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1981 (8) TMI 125
Standard Deduction ... ... ... ... ..... nue itself has by public statements given the assessee to understand that that was the plain meaning of the section and the order of the AAC was in conformity with the revenue s own understanding of the section. The argument now advanced does not offer any other reasonable meaning to the section, for the contention put forward can raise an ambiguity where there is none, only by doing violence to the section, besides being self-contradictory. The impression that is left is that this is an attempt to complicate the matter which the Finance Minister wished to simplify and it is not clear whether any responsible decision was taken to appeal against the order which gives effect to the policy of the Government. We are, therefore, of the opinion that the AAC was correct in allowing standard deduction under section 16(i) to be calculated on the entire amount chargeable to tax under the head Salaries and we have no hesitation in confirming his order. The appeal fails and is dismissed.
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1981 (8) TMI 123
... ... ... ... ..... ference from M/s. Bhandari Sugar Depot, Poona. The CIT observes that the ITO did not make any enquiry whether the profit shown by the assessee resulted either by purchase and sale of sugar by way of actual delivery or otherwise. In his opinion, the phrase Sugar rate difference , was indicative of the fact that the assessee entered into speculative business. The question for consideration before the Tribunal was whether these two errors were there in the orders of the ITO. On appraisal of the evidence, the Tribunal reached the conclusion that no such error existed in the orders of the ITO and, therefore, jurisdiction u/s. 263 could not have been exercised by the CIT. Whether or not the errors as appointed out by the CIT existed in the orders of the ITO, finding on this question is purely of finding on fact and, therefore, the proposed question is not the question of law. For the reasons, we reject the contention of the Revenue. 5. In the result, the applications are dismissed.
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1981 (8) TMI 122
... ... ... ... ..... e is not a dealer in paintings and that a single transaction of sale that was made in distress, cannot establish a trading venture. We find substance in the submissions of Shri Pandey. So far as the WTO is concerned, he has refused to grant exemption u/s. 5(1)(xii) on the sale amount because the other members of the royal family had sold the paintings. So far as this reasoning is concerned, we can straight away say that it is not acceptable. The intention for sale on the part of the assessee cannot be judged by the conduct of the other members of the family The conduct of the assessee itself will be germane to decide the intention for sale. A single transaction or sale and that too a distress sale cannot establish the intention for sale of the paintings on the part of the assessee. For the reasons we upheld order of the AAC that the assessee is entitled to exemption u/s. 5(1)(xii) in respect of the paintings which are admittedly works of art. 3. All the appeals are dismissed.
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1981 (8) TMI 121
... ... ... ... ..... be heard afresh after giving an opportunity to the Valuation Officer. 2. We have heard the rival parties at length. Requirements of s. 24(5) of the WT Act are no doubt mandatory since in this case the valuation was made by the Valuation Officer u/s. 16A of the WT Act, it was obligatory to give an opportunity to the Valuation Officer as required u/s. 24(5) of the WT Act. To this extent we find that there is a mistake of law apparent from record. The order of the Tribunal, therefore, requires to be recalled and decided afresh after giving the Valuation Officer an opportunity as required u/s. 24(5) of the WT Act, 1957. We, therefore, cancel the order of the Tribunal and restore the appeals and cross objections to the file of the Tribunal for fresh hearing. Since we have recalled the impugned order of the Tribunal, the contentions raised in M.A, No. 95/JP/1980 will also be considered at the time of fresh hearing. 3. In the result, both the Miscellaneous Applications are allowed.
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1981 (8) TMI 120
... ... ... ... ..... e main objects of the trust, but it was rather a dominant object of the trust. In the following paragraphs, he gave other reasons also to disqualify the trust from claiming exemption, but the main objection of the CIT (A) is contained in para 11. 5. On further appeal, the Tribunal set aside the order of the CIT (A) with a direction that he will record a clear finding keeping in view the observations having been made by the Tribunal in the body of the order on the question, whether or not the assessee is entitled to exemption under s. 11. It appears from the Tribunal rsquo s order dt. 30th Aug., 1980 that no conclusive finding was given and the matter was simply restored back to the CIT (A) for fresh consideration in the light of the observations made in the body of the order. No conclusive finding having been given by the Tribunal, we are of the view that the proposed questions do not arise from the Tribunal s order. For the reasons, we reject the applications of the Revenue.
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1981 (8) TMI 119
... ... ... ... ..... urged that the assessee was receiving huge fund from the Branch Office which also included high denomination notes. It has been vehemently contended on behalf of the assessee that it explained to the satisfaction of the authorities below the source of the high denomination of the notes and, therefore, there was no justification for treating the same as income of the assessee. We have considered the rival submissions very carefully. We find force in the arguments made on behalf of the assessee. We are in complete agreement with the ld. counsel of the assessee that the assessee did get high denomination note during the course of its business form the Branch Office as well as it got converted such notes from the Bank on 14th Jan., 1978. The assessee was not obliged to maintain details of such notes. Taking into consideration the facts and circumstances of the case in entirety, we have no hesitation in sustaining the order of the CIT(A). 8. In the result, the appeal is dismissed.
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1981 (8) TMI 118
... ... ... ... ..... ar that she was not the benamidar of Paramasivan and the aforesaid reason also which weighed with the ITO considering registration could not be granted ceases to have relevance. The Board in Circular F. No. 26/3/65-IT(A-I) dt. 20th May, 1967 had again laid down instructions that merely because one of the partners was paid salary which was not specifically mentioned in the instrument of partnership etc., the firm should not be denied registration. It would follow therefore, in this case that because partner Ramaswamy was paid salary though not specifically provided for in the instrument of 5th Dec., 1975 registration cannot be refused for salary can be paid in term of an oral contract also. In our view the various reasons which have been mentioned by the ITO for declining to grant registration are not sufficient for coming to that conclusion. We accordingly direct the grant of registration to the assessee firm for the asst. yrs. 1976-77 and 1977-78. 5. The appeals are allowed.
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1981 (8) TMI 117
Hindu Undivided Family, Assessment After Partition ... ... ... ... ..... r Rajeswaramma, take the property as tenants-in-common and not as joint tenants. Therefore, one-fourth of the total share (i.e., one-half of one-half) relates to Ramulu and one-fourth (i.e., one-half of one-half) would relate to Rajeswaramma separately, since these parties do not take by survivorship but take on the basis of intestate succession in view of the proviso to section 6 of the Hindu Succession Act. We would, therefore, set aside the orders of the authorities below and direct a fresh assessment to be made in the case of the smaller HUF which is the appellant before us, in accordance with our directions. In so doing, the ITO will have regard to the provisions of Hindu Law insofar as the status in respect of the 1/4th share falling to Ramulu is concerned and would consider whether the same has to be included in the hands of the assessee-smaller HUF or is to be considered separately in the hands of Ramulu. 9. The result is that the appeal is treated as allowed in part.
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1981 (8) TMI 116
... ... ... ... ..... mmon ground that all the seven partners of the firm are related to each other and many of them are cousins. The plea of the assesee was that the managing partner was busy in attending to the illness of his father and that he had no peace of mind. The plea was also taken even subsequent to the death of the managing partner rsquo s father, there were misunderstandings among the cousins who were partners. This plea gains support from undisputed fact that the declarations for all the four years as mentioned above which were delayed came to be filed on one date, viz., 6th Nov., 1978. In these circumstances, we are inclined to accept the explanation offered by the assessee as constituting sufficient cause preventing it from filing the declaration within the time. It is common ground that the firm is otherwise genuine and entitled to registration. We. therefore, direct that registration be continued to the assessee firm for the assessment year under appeal. 5. The appeal is allowed.
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1981 (8) TMI 115
... ... ... ... ..... ng of simple interest for late filing of the return, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance-tax, if any, paid, and any tax deducted at source. Since advance-tax has not been defined, for the purpose of calculation of interest u/s. 139(8), we are of the opinion that advance-tax paid within the specified dates only could be taken into account for the purpose of quantification of tax payable by the assessee while quantifying interest payable by the assessee u/s. 139(8). In his impugned order, the AAC has not given any reason or material for giving the above direction to the ITO. In fact, there was no discussion made why direction was required to be given. In view of what we have discussed above, we are of the opinion that the order of the AAC cannot be sustained. Accordingly, his order impugned before us is reversed and that of the ITO is restored. 8. In the result, the appeal by the Revenue is allowed.
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1981 (8) TMI 114
... ... ... ... ..... information issued a reassessment notice to the assessee. It was held that this was a case of suspected untrust disclosure where the primary facts to arrive at the reason to belief did not exist and, therefore, the notice issued u/s. 147(a) was bad. 17. In our opinion the above authorities are sufficient to hold that the ITO could not have reason to believe that the income chargeable to tax for the assessment year under appeal had earned assessment on account of the assessee rsquo s failure to disclose fully and truly all material facts necessary for its assessment. We, therefore, hold that the reopening of the assessment (u/s. 147(a) of the Act was invalid and illegal in law. The reassessment made on the cases, is, therefore, cancelled. In the view we have taken we do not consider it necessary to go into the merits of the case and give finding whether the assessee had or had not discharged the onus and on it under section of the Act. 18. In the result, the appeal is allowed.
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1981 (8) TMI 113
... ... ... ... ..... spect of one addition though both the additions were challenged in appeal before the Tribunal. That being the position to the very commencement of the penalty proceedings was invalid and the penalty had to be cancelled on this ground. On merits and no case of concealment of income or furnishing of inaccurate particulars has been made out. The loss has only been held not conclusively proved and also not incurred in the carrying on of the business. The fact that Expln. to s. 271(1)(c) applies does not take the Department s case further because it cannot be said that the failure of the assessee to return the correct income was on account of fraud or gross or wilful neglect. The assessee had placed before the ITO the entire material. May be it fell short of evidence required to satisfy the IT authorities for allowance of the claim. But that does not mean he committed a fraud or gross or wilful neglect. Accordingly we uphold the order of the AAC. 5. The Deptl. appeal is dismissed.
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1981 (8) TMI 112
Business Loss, Carry Forward And Set Off, Unabsorbed Depreciation ... ... ... ... ..... een brought forward should not receive priority over current depreciation allowance . . . . 10. 5 On the other hand, in the case of CIT v. Gujarat State Warehousing Corporation 1976 104 ITR 1 (Guj.), it was clearly held that the current year s depreciation should be adjusted first against the income of the year and then if there are both carried forward losses of the earlier years and carried forward unabsorbed losses and also unabsorbed depreciation, priority should be given to carried forward losses in terms of section 72(2). Their Lordships have, in our view, correctly applied the principles laid down by the Supreme Court in the case of Jaipuria China Clay Mines. As regards the facts, it has to be noted that the assessee had both unabsorbed depreciation and the past losses carried forward and there was also a claim for depreciation for the current year. The facts of this case are, thus on all fours, with that of the assessee before us. 11. The appeal, thus, stands allowed.
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1981 (8) TMI 111
Reassessment, Information ... ... ... ... ..... onouncement to the notice of the ITO. In these circumstances, it cannot be said that the ITO had information as required under section 147(b) to invoke the provision. 8. It has been submitted by the departmental representative that the basis of the audit note was the opinion of the Law Ministry circulated by the Central Board of Direct Taxes to the officers of the department. We are unable to agree that the opinion of the Law Ministry on a question of law would constitute information. It has been held by the Supreme Court in the case of Indian and Eastern Newspaper Society that it is only the judicial pronouncement made by the authorities vested with the power of interpreting the provision of law that would constitute information for the purpose of section 147(b). The advice of the Law Ministry cannot be considered to belong to this category. We, therefore, hold that the ITO has not validly initiated proceedings under section 147(b). 9. In the result, the appeal is dismissed.
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1981 (8) TMI 110
Actual Cost ... ... ... ... ..... or a number of years is an entirely different event which cannot in terms be equated to a position that Atlanta Corporation has met part of the cost to the assessee. As pointed out by the learned representative of the assessee, the liability that was remitted during the year ended 31-12-1973 was not merely the liability of the assessee towards the purchase of these machinery but also other liabilities. The remission of the liabilities was due to the fact that the assessee had incurred substantial losses in its business and was not in a position to repay the loans to Atlanta Corporation. The assessee has been having business transactions with the American concern for a number of years in the past as well as subsequent to the writing off of these loans. We, therefore, hold that there is no ground for reducing the cost of the machinery to the assessee by the amount of the liability of the assessee which was remitted by Atlanta Corporation. 7. The appeal is, therefore, dismissed.
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1981 (8) TMI 109
... ... ... ... ..... ions including litigations arising out of the IT Act and an earlier decision as the same question cannot be responded unless that decision is shown to be arbitrary or parverse. Therefore, being consistent with the approach which we have taken in the assessee s own case and also a large number of other cases, the latest being our decision dt 12th May, 1981 in ITA No. 156 (Chd)/1980 in the case of ITO, CC-V, Ludhiana vs. Dharam Pal we dismiss all these four revenue s appeals. 8. Before parting we like to mention that shri G.K. Sood, Advocate, relied upon the following judgment of the Bombay High Courts (i) CIT vs. M.D. Kanoria (1981) 23 CTR (Bom) 262 and (ii) CIT vs. Indra Mohan Sharma and Ors. (1981) 23 CTR (Bom) 120 Since we have accepted in principle his contention with respect to the judgments which we have dealt with in this order above, it is considered unnecessary to deal with the above mentioned two judgments. 9. All the four appeals filed by the Revenue are dismissed.
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1981 (8) TMI 108
... ... ... ... ..... 7 and 1957-58 against the assessee. 10. The view which we have taken in respect of ITA Nos. 367 and 368, we are not dealing with various grounds of appeals in addition to challenging of the validity of assessments objections are taken to the estimates of income as extremely excessive and most unreasonable. We like to make it clear that for the assessee we are not addressed by arguments in relation to ground No.4 in each of the two years where the agitation raised in that the IT authorities were not justified in taking the status as URF as the correct status was AOP. In fact, the contention taken was that irrespective of the status whether URF or AOP the very initiation of proceedings being bad assessment proceedings were void ab initio, which contentions have been accepted by us. 11. The appeals in ITA Nos. 369 and 370 do not survive for our consideration but for the purpose of statistics these shall be treated as allowed. 12. In the result, all the four appeals are allowed.
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1981 (8) TMI 107
... ... ... ... ..... of his son utilising it for deposit by Shri Radhey Shyam. Once that conclusion is reached, it has to be further held that the addition of Rs. 20,000 made by AAC to the total income of the assessee as income from undisclosed sources has to be deleted, We order accordingly. 17. As rightly argued by the department, the assessment of the assessee has been validly reopened. As already stated above the original assessment was completed u/s 143(1) of the Act. The present re-opening when no investigation was made at the time of the original assessment is valid when r/w s. 143(2) (a) of the Act. We held like wise. 18. The ITO had made an addition of Rs. 1,000 out of travelling and shop expenses being untouched and inadmissible in nature. The said disallowance upheld was restricted to Rs. 500 by the AAC. We after hearing both the sides keeping in view the unvouched nature of the expenditure upheld the said disallowance. 19. In the result, the appeal by the assessee is partly allowed.
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1981 (8) TMI 106
... ... ... ... ..... Tribunal there held that expenses of this nature could not be regarded as entertainment expenses. The same view has been taken in the order of the Tribunal dt. 12th May, 1981 referred to above. 4. The Department filed a special leave petition before the Supreme Court against the order of the Tribunal in the case of M/s. Allied Publishers Private Limited vide its order dt. 13th Oct., 1979, in S.L.P. (Civil) 3781/78 in CIT, Bombay vs. M/s. Allied Publishers Private Limited., the Supreme Court upheld the finding of the Tribunal and dismissed the Department s petition thus, confirming the Tribunal s view that the expenditure of the nature referred to above did not constitute, on the relevant facts, expenditure of entertainment nature. In view of the Supreme Court s decision on the aforesaid special leave petition, we hold that no referable question of law arises out of the aforesaid order of the Tribunal. 5. In the result, the applications filed by the Department stand rejected.
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1981 (8) TMI 105
... ... ... ... ..... ted. In the present case, on the other hand, the only information in the possession of the WTO is the bald fact that the Land and Buildings Tax Department had valued the Kota house property at Rs. 3,87,500. It is, therefore, evident that the principles laid down by the Bombay High Court in the above mentioned case would apply a fortioria in the case of the assessee. Hence, apart from the reasons already given by us, we hold that even on the basis of the principles laid down by the Bombay High Court in the above mentioned case, the proceedings under s. 17(1)(b) of the Act had not been validly initiated by the WTO. We accordingly cancel the re-assessments made by the WTO. 14. As we have cancelled the re-assessments made by the WTO, we do not consider it necessary to go into the other grounds of appeal raised by the assessee in regard to the merits of the valuation of the various house properties made by the WTO. 15. In the result, the appeals filed by the assessee are allowed.
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