunal was right in affirming the view taken by the ITO that the capital gains realised by the assessee on sale of shares of the company, viz., the New City of Bombay Manufacturing Company Ltd., was Rs. 7,50,958. We answer the question referred to us accordingly. The assessee shall pay the costs of the revenue.
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1978 (6) TMI 18
Companies Profits Surtax, Computation Of Capital, Dividend Reserve, General Reserve ... ... ... ... ..... he amount was realised three or four years subsequently and has been taxed would seem to make no difference to the conclusion to be arrived at for the assessment year in question, which conclusion appears to us to be the correct one and justified on the facts and circumstances of the case. The Tribunal placed reliance for its conclusion on Sherwani Bros. Co. Ltd. v. CIT 1953) 23 ITR 51 (All). It was submitted at the Bar that the facts in that case were stronger against the assessee than the facts in our case. To a certain extent, there is force in this argument. However, as we have expressed earlier, even if this decision be not taken into consideration, the conclusion of the Tribunal appears to be correct. At any rate, it is not such a conclusion which calls for interference or revision on the facts and the material available before the Tribunal. In the result, the question is answered in the negative and against the assessee. The assessee to pay the costs of the reference.
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1978 (6) TMI 17
Central Government, Failure To Disclose, Managing Agent, Reopening Assessment ... ... ... ... ..... tral Government was necessary for granting of a loan by a managing agent to the managed company. If the loan by the managing agent to the managed company was proper and legal, then the payment of the amount of interest cannot be open to challenge, in the present case, on the footing that such payment of interest of Rs. 270 by the assessee to the managing agent was not legal, as it was without the sanction of the company by a special resolution or of the approval of the Central Government. As for initiation of these proceedings, in Suit No. 196 of 1962, a clear view was taken by me, sitting as a single judge of the court, that such a loan by a managing agent to the managed company did not require the sanction of the company by a special resolution or the approval of the Central Government there was no question of any part of the income of the company escaping assessment. In the result, the question referred to us is answered in the negative. Each party will bear its own costs.
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1978 (6) TMI 16
Appeal To Supreme Court, High Court, Partnership Firm, Registration Of Firm ... ... ... ... ..... ered by the Supreme Court in the case of Dwarkadas Khetan and Co. 1961 41 ITR 528 (SC), and it was possible to take a view different from the view expressed by the Supreme Court. We do not think that on the ground that a particular argument was not considered by the Supreme Court while deciding a particular case, we can disregard its decision when the point in issue has been decided by it (vide Smt. Somawanti v. State of Punjab, AIR 1963 SC 151 33 Comp Cas 745). We are of opinion that the view taken by the decision in Dwarkadas Khetan and Co. 1961 41 ITR 528 (SC) clearly applied to the facts and circumstances in these two cases and the decision therein precludes us from taking a contrary view. Accordingly, we hold that the Tribunal was in error in construing the partnership deed as one by which the minor, Shivashankar, had been admitted only to the benefits of the partnership. The questions referred to us are answered in the negative and in favour of the department. No costs.
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1978 (6) TMI 15
Cash Credits, Voluntary Disclosure ... ... ... ... ..... at liberty to disclose his income, which, in the ordinary course, was assessable, had escaped assessment in the earlier years. Thus, we are in agreement with Mr. Sen that there was absolutely no scope for acceptance or rejection of the petition of disclosure or there was any scope for an enquiry and this position was also conceded before us by Mr. Pal. There is also great force in the contention of Mr. Sen that the conclusion of the Tribunal, namely, that the assessee has duly explained the nature and source of the income is perverse in view of the aforesaid inconsistent and contradictory findings of fact. In the premises, our answer to the question is that the conclusion of the Tribunal that the source and the nature of the cash credits were duly explained by the partner, Ghanshyamdas Binani, in the disclosure petition made by him was not justified in law and was unreasonable and perverse, and is in favour of the revenue. There will be no order as to costs. DEB J.--I agree.
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1978 (6) TMI 14
Companies Profits Surtax, Computation Of Capital, Dividend Reserve, General Reserve ... ... ... ... ..... he Tribunal in holding that the amount is eligible for inclusion in the computation of the capital of the company. It is true that the Tribunal has relied, in coming to this conclusion, on the Kerala case (CIT v. Periakaramalai Tea and Produce Co. Ltd. 1973 92 ITR 65) which was declared to be bad law by the Full Bench of this court in Hyderabad Asbestos Cement Products Ltd. v. CIT 1976 105 ITR 822. However, it is not necessary to rely on that Kerala decision at all for deciding the nature of the reserve of this amount of Rs. 1,93,577. What I have pointed out clearly shows that it is a reserve and shall be available for computation of the capital of the company under the Surtax Act. I, therefore, answer the second question in the affirmative and in favour of the assessee. In the result, the two questions referred to the High Court are answered as stated above. Having regard to the circumstances of the case, I direct the parties to bear their own costs. MADHAVA RAO J.--I agree.
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1978 (6) TMI 13
Agreement For Avoidance, Double Taxation Between India And Pakistan, Income Tax Act, Mistake Apparent From Record, Rectification Of Mistakes
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1978 (6) TMI 12
Charitable Institution, Gross Total Income ... ... ... ... ..... it as per the provisions of sub-s. (4), to Rs. 40,308.40, which represents 10 of the gross total income. Therefore, the assessee is clearly entitled to a deduction of Rs. 40,308.40 and not Rs. 22,169 which represents 55 of 10 of the total income. The latter figure is wholly inconsistent with the provisions of s. 80G. As we have pointed out, there is no warrant anywhere in s. 80G, much less in sub-s. (4) for deducting only 55 of 10 of the total income. The concept of 55 deduction is stated only in sub-s. (1) and sub-s. (4) prescribes only the ceiling limit at 10 of the total income. Therefore, the answer to the question is that the assessee was not entitled to a deduction of a sum of Rs. 22,169 only, being 55 of 10 of the total income but is, on the other hand, entitled to a deduction of Rs. 40,308.40. In the result, the question referred to us is answered in the negative and in favour of the assessee. The assessee will have his costs from the revenue. Advocate s fee Rs. 250.
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