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1981 (4) TMI 139
... ... ... ... ..... lty of fraud. Other hypothesis as arises from the case of assessee is that Shri Prem Rattan was in possession of savings amounting to Rs. 5,000 and that he received Rs. 10,000 at the time of death of his father. The question for consideration is whether there is any positive evidence from the side of the Revenue to show that the explanation given by the assessee is wholly false. Unless such evidence is available on record and unless the possibility of the assessee s explanation being true is fully ruled out, no penalty can be upheld despite the application of Explanation to s. 27(1)(c). There is nothing on record to show which may prove that the explanation given by the assessee is totally false. Following the ratio of the aforementioned judgment of the Punjab and Haryana High Court we hold that as there is no positive evidence on record to show that the explanation of the assessee is totally false, and so the penalty cannot be upheld. 4. In the result, the appeal is allowed.
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1981 (4) TMI 138
Exemptions, Warehousing Corporation ... ... ... ... ..... ort-term fixed deposits. Idle money belonging to the Corporation was deposited and the interest was earned. The question arose whether such interest income qualifies for exemption under section 10(29). The Allahabad Bench A answered the said question in affirmative and in favour of the assessee. Following the said decision dated 31-7-1976, pages 1 to 5 of the paper book, we hold that the assessee is entitled to claim exemption in respect of interest income amounting to Rs. 11,41,350.25. 4. Then, we take up the supervision charges, fumigation service charges and the miscellaneous income amounting to Rs. 23,790.67, Rs. 6,538.65 and Rs. 48,253.49, respectively, for consideration. The assessee having carried on the single and indivisible activity, we hold that these items qualify for exemption under section 10(29) as they are fully covered by the expression facilitating the marketing of commodities as occurred under section 10(29). 5. In this result, the appeal is partly allowed.
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1981 (4) TMI 137
... ... ... ... ..... medical certificate submitted by the assessee. The extent of the seriousness of the disease, mentioned by the doctor in the medical certificate, could have been ascertained by the AAC only by examining the doctor, but such a course was not adopted. The medical certificate was brushed aside only on the assumption that dysentry was a disease which could not prevent the partner from signing the partnership deed or the application in Form No. 11. in our opinion, the nominal delay of two days submitting to application in Form No. 11 is covered by a reasonable cause and we direct that the said application should be entertained. However, since the assessee s claim has not been considered on merits, we set aside the orders passed by the AAC and the ITO and restore the matter to the file of the ITO who should examine the assessee s claim for registration of the firm on merits and pass the necessary orders accordingly. 6. In the result, for statistical purposes, the appeal is allowed.
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1981 (4) TMI 136
... ... ... ... ..... A.J.C., was of opinion that the demand for super-tax should be made within a reasonable time and therefore, should simultaneously be with the demand for income tax. Both of them held for this reason (amongst others) that the service of the Notice of Demand of 4th May, 1929, was illegal and inoperative to impose liability upon this respondents. Their Lordships do not find it necessary to express any opinion upon his point inasmuch as in their view and for the reasons which they will now proceed to give it does not call for determination in the present case. x x x x x Their Lordships are accordingly of the opinion that the order of 4th May, 1929 was one that the ITO had no power to make and that the second of the two questions to which they have referred must be answered in the affirmative. 3. Thus, respectfully following the same, we cancel the demand made by ITO as no notices were served on the assessee within a reasonable time. 4. In the result, both the appeals are allowed.
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1981 (4) TMI 135
... ... ... ... ..... ssee s contention and restricted the addition to Rs. 5,000. 4. Before me, the ld. counsel of the assessee submitted that the assessee maintained regular books of accounts and the receipt-register was duly inspected by the police authorities, and, in these circumstances, there was no scope for estimated income from the lodge. It was also pleaded that the assessee never charged any rent for the hall. Further, it was submitted that in the succeeding year the net income from this source at Rs. 9,449 was accepted by the ITO. 5. In my opinion, there is force in the contention of the ld. counsel. Since proper accounts have been maintained in respect of the income from the lodge, there is no justification for estimating any income higher than what has been shown by the assessee. In these circumstances, the net income of Rs. 8,942 declared by the assessee should be accepted. The addition of Rs. 5,000 as upheld by the AAC is, therefore, deleted. 6. In the result, the appeal is allowed.
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1981 (4) TMI 134
... ... ... ... ..... e unable to draw the inference that the payment in the present case was on capital. It was clearly interest on funds which were deposited by the members, or advanced by the members, to the association and which the association was permitted to use for its business. In view of this, the decision in ITA No. 326/Hyd/1979 dt. 15th March, 1980 does not help the Department. We do no pronounce on the contentions of the ld. counsel that even if the amount was capital, interest would yet be admissible as a deduction, because the members of an association are different from the association itself, that is not a payment to self and that whether the interest was paid on capital or advances makes no difference, because, in the present case, it is not necessary to do so. Since the payment is on advances, it is fully covered by the Tribunal s decision in ITA No. 1212/Hyd/1972-73 dt. 20th June, 1974 and we direct allowance of the amount of Rs. 14,173. 7. The result is, the appeal is allowed.
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1981 (4) TMI 133
... ... ... ... ..... firm. The partners of capital contribution does not lead to an inference of commonness. 20. Looking to the prime guideline laid down by the Andhra Pradesh High Court in 121 ITR 97 for determining whether two firms are the same or not, we have already found that there was inter-lacing or inter-locking of funds between the two firms or even of their business affairs. The new firm was started to avert competition and to get certain benefits of civil supplies or rather, not to be hit by the Civil Supplies Regulations. As long as the cumulative facts point to the firms being separate, the purpose for which the new firm was brought into being viz., to avert competition etc., cannot make the firms one and the same. We have therefore, to come to the conclusion on the facts, found that no case has been made out for aggregating the income of the two firms. We would accordingly set aside the orders of the CIT and restore the orders of the ITO. 21. The result is, the appeals are allowed.
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1981 (4) TMI 132
... ... ... ... ..... orrect in passing an order under s. 61 of the Act since the dispute in this case is fully covered by the decision of the Andhra Pradesh High Court in the case of Beharilal CED (AP) vs. Estate of late Durga Prasad Beharilal (1979) 116 ITR 692 (AP). In any case, there are contrary decisions by various High Courts as regards the issue of exemption of the value of residential house belonging to the HUF of which the deceased was a member. In such circumstances, we are of the view that the Asstt. Controller could not have passed an order under s. 61 of the Act, holding that there is any mistake apparent from the record. This view finds support from the decision of the Gujarat High Court in the case of Smt. Lilavatiben Hari Jivandas Kotecha vs. J.V.Shah, ITO (1980) 122 ITR 863 (Guj) and that of the Madras High Court in the case of Nilgiris Potato Growers Co-operative Marketing Society Ltd. vs. CIT 1977 CTR (Mad) 58 (1978) 111 ITR 375 (Mad). 8. In the result, the appeal is dismissed.
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1981 (4) TMI 131
... ... ... ... ..... irm cannot be refused to be registered. This observation squarely applies to this case. In fact in the case cited by the ld. Deptl. Rep. reported in (1980) 122 ITR 362 (AP) (CIT vs. Krishna Mining Co. their Lordships of Andhra Pradesh High Court observed at page 378 that the actual sharing ratio may be either express or implied and that this ratio can easily be inferred from the facts and circumstances of the case. On the facts of that case the Hon ble High Court held that major partners alone agreed to share the losses if any and that this circumstances can easily be inferred without any difficulty. In the instant case there is no minor involved, and all the three adult partners agreed to share the profits equally without any contrary intention about the sharing of losses. It, therefore follows that the losses also were agreed to be shared as provided under s. 13(b) of the Partnership Act. We therefore hold that there being no other legal infirmity. 6. The appeal is allowed.
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1981 (4) TMI 130
... ... ... ... ..... present case. In Dost Mohd. Alladdin rsquo s case there was a sale. In the present case, we have tried to ascertain what is the true nature of the transaction, and we have come to the conclusion that there has been no transfer. In coming to this conclusion we have kept in view the fact that the assessee has not shown in wealth tax returns filed so far the amount in question as due from the wife. Though this is relevant evidence it is not conclusive in determining the true nature of the transaction and as such we have determined the true nature with reference to all other attendant circumstances, particularly keeping in view the fact that the law on this point was rather nebulous. 24. The ITO would re-work the total income for each of the asst 1972-73 to 1976-77. The assessments for 1968-69 to 1971to 1972 are cancelled. 25. The result is the appeals are allowed for the asst. yrs. 1968-69 to 1971-72 and 1976-77 and for the asst. yrs. 1972-73 to 1975-76 they are allowed in part.
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1981 (4) TMI 129
... ... ... ... ..... heir experience and equipment. The three members of the Desai Group became partners in this firm from6th June, 1973 but M/s Desai and Company had been in this line for the last three decades. We are unable to see how payment to the firm M/s Desai and Company could be treated as a payment by the assessee firm to its three partners. The reference to Supreme Court decision is of no assistance at all. In those cases their lordships did observe that a firm does not have its won entity and that it was compendious description of the partners there-of but those observations were made in entirely different context. In our view s. 40(b) has no application in this case. The payment of commission was made to M/s Desai and Company by virtue of an agreement between the two firms which was commercially sound and otherwise also activated by business consideration. It was a genuine payment and was admissible. We direct that the additions be deleted. 9. In the result, both the appeals succeed.
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1981 (4) TMI 128
... ... ... ... ..... parent from the record where the ITO charged interest even though the assessee had not applied for extension of time for filing the return and, therefore, the assessee cannot seek rectification of the assessment under s. 154. 11. That rectification is not permissible on a debatable question of law has been settled by the Supreme Court in the case of Volkart Brothers (1972) 82 ITR 50 (SC). We have already held above that the question as to when s. 249 (4) became applicable to the appeals is highly debatable. We have also held that the power under s. 154 does not extend to rectification of an order under s. 249. Here the AAC had admitted the appeals whether rightly or wrongly and had disposed it of on merits. After that he had no right to hold that the appeals itself were defective and could not have been admitted. We, therefore, allow both the appeals and cancel the orders of the AAC dt.3rd Nov., 1979and7th Oct., 1980and restore his order dt.11th Sept., 1979for both the years.
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1981 (4) TMI 127
Revision, Order Prejudicial To Interests Of Revenue ... ... ... ... ..... er opines that a multiple of 16 times should be applied on the net annual letting value which would bring the net value of the property to a much higher figure than assessed by the WTO. However, the Commissioner did not bring out the circumstances under which this multiple of 16 times should be applied in preference to lower multiple applied in this case. Since the net value of the property assessed by the WTO for these two years compared favourably with the cost of investment and the value determined on net rental basis by applying a multiple of 12, the orders cannot be said to be prejudicial to the interest of the revenue without any specific instance on record of higher multiple adopted in the cases of other assessees in the area. Since the probability is unfounded and not supported by any specific instances, we are of the opinion that the Commissioner was not justified in assuming jurisdiction under section 25(2). We, accordingly, cancel the order. 6. The appeals succeed.
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1981 (4) TMI 126
... ... ... ... ..... of the firm. 6. For the asst. yr. 1978-79 the only other ground raised is that interest u/s. 217 should not have been charged. In support of the submission that charging of interest u/s. 217 was appealable, the ld. Counsel for the assessee relied on the judgment in CIT, Patiala-II vs. Raghubir Singh and Sons (1980) 18 CTR (P and H) 167 (1980) 125 ITR 256 (P and H).In this case it has been held that if the assessee has challenged the order under appeal on any of the grounds mentioned in s. 246(1)(c) and consequentially the liability to pay penal interest is also challenged, the appeal would be competent. In the light of this judgment, I would hold that the levy of interest under the s. 217 is appealable. Since this has not been decided by the AAC on merits, the matter is restored to his file for the limited purpose of deciding the issue of interest u/s. 217. 7. In the result, for statistical purposes ITA No. 1830 (DEL)/81 is partly allowed and ITA No. 1831(DEL)/81 is allowed.
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1981 (4) TMI 125
... ... ... ... ..... ce the creditor himself had expired in April 1974, he could not be produced before the ITO. But his closest relative Shri Nepal Singh to whom the money was paid back was produced before the ITO. His affidavit was filed, ITO recorded his statement also. Shri Nepal Singh admitted the transaction and also the fact of repayment of the amount and further said that he had utilised for his own purpose. The assessee could not do anything more. The authorities below rejected this explanation of the assessee, it cannot be the basis for the conclusion that the assessee had suppressed its income or that the assessee was guilty of gross o wilful neglect or of fraud. The authorities which have been cited above amply support the assessee s view and following these and considering the facts the ld. AAC came to the correct conclusion that it was not a fit case for the levy of the penalty. We uphold the order of the ld. AAC and dismiss the Revenue s appeal. 6. In the result, the appeal fails.
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1981 (4) TMI 124
... ... ... ... ..... the additions for the plant and machineries during the relevant assessment year. In this behalf we may refer to the case of Indian Overseas Bank vs. CIT (1970) 77 ITR 512 (SC)wherein the Hon ble Supreme Court has observed that reserve funds can be created only at the time of framing the profit and Loss A/C. Any adjustment in this behalf could not ordinarily be made at a later stage nor could the Appl. Authority give a deduction in respect of belated entries in this behalf. Even upto now, the representative of the assessee has not been able to show that development rebate reserve had been actually created by it. Therefore, the assessee cold not be granted any development rebate in rectification proceedings under s. 154 before which an enquiry was necessary if at all any relief was given to the assessee. Thus ground, therefore, has no force. 7. In the result, the appeal is partly allowed and the ITO is directed to compute the relief under s. 80J afresh in accordance with law.
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1981 (4) TMI 123
... ... ... ... ..... since the GTO while making the present assessment has repeated the same mistake which had earlier been committed by the ITO in making an assessment under s. 52(2) of the IT Act which had been consequently set aside by the AAC, the AAC in the present case should not have sent matter back to the GTO and should have himself decided the appeal on merits. At any rate, now we are informed that the ITO has already disposed of the IT assessment matter relating to under valuation of the sale consideration under s. 52(2) of the IT Act and whatever material was available has already been collected by him. We are, therefore, of the opinion that subject to the fact that the material already collected by the Department and which has been put to the assessee may be considered by the AAC, there is no necessity for sending the matter back and the AAC shall decide original appeal filed before him, himself. 5. For statistical purposes, this appeal shall be deemed to have been allowed as such.
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1981 (4) TMI 122
... ... ... ... ..... affected the Revenue inasmuch as the shares of profits from the firm earned by the minor is to be clubbed with the share of his father under s. 64(1)(iii) of the IT Act, Since it is contended in the application for additional evidence that ultimately the entries have been reversed and the profit sharing ratio as agreed to in the deed had been actually maintained in the ultimate accounts, we are of the opinion that it is a proper case where the assessee should be given an opportunity to prove that this was a mere incidental omission. We accordingly allow the application for additional evidence and direct that a copy of the same along with the affidavit thereto be sent to the AAC who shall after considering the same and giving reasonable opportunity of being heard to the parties including the ITO decide the of cancellation of registration afresh in the light of our aforesaid observations. 7. For statistical purposes all the appeals shall be deemed to have been allowed as such.
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1981 (4) TMI 121
... ... ... ... ..... year and were incidental to the carrying out of the objects of the trust. Therefore, the payments had to be excluded from the income of the trust. If so excluded, the income of the assessee for the asst. yr. 1976-77 was only Rs. 9428-61 and the same being less than Rs. 10,000 the trust was the asst. yr. 1968-69, the expenditure over income was 2,006.03 after excluding the taxes paid during the year and, therefore, there was no surplus money for the purpose of investment and hence the trust was not assessable under the IT Act . In view of the clear finding of their Lordships, we are of the considered view that the impugned order on the point is erroneous and, therefore, cannot be supported. We, therefore, set aside the impugned order on this point and so also the assessment order with a direction that the wealth-tax and income-tax liabilities be considered as application of the income of the assessee for charitable purposes. 2. In the result, the assessee s appeal is allowed.
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1981 (4) TMI 120
... ... ... ... ..... r after 1942. Therefore, the question of s. 14 making absolute any right in the properties of her husband did not arise. 7. As noted above, she had no interest in the properties of the HUF except the right of maintenance and therefore under s. 7 of the ED Act, 1953 no coparcenary interest came to be cease on her death. The right that ceased on her death was the right of maintenance. This right will therefore have to be evaluated in accordance with the Jellico s formula. If this right is substantiated as enough to be assessable under the ED Act. It may brought to tax. If it is not apparently assessable, the same will have to be quashed. 8. For determination of the value of the right of maintenance which ceased on the date of the deceased, the matter is restored to the Appl. Controller of ED. He will redetermine the question of assessability to Estate Duty in accordance with the observations made by us above. 9. For statistical purposes, the appeal shall be treated as allowed.
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