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1991 (1) TMI 85
... ... ... ... ..... joined the firm and the business was carried on by her along with the other nine partners. However, on July 27, 1970, a fresh deed of partnership was executed. While stating in the preamble that the firm was not dissolved on the death of Ruab Ali, yet it purported to say that the firm stood dissolved with effect from June 29, 1970, on the death of Ruab Ali. The Tribunal found that there was absolutely no evidence to show any such dissolution and refused to place any reliance on the deed of dissolution. On the above facts, it is evident that what happened in this case was only reconstitution of the firm and that it was not a case of succession of one firm by another. We reiterate that the Tribunal refused to believe, accept or act upon the deed of dissolution. In short, the deed of dissolution was rejected. For the above reasons, the question referred is answered in the affirmative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.
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1991 (1) TMI 84
HUF, Wealth Tax ... ... ... ... ..... relevant only to construe the provisions of section 20 and to find out as to when a Hindu undivided family ceases to exist as a taxable entity and as to how the erstwhile Hindu undivided family will have to be taxed under a given set of circumstances. To summarise, we may once again point out that section 20 has nothing to do with the quantification of the net wealth of the Hindu undivided family on the death of a member of a Hindu undivided family leaving behind other members in the family including a female warranting the application of section 6 of the Act the share of the deceased devolves on the heirs and the legal fiction imagining a partition just prior to the death of the member is only for the purpose of quantifying the share of the deceased without disrupting the unity of the family in any manner though resulting in the diminution of the net wealth of the Hindu undivided family. Consequently, our answer to the question is in the affirmative and against the Revenue.
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1991 (1) TMI 83
Assessment, Association Of Persons ... ... ... ... ..... by the Income -tax Officer ? (2) Whether, on the facts and in the circumstances of the case, the Assessing Officer cannot change the status of An assessee as the determination of status is a part of the assessment order ? Having heard learned standing counsel for the Revenue are of the opinion that question No. 1 does arise from the order he Tribunal but not question No. 2. Accordingly, the Tribunal is directed to, state, only question No. 1 under section 256(2) of the Income-tax Act. The income-tax application is answered accordingly. No costs.
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1991 (1) TMI 82
Identical Question ... ... ... ... ..... hi). 2. Kanhaiyalal v. CIT 1982 136 ITR 243 (Rai). 3. Thalibai F. Jain v. ITO 1975 101 ITR 1 (Kar). (2) Whether the Income-tax Appellate Tribunal was justified in not upholding the order under section 263 in view of the Supreme Court decisions in the cases, of Rampyari Saraogi 1968 67 ITR 84 and Smt. TaraDevi Aggarwal v. CIT 1973 88 ITR 323 ? (3) Whether the Tribunal is correct in law and on the facts in cancelling the order of the Commissioner of Income-tax under section 263 where the Commissioner of Income-tax had considered the order of the Assessing Officer as erroneous and prejudicial to the interests of the Revenue on the facts and the circumstances of the case ? Similar applications raising identical questions have been dismissed by us following a Bench decision of this court in CIT v. Goyal Pvt. Family Specific Trust 1988 171 ITR 698. This fact is admitted by counsel for both the parties. Following the said order, these three applications are also dismissed. No costs.
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1991 (1) TMI 81
Accounting, Agricultural Income Tax ... ... ... ... ..... a reasonable estimate of the value, based on some relevant material. The future value of coffee and the valuation of coffee points by the Coffee Board depend upon several factors some of which are beyond the control of the assessee or the Coffee Board. It is well known that the value of coffee depends upon international market conditions and to some extent on the policy of the Central Government. Therefore, it is not possible to infer as a matter of course in all cases that the value of coffee points would not be lower than the average rates declared by the Coffee Board for the three immediate previous years. This must have weighed while the relevant provisions of section 7 and rule 9 were drafted. For the reasons stated above, these writ petitions are allowed the impugned assessment orders are set aside the respondent is directed to redo the assessments in the light of the observations made above. The petitioners are entitled to their costs. Advocate s fee Rs. 1,000 one set.
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1991 (1) TMI 80
... ... ... ... ..... s, cash subsidies should be taxed in the year in which they were received. The Tribunal has also noted that the assessee had neither asked for a change in that system for the relevant assessment year nor was any change ordered by the Income-tax Officer. The application is, accordingly, dismissed. No costs.
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1991 (1) TMI 79
Business Expenditure, Firm ... ... ... ... ..... r remuneration made by the firm to any partner of the firm. It was held by a Full Bench of this court in CIT v. Nitro Phosphetic Fertilizer 1988 174 ITR 269 that the object of the provision is to prevent partners siphoning off substantial profits in the guise of salary, interest, bonus, commission, etc., and that the idea is to bring the entirety of such profits of the firm to charge. It is held that even where the karta of tile Hindu undivided family joins the firm as a representative of the Hindu undivided family, he is not a distinct and separate personality from that of the Hindu undivided family and, therefore, monies invested by him from his individual account cannot be treated as distinct and separate for purposes of section 40(b). It was held that such payments are liable to be disallowed. Following the said decision, we answer the question referred herein in the negative, i.e., against the assessee and in favour of the Department. There shall be no order as to costs.
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1991 (1) TMI 78
HUF, Partition ... ... ... ... ..... partition on the ground that the share of each member in a group is not in a definite portion in the partition ? We may mention that, in his application, the petitioner has asked for referring three questions but, before the Tribunal, in his application under section 256(1), he had requested only questions Nos. (ii) and (iii) alone to be referred and those are the questions which we have now directed to be referred. What is now styled as question No. (1) in this application was not raised in the application under section 256(1). Be that as it may, since question No. (ii) brings out the question in controversy, it is not necessary to refer question No. (i). The application is allowed in part. No costs.
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1991 (1) TMI 77
Business Expenditure, Disallowance ... ... ... ... ..... t constitutes an advance and not an expenditure. Admittedly, the payment was made towards consideration of the goods which were supplied on the next day. We may also point out that the balance of consideration, namely, Rs. 3,800, paid by the assessee in lieu of the said transaction has been treated as expenditure by the Tribunal itself and has been disallowed, which aspect we have dealt with while dealing with the question referred at the instance of the assessee. We are, therefore, of the opinion that the distinction made by the Tribunal is without a difference. Whether the payment is made prior to delivery of goods or after delivery of the goods, it is payment in cash and it is payment of consideration for the goods. We, accordingly, hold that this payment of Rs. 25,000 in cash on December 10, 1974, is hit by sub-section (3) of section 40A. This question is, therefore, answered in the affirmative, that is in favour of Revenue and against the assessee. No order as to costs.
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1991 (1) TMI 76
... ... ... ... ..... Be that as it may, in the proceedings concerned herein, i.e., under section 271 (1) (a), penalty was levied by the Income-tax Officer and confirmed in appeal by the Appellate Assistant Commissioner. On further appeal, however, the Tribunal deleted the penalty following and applying the findings recorded in proceedings under section 271(1)(c). The Tribunal was of the opinion that though the assessee s explanation was rejected, yet it cannot be said, in the circumstances of the case, that the assessee WAS not under a belief that he was under no statutory obligation to Me a return. It is a finding of fact and, on the facts on record, it cannot be said to be perverse or based on no evidence. The proceedings are of penalty and levying of penalty is not automatic. For the above reasons, the question referred is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. We hold that there was material before the Tribunal to support its findings. No costs.
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1991 (1) TMI 75
Air Freight Expenses, Export Market Development Allowance, Weighted Deduction ... ... ... ... ..... therewith or expenditure (wherever incurred) on the carriage of such goods to their destination outside India or on the insurance of such goods while in transit. A reading of this clause shows that weighted deduction is available on expenditure incurred wholly and exclusively on distribution, supply or provision of goods outside India and that the expenditure incurred in carrying the goods to their destination is not so allowable. It may be noted that the words beginning with not being expenditure incurred and ending with the words while in transit were inserted by the Finance Act, 1970, with effect from April 1, 1968. On a reading of the clause, we are clearly of the opinion that even the expenditure, wherever incurred, on the carriage of goods to their destination outside India is excluded and does not qualify for weighted deduction. For the above reasons, the question referred is answered in the negative, i.e., in favour of the Revenue and against the assessee. No costs.
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1991 (1) TMI 74
Income From Other Sources ... ... ... ... ..... s. 1,50,000 the fair market value? The main controversy relates to the determination of the value of the asset as on January 1, 1964 (the question arose in the matter of determining the capital gains). The assessee stated a particular valuation as on the said date supported by the report of a registered valuer. The Income-tax Officer did not accept the same. Though the Income-tax Officer s order was reversed in appeal by the Appellate Assistant Commissioner, the Incometax Officer s order was restored in appeal by the Tribunal. The Tribunal was impressed by the fact that, even according to the assessee, the property was valued at Rs. 1,50,000 in 1977 and if so, it cannot have the same value on January 1, 1964. It cannot be said that the finding of the Tribunal is based on no evidence. The income-tax reference application is, accordingly, dismissed with no order as to costs. We also may clarify that this is not a case in which a reference was made under section 55A of the Act.
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1991 (1) TMI 73
Investment Allowance, Rectification ... ... ... ... ..... ge is a disputable issue when the issue stands already settled following the decisions of the Hon ble Supreme Court in Chowgule and Co. (P) Ltd. 1981 47 STC 124 which was followed by the Hon ble High Courts in Delhi Cold Storage (P) Ltd. v. CIT 1985 156 ITR 97 (Delhi) and CIT v. Mittal Ice and Cold Storage 1986 159 ITR 18 (MP) (sic) ? (2) The decision of the Hon ble Supreme Court in Chowgule and Co. (P) Ltd. 1981 47 STC 124 on the interpretation of definition of the manufacturing or processing amounted to a declaration of law as contemplated by article 141 of the Constitution of India. Whether, on these facts, the Income-tax Appellate Tribunal was correct in law in holding that the provisions of section 154 did not apply because allowability of investment allowance to a cold storage plant was a disputable law point ? Accordingly, this application is allowed and the Tribunal is directed to state the aforesaid two questions under section 256(2) of the Income-tax Act. No costs.
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1991 (1) TMI 72
Reassessment, Wealth Tax ... ... ... ... ..... property may shoot up year to year not by a few percentage only. Since it is a case of reopening the assessment, the burden is quite heavy on the Revenue to establish the factors that warrant the exercise of the power. The information that has to be the basis for action under section 17(1) (b) should be a legally admissible material and cannot be just subjective inferential fact. In the absence of any material to indicate the percentage of fluctuation in the prices of the immovable properties, it will be an entirely guess work to deduct a few percentage from the subsequent year s valuation to arrive at the valuation for the previous years. In these circumstances, it is not possible for us to uphold the contention of the Revenue. In the facts and circumstances of this case, the report of the Government valuer would not constitute information under section 17(1)(b) of the Act. The answer to the question referred to us, therefore, is in the affirmative and against the Revenue.
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1991 (1) TMI 71
Reassessment, Wealth Tax ... ... ... ... ..... statement of case quotes the basis for initiating the proceedings under section 17 as something other than the report of the valuer, by stating that the realisation that certain allowances were wrongly computed was the starting point. Fresh valuer s report for the subsequent year as the reason for the reassessment cannot be identified by reading the statement of the case and the relevant order of assessments. We have already referred to what was recorded by the Wealth-tax Officer as extracted in the statement of the case which shows that the valuer s report by itself was not the sole information in the instant cases. The assessment orders indicate that the valuer s report with reference to the relevant valuation dates was applied by the assessing authority and not merely the valuation report for the subsequent year. Bearing these facts in mind, the question referred to us is answered in favour of the Revenue and in the affirmative. The second question is answered accordingly.
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1991 (1) TMI 70
Business Income, Depreciation, Loss, Return, Unabsorbed Depreciation ... ... ... ... ..... Income-tax Officer just to thrust upon the assessee the carried forward depreciation allowance without reference to these statutory provisions. To what extent the depreciation allowance carried forward from the previous year will go into the computation of the profits and gains of the business of the company would depend upon the availability of the surplus of the gross income after deducting the carried forward business loss under section 72(1). This is a matter for computation. Regarding question No. 1, much discussion is not necessary because once the original return is withdrawn or is substituted by filing a valid revised return, the natural consequence is that the earlier return would be effaced or obliterated for all purposes under the Act. The answer to the first question is, therefore, necessarily in the affirmative and against the Revenue. Similarly, the answer to the second question will be in the affirmative and against the Revenue. Reference answered accordingly.
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1991 (1) TMI 69
Business Expenditure, Gratuity, Reassessment ... ... ... ... ..... in law in directing to adopt the status as that of Hindu undivided family ? 2. Whether the findings of the Tribunal are not contrary to findings recorded in the case of Shri Shyam Lal (Income-tax Application No. 2485 (Delhi) 79 dated January 16, 1989) of which this group is an off-shoot and Shri Brahm Swarup and Sons in Income-tax Applications Nos. 1112 and 1113/Del./77-78 dated November 24, 1978, holding that members of the group held property falling to their shares as tenant-in-common ? No costs.
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1991 (1) TMI 68
Petitioner, Search And Seizure ... ... ... ... ..... n the order sought to be rectified was passed. We are further of the view that the Appellate Tribunal was in error in holding that the subsequent decision of the High Court has no retrospective operation as in the case of subsequent legislation or the decision of the Supreme Court. A subsequent binding decision of the Supreme Court or of the High Court has retrospective operation and overruling is always retrospective. In CIT v. Shakuntala Rajeshwar 1986 160 ITR 840, the Delhi High Court had to consider almost an analogous case on facts and, in connection with the scope of the power of rectification, held that when the earlier order of the Tribunal was founded on a mistaken assumption and the error is discovered, power under section 254(2) can be invoked. The very basis of the earlier order required rectification. In view of the foregoing, we have no hesitation to answer the question referred to us in the affirmative and against the assessees. References answered accordingly.
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1991 (1) TMI 67
... ... ... ... ..... ions were part of the amenities to be compulsorily provided, the Delhi High Court found them to be of capital nature. The said decision will have to be treated as flowing out of the particular set of circumstances and we do not think it can be applied as a precedent in all cases. From the foregoing, it is clear that the proposition stated by us at the commencement of this order is supported by the various decisions of the Supreme Court and there cannot be any single rigid formula to find out whether a particular expenditure is revenue in nature or capital and that the expenditure was incurred to obtain a benefit of an enduring nature is not the sole test in every case. The facts and circumstances of each case, read in the background of the assessee s business and other activities, will have to be examined. Consequently, we are of the view that the answer to the question referred to us will have to be in the affirmative and against the Revenue. Reference answered accordingly.
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1991 (1) TMI 66
Business Expenditure, Provision For Purchase Tax ... ... ... ... ..... rly. We decline to answer the question of law formulated by the Appellate Tribunal and as stated hereinabove for the decision of this court. While declining to answer the question referred to this court, we direct the Income-tax Appellate Tribunal to restore 1. T. A. No. 1161 (Coch) of 1986, the appeal filed by the assessee, for the assessment year 1981-82 to file and consider the matter afresh on the basis of the relevant records and other facts brought to its notice. We are not adjudicating the question on merits, since it was not found necessary due to the non-advertence to the basic and relevant fact which is essential for claiming deduction for the assessment year 1981-82. It is for the Appellate Tribunal to traverse the entire grounds on merits when the appeal is heard again. The reference is disposed of as above. A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.
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