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Section 245: Set off of refunds against tax remaining payable: Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.” 20. From a reading of the above Section, it is crystal clear that the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set-off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under the Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under that Section. (emphasis supplied).On a perusal of the entire material documents including the impugned order, it is clearly evident that there is no intimation in writing to the petitioner-assessee before making such an adjustment of refund. No doubt, the respondent is empowered to make the adjustment of refund, but the same can be done only in the manner as contemplated under the provisions of the Act. It is conspicuous from the records that there is no intimation in writing to the petitioner before making such adjustment of refund. As the respondent has not followed the procedures prescribed under the provisions of the Act while adjusting the refund amount with the outstanding amount, the impugned order is vitiated in law and is liable to be set aside. For the foregoing reaasonings, the impugned order is set aside. The Writ Petition is allowed and the matter is remanded back to the respondent for compliance of Section 245 of the Act, and thereafter, the respondent is at liberty to adjust the refund amount payable to the petitioner with the amount payable for the respective assessment year, in accordance with law. Such an exercise shall be completed by the respondent within a period of four weeks from the date of receipt of a copy of this order. No costs. The Miscellaneous Petition is closed. Reported in/ published in http://judis.nic.in/judis_chennai/filename=41825

IN THE HIGH COURT OF JUDICATURE AT MADRAS     DATED: 30.4.2013   CORAM:   THE HONOURABLE MR.JUSTICE V.DHANAPALAN   W.P.No.8571 of 2013 & M.P.No.1 of 2013           M/s.Cognizant Technology Solutions India P. Ltd., 6th Floor, New No.165/Old No.110, Menon Eternity Building, St.Mary’s Road, Chennai-600 018 represented by its Director .. … Continue reading

claim of the assessee for depreciation under Section 32 of the Income Tax Act, 1961 (for short “the Act”).The assessee is a public limited company, classified by the Reserve Bank of India (RBI) as a non-banking finance company. It is engaged in the business of hire purchase, leasing and real estate etc. The vehicles, on which depreciation was claimed, are stated to have been purchased by the assessee against direct payment to the manufacturers. The assessee, as a part of its business, leased out these vehicles to its customers and thereafter, had no physical affiliation with the vehicles. In fact, lessees were registered as the owners of the vehicles, in the certificate of registration issued under the Motor Vehicles Act, 1988 (hereinafter referred to as “the MV Act”). = where the business of the assessee consists of hiring out machinery and/ or where the income derived by the assessee from the hiring of such machinery is business income, the assessee must be considered as having used the machinery for the purpose of business. 40. In the present case, the business of the assessee consists of hiring out machinery and trucks where the income derived by the assessee from hiring of such machinery is business income. Therefore, the assessee- appellant viz. ICDS should be considered as having used the trucks for the purpose of business. 41. It was further brought to our notice that the Hon’ble Karnataka High Court in its judgment in ITRC No. 789 of 1998 for the asst. year 1986- 87 in the case of the assessee- appellant itself (viz. ICDS) has already decided the issue in question in favour of the assessee, confirming the decision of the CIT (A) and the ITAT holding that the assessee company is entitled to the investment allowance and additional depreciation. In this judgment of the Karnataka High Court the decision of the Supreme Court reported in 231 ITR 308 was relied upon. Therefore we have no hesitation to hold that the appellant- company is entitled to a higher rate of depreciation at 50% on the trucks leased out by it. We therefore, reverse the orders of the CIT (Appeals) on this issue.” 32. For the foregoing reasons, in our opinion, the High Court erred in law in reversing the decision of the Tribunal. Consequently, the appeals are allowed; the impugned judgments are set aside and the substantial questions of law framed by the High Court, extracted in para 6 (supra), are answered in favour of the assessee and against the Revenue. There will, however, be no order as to costs.

REPORTABLE |IN THE SUPREME COURT OF INDIA | |CIVIL APPELLATE JURISDICTION | |CIVIL APPEAL NO.3282 OF 2008 | | | |M/S I.C.D.S. LTD. |— |APPELLANT | |VERSUS | |COMMISSIONER OF INCOME TAX, MYSORE |— |RESPONDENTS | |& ANR. | | | WITH CIVIL APPEAL NO.3286 OF 2008, CIVIL APPEAL NO.3287 OF 2008, CIVIL APPEAL NO.3288 … Continue reading

since introduced Section 145-A to the Income Tax Act. Clause(b) thereof provides that notwithstanding anything contained in Section 145 of the Income Tax Act, interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received.

THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR W.P. No.6425 of 2012                                                   DATED:09-03-2012 Between: Sannapureddy Pakkeera Reddy                         …  Petitioner   And   The Special Deputy Collector, Telugu Ganga Project, Unit – I (L.A.), Kadapa and another.             … Respondents                     … Continue reading

Income Tax Act, 1961-Effect of death of one of the partners of a registered firm during the assessment year on the continued benefit of registration under section 184(7) thereof-Whether a fresh application for registration with partnership deed embodying change in constitution of firm, required. % Two appeals were filed before this Court one (Civil Appeal No. 1792 (NT) of 1974) by the assessee from the Allahabad High Court, and the second (Civil Appeal No. 609 (NT) of 1975) by certificate, at the instance of the revenue, from the Gujarat High Court. Both the appeals dealt with a common situation, namely, the position of the registered firm during the assessment year if one of the Partners died or retired. In the assessee’s case above-mentioned, the assessee was a partnership firm styled as Messrs. Wazid Ali Abid Ali, constituted under a deed of partnership, which, inter alia provided “that where the deed is silent, it shall be governed by the Indian Partnership Act save and except that on the death or demise of any partner the firm shall not be dissolved but shall be carried on with the remaining partners and that heir and representative of the deceased partner who resides in India on such terms and conditions to which they mutually agree. ” On June 4, 1964, one of the partners, Qamaruddin, died and his son, Fariduddin, joined the firm as a partner. New deed of partnership evidencing the change in the constitution of the firm was not executed (before November 4, 1964). The assessee filed a declaration in Form No. XII for the relevant assessment year 1965-66 under section 184(7) of the Act, signed by all the partners and Fariduddin taken in as a partner in place of his father, Qamaruddin. The Income Tax officer held that the admission of a new partner in place of the deceased partners amounted to a change in the constitution of the firm and as the firm had failed to file a fresh application for registration, the assessee was not entitled to the continued benefit of registration under section 184(7) of the Act. An appeal filed by the assessee before the Appellate Assistant Commissioner was dismissed. The assessee preferred an appeal to the Income 918 Tax Appellate Tribunal. The Tribunal held that the death of Qamaruddin and the inclusion of Fariduddin involved a change in the constitution of the firm and a fresh deed of partnership should have been executed and a fresh application for registration, filed. The Tribunal, however, also held that the conditions laid down in sub-section (7) of section 184 of the Act had been satisfied and the assessee would be entitled to the benefit of registration upto June 4, 1964; that is, a part of the previous year, and that the Income Tax officer should have made a single assessment only on the assessee and apportioned the total income between the partners who were entitled to receive’ the profits accordingly as they were entitled to share the profits, the firm being assessed as a registered firm in respect of the profits for the remaining part of the previous year. And the question “whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that for the period covered by the old constitution the income was assessable in the hands of the assessee as a registered firm?” was referred to the High Court, which answered the question in favour of the revenue and in the negative. The assessee appealed to this court for relief, as aforementioned. In the second appeal afore-mentioned at the instance of the revenue, the assessee, a registered firm, consisted of five partners, out of whom, one partner, Sarabhai Chimanlal died on March 9, 1963. The assessee firm filed two returns for the assessment year in question-one for the period ending on March 9, 1963 and the other, for the rest of the accounting period. A declaration under section 184(2) of the Act was enclosed along with the return for the first period. The two returns were filed on the basis that according to the assessee there was a dissolution of the firm on the death of the partner Sarabhai Chimanlal, and, therefore, the subsequent continuance of business was only for the purpose of winding up the firm. The Income Tax officer held that there was a change in the constitution of the firm within the meaning of section 187(2), and the assessee should have applied for registration and should not have remained content with the filing of the declaration under section 187(2) of the Act. The assessee filed an appeal before the Appellate Assistant Commissioner, who dismissed the same. The assessee then appealed to the Income Tax Appellate Tribunal, which came to the conclusion that there was a dissolution of the partnership on March 9, 1963, and at the instance of the revenue the Tribunal referred to the High Court, two questions “(1) Whether, in the facts and circumstances of the case, there was any dissolution of the partnership on the date of death of Shri Sarabhai Chimanlal and that, therefore, there should be separate assessment till the date of his death? and (2) 919 Whether in the facts and circumstances of the case, provisions of section 187(2) apply to the facts of the case? The High Court answered the first question in both parts in the affirmative and in favour of the assessee, and the second question, in the negative and in favour of the assessee, and granted certificate to the revenue to appeal to this court as aforementioned. Allowing the assessee’s appeal (the Allahabad case) and dismissing the appeal by the revenue (the Gujarat case), the Court, ^ HELD: The real question in both these appeals is when there is a death of a partner within a previous year in the case of a registered firm, what happens. [930B-C] In the context of the relevant statutory provisions of the Income Tax Act, 1961, the question arises whether on the death of the partners in the situations of the two appeals, the firm was dissolved or whether two assessments should be made. [932H; 933A] It is well to reiterate that in all cases, dissolution does not take place by death if there is a contract to the contrary. If that is so, then, in such a situation, the next question is whether there was any contract to the contrary in the situations of the two cases. [933A-Bl There was a contract to the contrary in the Allahabad case, where the deed of partnership provided, inter alia that where the deed is silent, it shall be governed by the Indian Partnership Act save and except that on the death or demise of any partner, the firm shall not be dissolved but shall be carried on with the remaining partners and that heir and representative of the deceased partner who resides in India on such terms and conditions as they mutually agree to. Therefore on the death of the partner, there is no dissolution by the expressed terms of the contract between the parties but the partnership is deemed to be carried on with the remaining partners and that heir and representative of the deceased partner, who was in India. The terms and conditions of the partnership, however, had to be mutually agreed upon. In this (Allahabad) case, Qamaruddin, one of the partners, died on June 4, 1964. Within the relevant time, his son, Fariduddin joined the firm as a partner. Before the expiry of November 4, 1964, that is, the assessment year which expired on November 4, 1964, the assessee had filed a declaration in Form XII for the relevant assessment year 1965-66 under section 184(7) of the Act. [933B-E] 920 In this case, on the death of Qamaruddin and the inclusion of A Fariduddin, there was a change in the constitution of the firm, but the firm was not dissolved. Fresh deed had to be executed under sub-section (7) of section 187. The application was not filed for the whole of the assessment year; so, for a part of the assessment year, the firm was registered and for the rest, the firm was not registered. The Tribunal held that (1) the assessee would be entitled to the benefit of registration upto June 4, 1964, that is, a part of the previous year and (2) the total income would be apportioned between the partners who were entitled to receive the profits accordingly as they were entitled to share the profits, the firm being assessed as a registered firm in respect of the profits ending on June 4, 1964, and as an unregistered firm in respect of the profits for the remaining part of the previous year. This conclusion of the Tribunal is correct. An analysis of the different sections of the Act lead to that conclusion and there is no contrary provision in the Act. Such a conclusion is logical and equitable and would do justice to both, the revenue and the assessee. In the circumstances of the case, the course open was to seek registration to execute a new deed of partner-ship and apply for the registration of that deed, as rightly held by the High Court, but failure to do so, does not make the registration upto the date of the death of the partner Qamaruddin invalid, and in the absence of any express prohibition indicating the same, the firm was entitled to the benefit of such registration. [933E-H; 934A- E] In the Allahabad case, the Tribunal took the correct view and the High Court was in error in the view it took. Judgment and order of the High Court set aside. The view of the Tribunal upheld. [934G] In the second appeal (Gujarat case), the question is whether in the facts and circumstances of the case, there was any dissolution of the partnership on the date of the death of Shri Sarabhai Chimanlal and whether there should be two separate assessments till the death or whether in the facts and circumstances of the case, provisions of section 187(2) of the Act apply to the facts of this case. The High Court found that the assessee’s contention was right that the firm, as found by the Tribunal, was dissolved and the transactions were carried on with the remaining parties in the course of the winding up and for the realisation of its dues. The High Court, accordingly, answered rightly in the affirmative and in favour of the assessee. There was in fact a dissolution, as found by the Tribunal, and in the facts and circumstances of the case, after the dissolution, the firm ceased to exist and there should be two separate assessments. The High Court was right in answering the question as it did. The High Court was also right in answering the 921 question in view of the fact that there was a death and as such dissolution of the firm by the manner in which the parties acted, there was no question of the same firm being continued and the provisions of section 187(2) could not be said to apply in the light of the facts. [939E-H] In re. Hakerwal Colliery, [1942] 10 ITR 422, Girdharilal Seetaram & Bros. v. C.I.T, [1949] 17 I.T.R. 282; Pannalal Babulal v. C.I.T., [1969] 73 I.T.R. 503; Rex v. General Commissioners for the City of London, 24 Reports of Tax Cases 221; Commissioner of Income-Tax v. Shiv Shankar Lal Ram Nath, 106 I.T.R. 342; Vishwanath Seth v. Commissioner of Income Tax, U. P., 146 I.T.R. 249; Badri Narain Kashi Prasad v. Additional Commissioner of Income Tax, 115 I.T.R. 858; Sandersons Morgans v. Income Tax `A’ ward, District III (I), Calcutta, and others, 87 I.T.R. 270; Joshi & Co. v. Commissioner of Income-Tax, 162 I.T.R. 268; Girdharilal Nannelal v. Commissioner of Income-Tax, 147 I.T.R. 529; Commissioner of Income-Tax, Delhi-IV v. Sant Lal Arvind Kumar, 136 I.T.R. 379; Dungarsidas Kaluram v. Additional Commissioner of Income-tax, M.P., 132 I.T.R. 526; Ganesh Dal Mills v. Commissioner of Income-Tax, 136 I.T.R. 762; Dahi Laxmi Lal Factory v. Income-Tax Officer, Sitapur, and another, 13 I.T.R. 517; Additional Commissioner of Income-tax, Gujarat v. Harjivandas Hathibhai, 108 I.T.R. 517; I. Ramakrishnaiah & Sons. v. Commissioner of Income-tax Orissa, 111 I.T.R. 296; Tyresoles (India), Calcutta v. Commissioner of Income-tax, Coimbatore, 49 I.T.R. 515 and Mayukkaria (N) Estate Tea Factory v. Additional Commissioner of Income-tax, Madras II, 112 I.T.R. 715, referred to. 1988 AIR 757, 1988( 1 )SCR 917, 1988Suppl.SCC 193, 1987( 2 )SCALE1078, 1987( 4 )JT 349

PETITIONER: WAJID ALI ABID ALI, ETC. Vs. RESPONDENT: COMMISSIONER OF INCOME TAX, LUCKNOW, ETC. DATE OF JUDGMENT10/11/1987 BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) RAY, B.C. (J) CITATION: 1987 AIR 2074 1987 SCR (3)1049 1987 SCC Supl. 329 JT 1987 (3) 370 1987 SCALE (2)351 ACT: Income Tax Act, 1961-Effect of death of one … Continue reading

Act: Income Tax Act, 1961: s.36(1)(vii), Explanation – Deduction under s.36(1)(vii) – Held: With effect from April 1, 1989, mere provision for bad debt would not be entitled to deduction under s.36(1)(vii) – For availing benefit of the deduction, assessee has to write off the debt by debiting the Profit and Loss Account to the extent of provision for bad debt and simultaneously reducing corresponding amount from loans and advances/debtOTHERS from the asset side of Balance Sheet – It is not imperative for assessee to close the individual account of each of its debtOTHERS in the books. The question which arose for consideration in these appeals was whether it was imperative for the assessee-Bank to close the individual account of each of it’s debtOTHERS in it’s books or a mere reduction in the Loans and Advances or DebtOTHERS on the asset side of its Balance Sheet to the extent of the provision for bad debt would be sufficient to constitute a write off. Allowing the appeals, the Court HELD: 1.1. Prior to April 1, 1989, the law, as it then stood, was that even in cases in which the assessee made only a provision in its accounts for bad debts and interest thereon and even though the amount was not actually written off by debiting the profit and loss account of the assessee and crediting the amount to the account of the debtor, the assessee was still entitled to deduction under Section 36(1)(vii) of the Income Tax Act, 1961. However, by insertion (with effect from April 1, 1989) of a new Explanation in Section 36(1)(vii), it was clarified that any bad debt written off as irrecoverable in the account of the assessee would not include any provision for bad and doubtful debt made in the accounts of the assessee. Consequently, after April 1, 1989, a mere provision for bad debt would not be entitled to deduction under Section 36(1)(vii). [Paras 6] [727-G-H; 728- A-B] Southern Technologies Limited v. Joint Commissioner of Income Tax (2010) 320 ITR 577, relied on. Vithaldas H. Dhanjibhai Bardanwala vs. CIT (1981) 130 ITR 95 (Guj), referred to. 1.2. In the instant case, besides debiting the Profit and Loss Account and creating a provision for bad and doubtful debt, the assessee-Bank had correspondingly/simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from Loans and Advances/debtOTHERS on the asset side of the Balance Sheet and, consequently, at the end of the year, the figure in the loans and advances or the debtOTHERS on the asset side of the Balance Sheet was shown as net of the provision “for impugned bad debt”. After the Explanation, the assessee is required not only to debit the Profit and Loss Account but simultaneously also reduce loans and advances or the debtOTHERS from the asset side of the Balance Sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtOTHERS is shown as net of provisions for impugned bad debt. In the circumstances, the assessee was entitled to the benefit of deduction under Section 36(1)(vii) of 1961 Act as there was an actual write off by the assessee in it’s Books. [Para 7] [729-D-H; 730-A-B] 1.3. Section 36(1)(vii) of 1961 Act applies both to Banking and Non-Banking businesses. The assessee-Bank has not only been debiting the Profit and Loss Account to the extent of the impugned bad debt, it is simultaneously reducing the amount of loans and advances or the debtOTHERS at the year-end. In other words, the amount of loans and advances or the debtOTHERS at the year-end in the balance-sheet is shown as net of the provisions for impugned debt. However, what is being insisted upon by the Assessing Officer is that mere reduction of the amount of loans and advances or the debtOTHERS at the year-end would not suffice and, in the interest of transparency, it would be desirable for the assessee-Bank to close each and every individual account of loans and advances or debtOTHERS as a pre- condition for claiming deduction under Section 36(1)(vii) of 1961 Act. This view has been taken by the Assessing Officer because he apprehended that the assessee-Bank might be taking the benefit of deduction under Section 36(1)(vii) of 1961 Act, twice over. There is no finding of the Assessing Officer that the assessee had unauthorisedly claimed the benefit of deduction under Section 36(1)(vii), twice over. The Order of the Assessing Officer is based on an apprehension that, if the assessee fails to close each and every individual account of it’s debtor, it may result in assessee claiming deduction twice over. The matter cannot decide on the basis of apprehensions/desirability. It is always open to the Assessing Officer to call for details of individual debtor’s account if the Assessing Officer has reasonable grounds to believe that assessee has claimed deduction, twice over. [Para 8] [730-B-H; 731-A-B] 2. Section 41(4) of 1961 Act, lays down that, where a deduction has been allowed in respect of a bad debt or a part thereof under Section 36(1)(vii) of 1961 Act, then, if the amount subsequently recovered on any such debt is greater than the difference between the debt and the amount so allowed, the excess shall be deemed to be profits and gains of business and, accordingly, chargeable to income tax as the income of the previous year in which it is recovered. In the circumstances, the Assessing Officer is sufficiently empowered to tax such subsequent repayments under Section 41(4) of 1961 Act and, consequently, there is no merit in the contention that, if the assessee succeeds, then it would result in escapement of income from assessment. [Para 9] [732-A-D] Case Law Reference: CIT (1981) 130 ITR 95 (Guj) referred to Para 4 (2010) 320 ITR 577 relied on Para 5 CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3286-3287 of 2010. From the Judgment AND Order dated 2.4.2009 of the High Court of Karnataka at Bangalore, in Income Tax Appeal Nos. 54 and 55 of 2004. G. Sarangan, Sanjay Kunur and R.N. Keshwani for the Appellant. Bishwajit Bhattacharya, ASG, Arijit Prasad, C.V. Subba Rao, Debashis Mukherjee, Ajay Singh and B.V. Balaram Das for the Respondents.

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.3286-3287 OF 2010 (Arising out of S.L.P. (C) Nos.21568-21569 of 2009) M/s. Vijaya Bank …Appellant(s) Versus Commissioner of Income Tax & Anr. …Respondent(s) J U D G E M E N T S.H. KAPADIA,J. Leave granted. Whether it is imperative for the assessee-Bank … Continue reading

“(j) Whether the Full Bench of the High Court has grossly erred in reversing the finding of the earlier Division Bench that on a correct interpretation of the Proviso to clause (vii) of Section 36(1) and clause (v) to Section 36(2) is only to deny the deduction to the extent of bad debts written off in the books with respect to which provision was made under clause (viia) of the Income Tax Act? (k) Whether the Full Bench was correct in reversing the findings of the earlier Division Bench that if the bad debt written off relate to debt other than for which the provision is made under clause (viia), such debts will fall squarely within the main part of clause (vii) which is entitled to be deduction and in respect of that part of the debt with reference to which a provision is made under clause (viia), the proviso will operate to limit the deduction to the extent of the difference between that part of debt written off in the previous year and the = we hold that the provisions of Sections 36(1)(vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and operate in their respective fields. The bad debts written off in debts, other than those for which the provision is made under clause (viia), will be covered under the main part of Section 36(1)(vii), while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION C IVIL APPEAL NO. 1143 OF 2011 Catholic Syrian Bank Ltd. … Appellant Versus Commissioner of Income Tax, Thrissur … Respondent WITH C IVIL APPEAL NO. 1147 of 2011 CIVL APPEAL NO. 1151 OF 2011 CIVIL APPEAL NO. 1155 OF 2011 CIVIL APPEAL NOS. … Continue reading

income tax =manufacturing and exporting leather garments. For the assessment years 2001-2002 and 2004-2005, the appellant filed returns of income claiming deductions in respect of profits retained for export business under Section 80HHC of the Income Tax Act, 1961 (for short `the Act’). The Assessing Officer held in the assessment orders that the entire sale value of Duty Entitlement Pass Book (for short `DEPB’) represents profit on transfer of DEPB under Section 28(iiid) of the Act= We have today delivered judgment in Civil Appeal arising out SLP (C) No.26558 of 2010 (M/s Topman Exports v. Commissioner of Income Tax, Mumbai) and other connected appeals setting aside the judgment of the Bombay High Court in Commissioner of the Income Tax v. Kalpataru Colours and Chemicals. We have also delivered a separate judgment in Civil Appeal arising out of S.L.P. (C) No.32450 of 2010 (M/s ACG Associated Capsules Private Limited v. Commissioner of Income Tax, Central-IV, Mumbai) and other connected appeal affirming the judgment of the Delhi High Court in Commissioner of Income Tax v. Shri Ram Honda Power Equip (supra). These two appeals are disposed of in terms of our

Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 1915 OF 2012 (Arising out of SLP (C) NO. 16403 of 2011) Vikas Kalra … Appellant Versus The Commissioner of Income Tax-VIII, New Delhi … Respondent WITH CIVIL APPEAL No. 1916 OF 2012 (Arising out of SLP (C) NO. 20270 of 2011) … Continue reading

income tax= two issues against the assessee. On the first issue, the High Court has held, relying on its judgment in Commissioner of the Income Tax vs. Kalpataru Colours and Chemicals (ITA(L) 2887 of 2009), that the entire amount received by an assessee on sale of the Duty Entitlement Pass Book (for short `the DEPB’) represents profit on transfer of DEPB under Section 28(iiid) of the Income Tax Act, 1961 (for short `the Act’). We have already decided this issue in favour of the assessee in a separate judgment in M/s Topman Exports vs. Commissioner of Income Tax, Bombay, and other connected matters and we have held that not the entire amount received by the assessee on sale of DEPB, but the sale value less the face value of the DEPB will represent profit on transfer of DEPB by the assessee. The first issue is, therefore, decided accordingly. 3. For appreciating the second issue, we may refer very briefly to the facts of the case. For the assessment year 2003-04, the assessee filed a return of income claiming a deduction of Rs.34,44,24,827/- under =We have held in our judgment in the case of M/s ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income Tax that ninety per cent of not the gross interest but only the net interest, which has been included in the profits of the business of the assessee as computed under the heads `Profits and Gains of Business or Profession’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Since, the view taken by the High Court in the impugned order is consistent with our aforesaid view, we find no merit in this appeal and we accordingly dismiss the same. There shall be no order as to costs.

Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 1914 OF 2012 (Arising out of SLP (C) NO. 32450 OF 2010) M/s ACG Associated Capsules Pvt. Ltd. (Formerly M/s Associated Capsules Pvt. Ltd.) … Appellant Versus The Commissioner of Income Tax, Central-IV, Mumbai … Respondent WITH CIVIL APPEAL No. 4534 OF … Continue reading

NEW CONCEPT OF JOINT PROPERTY NOT KNOW TO OTHER PARTS OF INDIA EXCEPT GOA=Portuguese Civil Code. – (1) Where the husband and wife are governed by the system of community of property (known under the Portugese Civil Code of 1860 as “COMMUNIAO DOS BENS”) in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu, = the system `Communiao Dos Bens’ i.e. community of property

NEW CONCEPT OF JOINT PROPERTY NOT KNOWN OT OTHER PARTS OF INDIA EXCEPT TO STATE OF GOA. =               TO AVOID DOWRY DEATHS AND DOWRY HARASSMENT , THIS CONCEPT OF LAW IS TO BE APPLIED FOR THE REST OF INDIA money affairs of husband and wife governed by the … Continue reading

Voluntary Disclosure of the Income Scheme, 1997 : s.64(2)-Revocation of certificate-Search and seizure action against partners of firm-Income Tax authorities having already discovered assets declared in VIDS by assessee firm-Fact of search not disclosed in VIDS application-Certificate declared null and void-Writ Petition dismissed by High Court -Held: Though under Income Tax Act and VIDS, 1997 a firm and its partner may have to be treated differently, a firm is the conglomeration of its partners, and it is not a juristic person-On facts, disclosure made by firm related to some amount which had been disclosed by partner during search and seizure action-Even source of income was found to be the same-As income of firm vis-a-vis its partners have a direct correlation, while construing a statute granting immunity it should not be construed in such a manner so as to frustrate its object-Keeping in view the purport and object of 1997 Scheme, rule of purposive construction should be applied-Applying the principles underlying Article 136 and 142 of the Constitution, and having regard to nature of fraud practiced upon statutory authorities, no case made out for invoking jurisdiction under Article 136-Constitution of India, 1950-Arts. 136 and 142-Income Tax Act, 1961-Partnership Act, 1831-s. 19-Interpretation of Statutes-Purposive construction Interpretation of Statutes : Tax statutes-Circulars issued by Central Board of Direct Taxes-Held: May also be taken into consideration for purpose of construing the statute-Executive construction is ordinarily allowed to prevail and shall be binding on authorities under I.T. Act. Appellant-assessee, a partnership firm, made a voluntary disclosure, under the Voluntary Disclosure of the Income Scheme, 1997. The said declaration was accepted and a certificate was issued. However, by order dated 8.4.2003, the Commissioner of Income Tax declared the said certificate to be null and void u/s 64(2) of the Scheme, as the search and seizure action had been carried out in respect of the partners of the assessee relating to the assets declared by it in the VDIS application which had been discovered earlier by the Income Tax Department during the course of search and seizure action, but the assessee did not disclose this fact while filing the VDIS declaration. The writ petition filed by the assessee firm having been dismissed by the High Court, the firm filed the instant appeal. It was, inter alia, contended for the assessee-appellant that the firm for the purpose of applicability of provision of Income Tax Act being a distinct and separate entity vis-a-vis its partners, and there being no search and seizure of the premises of the firm, nor any warrant having been issued, the proceedings could not have been initiated for revoking the certificate issued under the VDI Scheme. =Dismissing the appeal, the Court HELD : 1.1. For the purpose of the application of the provisions of the Income Tax Act, 1961 and the Voluntary Disclosure of Income Scheme, 1997, a firm and its partner may have to be treated differently as a partner of a firm may have income other than his share of profits from the firm. [Para 17] [243-E] 1.2. It is, however, also well settled that fraud vitiates all solemn acts. Fraudulent actions shall render the act a nullity. It would be non est in the eyes of law. Acts of a firm vis-a-vis its partners, however, as is understood in common parlance or in terms of the provisions of the Partnership Act, 1932, in a case of this nature, may have to be taken into consideration for judging the validity of action. Under the Partnership Act, a partner represents a firm. He has an implied authority in terms of Section 19 thereof and thus, any action taken by a partner of a firm vis-a-vis. the firm, unless otherwise specific, binds the firm itself. It is one thing to say that for the purpose of invoking the provisions of the Income Tax Act and other taxation laws a firm and its partners are treated to be separate entities but while construing a statute involving immunity from certain penal actions, the provisions thereof should not ordinarily be judged on the touchstone of the provisions of the 1961 Act, only because the 1997 Scheme has a direct nexus therewith. The immunity granted pursuant to acceptance of a declaration made under the voluntary taxation scheme or Kar Vivad Samadhan Scheme, 1998 does not lead to a total immunity. Immunity granted under the Scheme has its own limitations. The Scheme must be applied only in the event the conditions precedent laid down therefore are applicable. [Para 19 and 20] [243-G-H; 244-A-C] State, CBI v. Sashi Balasubramanian & Anr., [2006] 10 SCALE 541 and Alpesh Navinchandra Shah v. State of Maharashtra and Ors., [2007] 2 SCC 777, relied on 1.3. In the instant case, a raid was conducted in the premises of the firm. Search warrant might have been issued in the name of a partner of the firm. The partner made certain statements. The search revealed some undisclosed income. The firm has a separate legal entity, it could have made a declaration, but it was done in respect of the same amount regarding the partner of the firm made disclosures. It is one thing to say that when a firm has concealed income, each partner need not make a declaration but it would be another thing to say that when a search has been made on the premises of the firm and the books of accounts of the firm are inspected, on the strength of a search warrant issued in the name of one of the partners thereof, a declaration can be made by the firm so as to cover the loopholes. In a case of this nature where fraud is alleged one cannot be oblivious of the fact that each firm acts through its partner. [Para 21] [244-D-G] 1.4. A firm is the conglomeration of its partners, and is not a juristic person. In the instant case, the purported disclosure made by the firm relates to the same amount which has been disclosed by the partner. Even the source of income was found to be the same. As the income of a firm vis-a-vis its partners have a direct co-relation, while construing a statute granting immunity, it should not be construed in such a manner so as to frustrate its object. Keeping in view the purport and object which the 1997 Scheme seeks to achieve, in the place of literal interpretation, the rule of purposive construction should be applied. [Para 21] [244-H; 245-A-B] Bombay Dyeing and Mfg. Co. Ltd. v. Bombay Environmental Action Group and Ors., [2006] 3 SCC 434 and National Insurance Co. Ltd. v. Laxmi Narain Dhut, [2007] 4 SCALE 36, relied on. Francis Bennion’s Statutory Interpretation, referred to. 2. Executive construction is ordinarily allowed to prevail and shall be binding on the authorities under the Act. A’ fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. [Para 18] [243-F] 3. In any event, it is not a fit case where this Court should invoke its extra-ordinary jurisdiction under Article 136 of the Constitution. It is now well settled that this Court does not exercise its jurisdiction only because it is lawful to do so. It, for the purpose of doing complete justice to the parties, not only may or may not interfere with the impugned judgment but also issue directions in terms of Article 142 of the Constitution. Applying these principles, and particularly having regard to the nature of fraud practiced upon the statutory authorities, no case has been made out for invoking our jurisdiction under Article 136 of the Constitution. [Para 23 and 24] Vimal Chandra, S. Dave, Neelam Kalsi, S.N. Singh, Pallavi Divekar for the Appellant. Amarjit Singh, Vikas Singh, ASGs., Neera Gupta and B.V. Balaram Das for the Respondents.

CASE NO.: Appeal (civil) 2696 of 2007 PETITIONER: Tanna and Modi RESPONDENT: C.I.T. Mumbai XXV and Ors. DATE OF JUDGMENT: 17/05/2007 BENCH: S.B. Sinha & P.K. Balasubramanyan JUDGMENT: JUDGMENT S.B. SINHA, J. 1. Leave granted. 2. Interpretation and application of the provisions of Voluntary Disclosure of Income Scheme falls for our consideration in this appeal … Continue reading

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