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1997 (2) TMI 65
Capital Loss, Legal Fiction, Set Off, Taxing Statutes, Winding Up ... ... ... ... ..... shade worse off and gets nothing in the event of such total loss should be denied the effect of section 46(2) read with sections 71 and 74 of the Act and be put to a perpetual loss. Therefore, even where the receipt is nil on the date of distribution on the liquidation of the company, the case of such shareholder will fall under section 46(2) and the deemed full value of the consideration for the purpose of section 48 will be regarded as nil and on that basis the income chargeable under the head Capital gains has to be computed under section 48. The question referred to us is, for the reasons stated in the judgment of my esteemed brother and for the reasons given above, answered in the affirmative, in favour of the assessee and against the Revenue. The reference stands disposed of accordingly with no order as to costs. We record our appreciation of the assistance rendered by learned counsel for the Revenue as well as by Mr. S. N. Soparkar and Mr. D. A. Mehta as intervenors.
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1997 (2) TMI 64
Reassessment ... ... ... ... ..... ation, so as to enable the AO to reopen the assessment. 14. In the case of Arvind Kumar vs. ITO (1984) 41 CTR (MP) 16 (1984) 146 ITR 437 (MP) TC 51R.1463, the Madhya Pradesh High Court held that a letter from IAC pointing out omission would constitute information under s. 147(b) of the Act. 15. Inasmuch as the Tribunal being the highest fact-finding authority, after perusing the memorandum issued by the IAC, came to the conclusion that the IAC has interpreted the law and directed the assessing authority to reopen the assessment, it is not possible to come to a different conclusion as suggested by the learned standing counsel for the Department that the IAC has merely pointed out the law and not interpreted the law. In view of the foregoing reasons, we consider that the order passed by the Tribunal in the case of both the assessees appears to be in order. In that view of the matter, we answer the question referred to us in the affirmative and against the Department. No costs.
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1997 (2) TMI 63
Rectification Of Mistakes, Condition Precedent ... ... ... ... ..... he assessee as a deduction was the payment made towards the gratuity liability on transfer of the business in favour of the partnership. Therefore, the provisions of s. 40A (7) of the Act cannot be made applicable to the facts arising in this case. In such a situation, it also cannot be said that there is a mistake apparent on the records in allowing the gratuity liability as a deduction in the original assessment made by the ITO on 30th Oct., 1974. Therefore, we are of the opinion that there is no ground for invoking the provisions of s. 154 of the Act rectifying a mistake, which is not in existence. Accordingly, the Tribunal was not correct in confirming the order passed by the authorities below under s. 154 of the Act. In this view of the matter, we answer question No. (i) referred to us in the negative and in favour of the assessee. In so far as question No. (ii) is concerned we answer it in the affirmative and in favour of the assessee. There will be no orders to costs.
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1997 (2) TMI 62
Rectification Of Mistakes, Mistake Apparent From Record ... ... ... ... ..... under section 140A of the Act. Section 140A did not say that the self-assessment tax is payable on the day when the return was filed under section 139 of the Act. In fact, it says that the self-assessment tax is payable within 30 days from the date of furnishing the return under section 139 of the Act. Therefore, a reading of section 140A and rule 19(3), sub-clause (a), to the proviso thereunder would go to show that the mistake which occurred in the present case is not apparent, obvious or patent, to warrant application of section 154 of the Act. The tax payable under section 140A would first become due at what point of time is highly debatable and something, which can be established only by long drawn process of reasoning. Therefore, the Tribunal was correct in saying that section 154 of the Act will not be applicable to the facts of this case. In view of the foregoing discussion, we answer the question referred to us in the affirmative and against the Department. No costs.
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1997 (2) TMI 61
Surtax, Dividends, Computation Of Capital ... ... ... ... ..... ar under the Second Schedule to the Surtax Act, the Income-tax Officer had reduced the sum of general reserve by the sum of Rs. 3,25,200 being the dividend paid during the subsequent year, out of the general reserve. A similar question came up for consideration before the Supreme Court in Indian Tube Co. P. Ltd. v. CIT 1992 194 ITR 102, wherein the Supreme Court held that though the general body of the shareholders resolved and appropriated the sum of Rs. 76 lakhs towards dividend from the reserve of Rs. 90 lakhs on May 31, 1963, the appropriation related back to the calendar year 1962 to which it related and, as on January 1, 1963, the sum of Rs. 76 lakhs was a provision and only Rs. 14 lakhs could be treated as a reserve in the computation of capital for the purpose of surtax. Inasmuch as the order passed by the Tribunal is not in conformity with the judgment of the Supreme Court cited above, we answer the question in the negative and in favour of the Department. No costs.
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1997 (2) TMI 60
Income From Property, Sale Of Water, Casual And Non-recurring Receipt, Appurtenant To Building
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1997 (2) TMI 59
Settlement, Settlement Commission, Void, Fraud ... ... ... ... ..... tax under section 245D(3) is discretionary in nature. We have doubts if we can give any positive direction to the Commission in this regard. We would, however, having regard to the significance of these cases, the amount involved, etc., like to know the response of the Commission in this regard. Let notice be issued to the Income-tax Settlement Commission (Additional Bench), 16B, Rowland Road (5th floor) Calcutta-700 020, returnable within two weeks. Notice shall go through the Commissioner of Income-tax, Bihar, along with a copy of the interlocutory application. In the meantime, it will be open to the Commission to act on its own in terms of the provisions of section 245D(3) of the Act. These matters will be on the list next on February 21, 1997. Both the CBI and the Income-tax Department shall file their reports by February 20, 1997. Let a copy of this order be delivered to Mr. Rakesh Kumar, counsel for the CBI, and Mr. L. N. Rastogi, counsel for the Income-tax Department.
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1997 (2) TMI 58
House, Residence, Firm, Partners ... ... ... ... ..... d intended or used as a habitation or shelter for animals of any kind, a building in the ordinary sense or any building, edifice, or structure enclosed with walls and covered, regardless of the fact of human habitation. Under particular circumstances, the term has been held equivalent to and interchangeable or synonymous with building , dwelling and dwelling house and sometimes premises. Our attention was drawn to a decision rendered in R. Venkatavaradha Reddiar v. CWT 1995 214 ITR 76, wherein this court held that a cinema theatre cannot be called a house . In that decision, the Board s Circular, as stated above, was not considered by this court. In view of the foregoing reasons, we see that there is no infirmity in the order passed by the Tribunal in granting exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, with regard to the godown owned by the assessee. Accordingly, we answer the question referred to us in the affirmative and against the Department. No costs.
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1997 (2) TMI 57
Effect Of Amendment, Charitable Purpose ... ... ... ... ..... Income-tax Act and is not the above finding wrong, unreasonable and unwarranted considering the scope and object of section 11(4A) of the Income-tax Act, 1961? This court had occasion to consider the issue raised in question No. 1 in I. T. R. No. 42 of 1994 in CIT v. Dharmodayam and Co. 1997 225 ITR 686 in the assessee s case itself. It was held that the assessee is entitled to claim exemption under section 11(1) of the Income-tax Act, 1961, in respect of its income from the kuri business, in spite of the provisions contained under sub-section (4A). In the light of the above, question No. 1 is answered in the affirmative, in favour of the assessee and against the Revenue. Question No. 2 is really another facet of question No. 1. In view of the our answering question No. 1 as above, we decline to answer question No. 2. 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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1997 (2) TMI 56
Pledged Articles, Seizure ... ... ... ... ..... away during current financial year up to 7-1-1997 2,53,395 Unaccounted investment in gold loan business as on 7-1-1997 39,56,630 Cash balance on the unaccounted gold loan business 66,548 --------- 62,75,323 --------- There is no serious dispute regarding the value of the gold which comes to Rs. 47,53,000. It is also not seriously disputed that the business of which seizure is taking place was not the subject-matter of assessment and that therefore they are only unaccounted assets. The petitioner would be given sufficient opportunity as per the special procedure set out with reference to assessment of such cases. Taking into account all the facts and circumstances of the case, there will be a conditional order of interim direction. Accordingly, I direct the first respondent to release and hand over the gold ornaments and pledge forms and applications immediately on the petitioner furnishing bank guarantee for a sum of Rs. 47,53,000 to the satisfaction of the first respondent.
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1997 (2) TMI 55
Surtax, Chargeable Profits ... ... ... ... ..... does not arise according to the facts arising in this case. In the present case, while computing the chargeable profits under the Surtax Act the Income-tax Officer followed the provisions contained in Schedule I to the Act. We cannot expect the Assessing Officer to read something which is not contemplated in the provisions of the Act. The fact remains that in the present case, the income-tax was not computed on the interest on long-term borrowals. There is no provision in the First Schedule to include the tax on interest on long-term borrowals. When such alleged tax was not included in computing the chargeable profits, the claim of deduction cannot be made. In view of the foregoing reasons, we consider that there is no infirmity in the order passed by the Tribunal in refusing to allow deduction of the alleged tax payable on interest on long-term borrowals. In that view of the matter, we answer the question referred to us in the affirmative and against the assessee. No costs.
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1997 (2) TMI 54
Deemed Gift, Transfer, Adequate Consideration ... ... ... ... ..... her co-owner s case, held that gift-tax is not exigible. Inasmuch as the fair market value is equivalent to the stated value, it was held that section 4(1)(a) of the Gift-tax Act would not apply. In CGT v. Indo Traders and Agencies (Madras) (P.) Ltd. 1981 131 ITR 313, this court held that if the consideration which passed between the parties can be considered to be reasonable or fair, it cannot be considered to be inadequate. Adequate consideration is not necessarily, what is ultimately determined by some one else as market value. Unless the price was such as to shock the conscience of the court, it would not be possible to hold that the transaction is otherwise than for adequate consideration. Accordingly, inasmuch as the Tribunal held that there is no difference between the fair market value and the stated consideration, there cannot be any deemed gift. In that view of the matter, we answer the question referred to us in the affirmative and against the Department. No costs.
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1997 (2) TMI 53
Penalty, Concealment, Capital Gains, Question Of Law ... ... ... ... ..... tum of proof of receipt of the additional consideration is that the assessee had concealed the particulars of income in the return of income filed when declaring the capital gains in the said return. Therefore, the said findings of the Appellate Tribunal are all findings of fact. The Supreme Court in the case of CIT v. Ashoka Marketing Ltd. 1976 103 ITR 543, held that the question whether the assessee had concealed his income is a question to be decided on the facts of the case and that the finding with reference to the concealment of income is a finding of fact. In the instant case, the Appellate Tribunal has arrived at the finding of concealment of income on the basis of the materials on record and, therefore, we are of the opinion that no question of law arises out of the order of the Appellate Tribunal. The view of the Appellate Tribunal that there was concealment of income on the facts of the case, is justified, and, therefore, we reject the tax case petition. No costs.
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1997 (2) TMI 52
HUF, Partial Partition ... ... ... ... ..... Court in the case of G. Lakshmi Narayana v. ITO 1989 175 ITR 593. In that case, partial partition was effected between January 1, 1979, and March 31, 1979, and the claim for the same was made in the assessment year 1979-80. The court laid down that partial partition effected between January 1, 1979, and March 31, 1979, in the assessment year 1979-80, cannot be affected by sub-section (9) of section 171 of the Act. In our view, the present case is squarely covered by the aforesaid two decisions as such, the authorities were justified in holding that the claim for partial partition made by the assessee will not be affected by the provisions of sub-section (9) of section 171 of the Act. Accordingly, the question referred to this court in these references is answered against the Revenue and in favour of the assessee. In the circumstances of the case, we direct that there shall be no order as to costs. Let a copy of this order be communicated to the Income-tax Appellate Tribunal.
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1997 (2) TMI 51
Prosecution, Penalty ... ... ... ... ..... roceeding was initiated and penalty was imposed, but on appeal being preferred before the Tribunal, the penalty has been cancelled on merits. It is well settled that the standard of proof in penalty proceedings is lighter than in criminal proceeding and since penalty has been cancelled on the merits, in my view, in the ends of justice, prosecution of the petitioners should be quashed. Accordingly, the application is allowed and prosecution of the petitioners is hereby quashed.
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1997 (2) TMI 50
House Property, Transfer, Registered Deed ... ... ... ... ..... ed of mutual release. Any such instrument, whether it be a regular deed of partition or a release deed, must be duly stamped as contemplated under the Indian Stamp Act, if the value thereof is over Rs. 100. In this case, the firm is a continuing firm and not a dissolved firm and without a registered deed or by any other manner known to law it is not possible for the assessee-firm to transfer its immovable property valued at more than Rs. 100 to the partners. The view of the Appellate Tribunal that there was a valid transfer of the property is not correct in view of the above decision. When once the transfer is not valid, the income arising from the property is includible only in the hands of the assessee. Hence, the view of the Appellate Tribunal that the income of the property is not includible in the assessment of the assessee-firm is not sustainable in law. Accordingly, we answer the question of law referred to us in the negative and in favour of the Department. No costs.
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1997 (2) TMI 49
Business Expenditure, Bonus, Settlement ... ... ... ... ..... e distinction between the bonus payment and the additional payment is maintained throughout the agreement under which the composite payment was made to the employees. Once it is held that it is not bonus, then the provisions of section 36 of the Act are not attracted and the provisions of section 37 of the Act alone would apply. We are of the opinion that the expenditure was incurred wholly and exclusively for the assessee s business and the additional payment would fall within the scope of section 37 of the Act. In this matter, we are of the opinion that the Tribunal has come to the correct conclusion that the additional amount of Rs. 2,05,201 paid by the assessee-company, in pursuance of the settlement under the Industrial Disputes Act, 1947, cannot be regarded as bonus and it is liable to be treated as business expenditure under section 37 of the Act. In this view of the matter, we answer the question referred to us in the affirmative and against the Department. No costs.
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1997 (2) TMI 48
New Industrial Undertaking, Carry Forward, Losses And Depreciation ... ... ... ... ..... ing the decisions of the Supreme Court in the cases of H. H. Sir Rama Varma v. CIT 1994 205 ITR 433 and Distributors (Baroda) P. Ltd. v. Union of India 1985 155 ITR 120. In view of the decisions cited above, the Appellate Tribunal is not correct in holding that the assessee is entitled to deduction under section 80J of the Act before setting off the earlier loss carried forward or unabsorbed depreciation of the earlier years. The Tribunal was not right in holding that the deduction under section 80J has to be allowed first before deducting the carried forward business loss or unabsorbed depreciation. Since the view of the Appellate Tribunal is in direct contrast with the above decisions of this court as well as the decision of the Supreme Court, we are unable to subscribe to the view of the Appellate Tribunal on the basis of the alleged intention of Parliament. Therefore, we answer the question of law referred to us, in the negative and in favour of the Department. No costs.
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1997 (2) TMI 47
Depreciation, Extra Shift Allowance, Arc Furnace, Lift, Roads, Building ... ... ... ... ..... assessee is entitled to extra-shift allowance on the cost of the power travel electric lift is not sustainable in law. Therefore, we are of the view that the Appellate Tribunal should reconsider the question with reference to the power travel electric lift in the light of the tests laid down by this court in CIT v. M. S. Sahadevan 1980 123 ITR 820 and whether it would fall within the relevant entry. Accordingly, we answer the second question as under The Tribunal was right in holding that the assessee would be entitled to extra-shift allowance on the arc furnace and in so far as the claim of the assessee for power travel electricity is concerned, the Appellate Tribunal should go into the matter de novo in the light of the observations made by us. Accordingly, we answer the first part of the question that is relating to arc furnace in the affirmative and against the Revenue and we are returning the question unanswered with reference to the power travel electric lift. No costs.
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1997 (2) TMI 46
Reference, Borrowed Capital, Interest, Project Cost ... ... ... ... ..... ejected the case of the Revenue relying upon the decision of this court in CIT v. Nagarjuna Steels Ltd. 1988 171 ITR 663, in which it was observed as follows We have heard the parties in this application. Since the issue involved is already covered by the decision of the jurisdictional High Court in CIT v. Nagarjuna Steels Ltd. 1988 171 ITR 663 and since the decision of the Tribunal is based on that very decision, in our view, no referable question of law arises. We accordingly decline to refer the question proposed by the Revenue and reject this application. The case above squarely covers this case. We do not find any case to call for a reference. The I. T. C. is dismissed.
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