Income Tax Act, 1922

Shad! Lal Sugar Mills Ltd. was assessed for the year 1958-59 with additions of Rs 48,500 for cane cost, Rs 67,500 for shortage and Rs 21,700 for out‑station staff salary. The assessee did not contest the assessment but later faced a penalty under s.274 read with s.271 of the Income‑Tax Act, 1961, after admitting that t…

The Thanthi Trust, created in 1954 to run a Tamil daily newspaper, claimed tax exemption under Section 11 of the Income Tax Act, 1961 for the newspaper's income, arguing that surplus earnings were used for charitable purposes such as education and relief of the poor. The Income Tax Officer disallowed the exemption for …

The assessee company had advanced a loan to a firm whose partners were also its shareholders and directors. Interest was charged on the loan in the 1966-67 and 1967-68 assessment years, establishing it as an interest‑bearing loan. For the 1968-69 assessment year the company passed a resolution before the end of its acc…

The Nizam of Hyderabad created a family trust in 1950, dividing the corpus into a Reserve Fund and a Family Trust Expenses Account, each with distinct purposes. The income of these two funds was assessed separately for 1960‑61 and 1961‑62, but the Income‑Tax Officer later reopened the assessments under section 147 of t…

Brooke Bond & Company Ltd., a UK‑based tea business, owned shares in various tea companies worldwide, including a wholly‑owned Indian subsidiary. It was assessed for AY 1955‑56 as a resident with a net loss and for AY 1956‑57 as a non‑resident with dividend income under “Income from Other Sources”. The company sought t…

The appellant, Saroj Aggarwal, was the widow of a partner who died in 1959. After his death a new partnership deed was executed, admitting her and an adopted son as partners. The deceased had unabsorbed speculation losses from earlier years. In the assessment year 1962‑63, the appellant claimed to set off those losses …

Syndicate Bank advanced a loan to United Auto Tractor Ltd. secured by a mortgage on 51 acres of land allotted by the Andhra Pradesh Government, relying on an allotment letter and a consent letter from the Director of Industries. The land was later partially cancelled and the allotment rescinded by AP ILC, and the bank …

K. George Thomas, an individual who owned a printing press and a daily newspaper, received Rs.5,85,637 from the United States in his capacity as Vice‑President of the India Gospel Mission. The funds were credited to a bank account in the name of the Mission but were largely used for the newspaper’s operations and Thoma…

The assessee, an oil‑mill owner, gifted part of his machinery to his wife and three minor children and a firm was formed by his wife and another person. The firm leased the mill premises and machinery and the assessee rendered management services, receiving commission. The assessee had large losses carried forward from…

The partnership firm M/s Jagannath Pyarelal, consisting of eleven partners, filed an application on 30 September 1959 for registration under section 26A of the Indian Income Tax Act, 1922. The partnership deed had not been signed by one partner, Shri Rabinder Kumar, who had left India for studies, and the application w…

The case concerned a show‑cause notice issued under the Central Excises and Salt Act, 1944 for alleged short levy of excise duty by a sole proprietor who died in 1989. The legal heirs challenged the notice, arguing that the Act contains no provision to continue assessment against a dead person’s estate. The Supreme Cou…

Hindustan Housing & Land Development Trust Ltd. owned land requisitioned and later acquired by the Government of West Bengal. The initial compensation award of Rs.24,97,249 was appealed, and an arbitrator enhanced it to Rs.30,10,873 with interest and recurring payments. While the State appealed the award, it deposited …

Banarsi Das, a partner who acquired a one‑sixth share in a sugar mill, received periodic payments from other partners under lease arrangements after the firm was placed under a court‑appointed receiver. The assessee claimed that these receipts were capital in nature and that depreciation could be claimed on the one‑six…

The assessee, a Hindu Undivided Family, owned 90 shares of Shorrock Co. which was amalgamated into New Shorrock Co. under a court‑sanctioned scheme that allotted the assessee 45 shares of the new company for every two shares held in the old company. The Commissioner of Income Tax treated the receipt of the 45 shares as…

The Supreme Court considered two questions raised by Bombay Dyeing & Manufacturing Co. Ltd.: (1) whether professional fees paid to solicitors for the amalgamation of Nawrosjee Wadia Ginning & Pressing Co. could be treated as revenue expenditure under the Income Tax Act, and (2) whether a contribution of Rs. 2,25,000 to…

The appellant, S.P. Gramophone Co., sought registration of its partnership under Section 26A of the Income Tax Act, 1922 for AY 1961‑62 after a fresh partnership deed added four new partners to the original two, who were disabled. The Income Tax Officer rejected the application, alleging that the new partners were mere…

The Hindu undivided family of Kapurchand Shrimal claimed that its joint family property had been partitioned, sending letters to the Income‑Tax Officer on 10 Oct 1960, 16 Jun 1961 and 11 Mar 1962. Despite these timely claims, assessment orders for the years 1955‑56 to 1958‑59 were completed without the inquiry mandated…

The respondent challenged a notice of reassessment issued under section 147(b) of the Income‑Tax Act, 1961 for the assessment year 1965‑66, arguing that the notice was barred by the statutory limitation. The Gujarat High Court quashed the notice, relying on the earlier Banarsi Debi decision which treated the date of se…

The respondent, a Hindu Undivided Family (HUF) that was a partner in a firm, effected a partial partition on 13‑April‑1979 and the Income Tax Officer (ITO) recognised it under Section 171(2) of the Income Tax Act, 1961. For AY 1980‑81 the HUF filed a return excluding income from the partitioned assets. The Finance Bill…

The respondent, Om Prakash, was a partner in two partnership firms in his capacity as Karta of a Hindu Undivided Family (HUF). The Income Tax Officer included the share of income earned by his minor children in his total income under Section 64(1)(i) and (ii) of the Income Tax Act, 1961. The assessee challenged this, a…

The appellants, two sisters who were shareholders of a company in liquidation, received agricultural land as part of the distribution of the company's assets. The Assessing Officer treated the market value of the land as a capital gain under Section 46(2) of the Income Tax Act, 1961, and levied tax. While the Commissio…

The employee, Shree Lal Meena, sent a resignation letter on 14 July 1990, which was accepted on 11 January 1991. After the Life Insurance Corporation (Employees) Pension Rules, 1995 were introduced with retrospective effect from 1 November 1993, he claimed pension on the ground that Rule 3 made the Rules applicable to …

The case concerned whether Modi Spinning and Weaving Mills Ltd. was entitled to an allowance of development rebate on plant and machinery installed after 1 January 1958, by complying with proviso (b) to section 10(2)(vib) of the Income‑Tax Act, 1922. The Allahabad High Court had held in favour of the assessee, but the …

L.B. Sugar Factory & Oil Mills Ltd., a sugar manufacturer, contributed Rs 22,332 to the construction of a dam and road at the request of the Collector and Rs 50,000 towards roads under a Sugarcane Development Scheme. Both amounts were claimed as deductions under section 10(2)(xv) of the Indian Income‑Tax Act, 1922, but…

The Gujarat Agro Industries Co. Ltd. owned properties in Ahmedabad and were served with property tax demand notices. It appealed the assessments under Section 406(1) of the Bombay Provincial Municipal Corporations Act, 1949, which requires the appellant to deposit the disputed tax before the appeal is heard. Section 40…

The appellant and respondent entered into a lease in 1936 for vacant land, a well and a structure called a "kaichalai" to operate a petrol pump. The lease was repeatedly extended, and the lessor later sought eviction under the Tamil Nadu Buildings (Lease and Rent Control) Act, claiming demolition and denial of title. T…

Claggett Branch Ltd., a non‑resident company dealing in tobacco, had its income for assessment years 1959‑60 and 1960‑61 originally assessed on the basis of returns filed by its Indian agents under s.23(3) of the Income‑Tax Act, 1922. While assessing the later year 1962‑63 the Income‑Tax Officer discovered that the ove…

M/s. Nagarmal Baijnath, a partnership firm, was dissolved on 2 December 1946 and its business was discontinued. Income‑tax and excess‑profits‑tax assessments for the years 1946‑47 and 1947‑48 were nonetheless made in the name of the firm after its dissolution. The assessee initially raised no objection, but later sough…

The appellant, a rice exporter, was required to contribute to a State Welfare Fund in order to obtain export permits. It claimed the contribution as a business expense deductible under Section 37(1) of the Income‑Tax Act, 1961. The Income‑Tax Officer and the Appellate Assistant Commissioner disallowed the deduction; th…

The Supreme Court examined whether Amalgamation Pvt. Ltd., a bulk shareholder holding investments in numerous subsidiaries, could claim a capital loss on the forced sale of shares to a subsidiary of a subsidiary, whether a loss incurred while guaranteeing a subsidiary's loan qualified as a business loss, and whether re…

Karamchand Premchand Pvt. Ltd. set aside Rs 4,50,000 as a provision for a possible tax liability under Section 23A of the Income‑Tax Act, 1922. The company later claimed that this amount was a reserve and should be included in its capital for the purposes of Rule 1 of the Second Schedule of the Super Profits Tax Act, 1…

The Karta of a Hindu undivided family (HUF) converted the family cloth business into a partnership with his son, who contributed only his skill and labour and no cash. The Income‑Tax Officer refused to register the firm, a decision upheld by the Appellate Tribunal and the Bombay High Court. The Supreme Court examined w…

Bajaj Tempo Ltd. was incorporated to exploit a government licence for manufacturing tempo vehicles and took over a factory of its promoter corporation, occupying the premises on lease and receiving tools worth Rs.3,500. The company claimed a partial exemption from tax under Section 15C of the Income Tax Act, 1922, asse…

Sutlej Cotton Mills Ltd., a British India resident company, sold cloth in both British India and native states. For the years 1945-46 to 1947-48 it was taxed under Section 42(3) of the Income Tax Act, 1922 on one‑third of the profit from native‑state sales as deemed accrued in British India, and also under Section 14(2…

K.G. Thomas, a journalist and propagator of Christian ideals, received large sums from the Indian Christian Crusade, U.S.A., which he claimed were personal gifts. The Income‑Tax Officer treated the amounts as remuneration for his vocation of preaching and publishing, and taxed them as business income for the assessment…

W.T. Suren & Co. Ltd transferred its distribution unit to Rallis India Ltd, terminating the employment of the unit's staff. Employees were offered similar jobs with continuity of service; those who did not join received gratuity directly, while the assessee paid the gratuity due to those who joined to Rallis, which hel…

The respondents, shareholders of a company in voluntary liquidation, received dividends from the liquidator after the sale of the company's assets. The sale proceeds exceeded the written‑down value of the assets but were less than the original purchase price, so the excess was taxed in the company under Section 41(2) o…

Escorts Ltd. and other assessees challenged the Finance (No.2) Act, 1980 amendment that gave retrospective effect to clause (iv) of Section 35(2) of the Income‑Tax Act, 1961, arguing it allowed a double deduction for scientific‑research expenditure and violated Articles 14, 19(1)(g) and 300A of the Constitution. The Co…

The appellant, an exporter of hides and skins, pledged goat skins to a bank and obtained an overdraft. The skins were damaged due to the bank's improper storage, leading the appellant to file a criminal complaint. A compromise was reached whereby the bank waived Rs 1,93,159 owed by the appellant, which the appellant tr…

The Commissioner of Income‑Tax appealed against the Allahabad High Court’s decision in favour of Behari Lal Ram Charan Ltd, which allowed the company to set off a capital loss of Rs 3,17,500 incurred in assessment year (AY) 1957‑58 against capital gains of Rs 3,10,200 in AY 1965‑66. The Revenue argued that the loss was…

Rampur Distillery, a limited company, claimed that a dividend in specie (shares of Dalmia Cement) declared by two sugar companies in January 1952 should be taxed in the 1952‑53 assessment year. The dividend was declared and the shares were placed with trustees for distribution, but an injunction delayed actual transfer…

The Commissioner of Wealth Tax, Gujarat sought to assess Ellis Bridge Gymkhana, an unincorporated club, for wealth tax for assessment years 1970‑71 to 1977‑78, arguing that the club fell within the term “individual” in Section 3 of the Wealth Tax Act, 1957. The club contended that an association of persons is not an in…

The assessee filed loss returns for assessment years 1950-51 to 1955-56 after the statutory period, and the Income‑Tax Officer (ITO) communicated that no cognizance could be taken. Later, the assessee claimed set‑off of those losses against income of 1960-61 and 1961-62, and the Income Tax Appellate Tribunal directed t…

The respondent, Radheshyam, was assessed for the years 1960-61, 1961-62 and 1962-63 and was served notices under sections 147(a) and 148 of the Income‑Tax Act, 1961. The Income‑Tax Officer alleged that his wife had received valuable assets from him without adequate consideration and that the income and capital gains ar…

The appellant, A.L.A. Firm, a partnership engaged in money‑lending and property transactions, was dissolved on 13 March 1961 and reported a revaluation surplus of $1,01,248 (Rs.1,58,057) in its 1961‑62 return, treating it as neither revenue nor capital. The Income‑Tax Officer initially accepted this view but later, aft…

The Supreme Court examined whether a sales‑tax assessment for the year 1985‑86, completed before the expiry of the four‑year limitation under Section 21(2) of the U.P. Trade Tax Act, could be reopened after the legislature enlarged the limitation to eight years by inserting a proviso in the 1991 amendment. The Court he…

ICE & GENERAL MILLS, a potato manufacturing and cold‑storage firm, was assessed for the year 1961‑62. The Income‑Tax Officer, under section 34(1) of the Income Tax Act, 1922, initiated reassessment proceedings and in 1965 ordered tax on Rs 1,00,000 of alleged benami income, but the order was annulled in 1967. The depar…

The assessee, a Hindu undivided family (HUF) carrying on business, claimed relief under section 25(4) of the Income Tax Act, 1922 for the assessment year 1949-50, asserting that a partial partition of the HUF on 11 October 1948 and the formation of a partnership firm on 12 October 1948 constituted a succession of the b…

The respondents, former members of a Joint Hindu Family, received specific assets and certain family debts after a partition ordered by an arbitrator's award. They claimed that interest paid on these debts, especially to unsecured creditors, should be deductible as a diversion of income by an overriding title under the…

Harcharan Singh, a tenant of a shop in a U.P. cantonment, failed to pay rent for 1965‑66. The landlord sent a combined notice of arrears and eviction by registered post on 9 November 1966, which the tenant refused to accept on 10 November. The landlord sued for eviction under the U.P. Cantonment (Control of Rent & Evic…

The case involved a Hindu Undivided Family (HUF) that received Rs.2,49,874 as insurance proceeds after the death of the Karta's father. The income from this amount was initially taxed in the Karta's personal assessment, but the Income Tax Officer later treated it as HUF income, leading to assessments for assessment yea…

Mis. George Williamson (Assam) Ltd. acquired the Indian undertakings of twelve UK‑registered tea companies under a scheme of arrangement approved by the High Courts and the RBI, which required that the net assets of the acquired business not be depleted. The consideration paid (Rs 490 lakhs) was lower than the net asse…

Alagappa Textile (Cochin) Ltd. entered into a five‑year financing and management agreement with Kamala Mills Ltd., under which Kamala Mills received remuneration for purchases, sales and management of the mill. The assessee claimed the remuneration as a deductible business expense under section 10(2)(xv) of the Income‑…

The Supreme Court examined whether an unregistered partnership firm that became a registered firm could carry forward unabsorbed depreciation from the year it was unregistered (1949-50) and set it off against the partners' income in the subsequent year (1950-51). The Tribunal had denied the set‑off, holding that regist…

The assessee, Orissa Corporation, claimed a cash credit of Rs 1,50,000 as loans from three individuals, producing confirmation letters and hundis but could not serve notices under s.131 to the alleged lenders. The Income‑Tax Officer deemed the lenders “name‑lenders”, added the amount as unproved cash credit under s.68 …

The assessee, a partnership firm engaged in manufacturing agarbattis, was dissolved in 1965 and its goodwill was valued at Rs.1,50,000. The goodwill was transferred to a newly formed partnership of the same name. The Income‑Tax Officer did not tax any gain on this transfer, but the Commissioner invoked revisional juris…

The case concerned K.S. Rathnaswamy, a Ceylon citizen who owned a share in a joint family house in Tamil Nadu but spent most of his time in Ceylon. He filed income‑tax returns claiming resident status, while the Revenue argued he was a non‑resident because he neither maintained nor had a dwelling place in India under S…

Mahabir Industries, a polythene manufacturer in Himachal Pradesh, claimed tax deductions under Section 80‑IA for two years, then under Section 80‑IB for five years, and after a substantial expansion in AY 2006‑07, under Section 80‑IC. The Assessing Officer allowed the 100% deduction for AY 2006‑07 and 2007‑08 but denie…

Shivakami Co. Pvt. Ltd., a private company, sold unquoted shares of two other companies and claimed a loss. The Income‑Tax Officer, relying on the first proviso to section 12B(2) of the 1922 Income‑Tax Act (now section 52 of the 1961 Act), deemed the break‑up values of the shares and assessed capital gains. The Tribuna…

The firm Amar Singh Gowamal & Sons, originally registered under the Income Tax Act, 1922 up to assessment year 1961‑62, altered its partnership constitution on 8 November 1961. It applied for registration under the Income Tax Act, 1961 on 29 September 1962 (Form UA). The Income‑Tax Officer rejected the application invo…

Hungerford Investment Trust Ltd., a Singapore‑registered non‑resident company owning 100% of the Indian firm Turner Morrison & Co., was deemed to have received dividends from the undistributed income of the Indian company under Section 23A of the pre‑1955 Income‑Tax Act, 1922. The Income‑Tax Officer issued notices unde…

The appellants, industrial consumers, had entered into contracts with the Madhya Pradesh Electricity Board requiring them to pay a minimum guaranteed charge equivalent to 40% of the contract demand, irrespective of actual consumption. They challenged the Board's demand for these charges, arguing that the Board had not …

The Supreme Court examined two tax disputes. In Commissioner of Income Tax, Kanpur v. Kamla Town Trust, a trust created in 1941 for workers’ housing was rectified in 1945 and 1955; the Court held that the 1945 deed did not create a public charitable trust, denying exemption for 1949‑55, but the 1955 deed had wholly cha…

The firm M/s Kishinchand Chellaram was reassessed for the year 1947-48 after the Income Tax Officer received information that Rs 1,07,350 had been telegraphed from its Madras office to Bombay in favour of a person named Nathirmal. The Officer repeatedly asked the assessee to explain the transaction but failed to disclo…

Mis Dalmia Cement, a public limited company, filed loss returns for assessment years 1952‑53 to 1954‑55 after the prescribed time. The Income Tax Officer refused to take cognizance of those returns, stating that no assessment could be made. For later years (1955‑56 to 1959‑60) losses were assessed, and for 1960‑61 the …

Udaipur Sahakari Upbhokta Thok Bhandar Ltd., a cooperative society dealing in both non‑controlled and government‑authorised controlled commodities, claimed a deduction under Section 80P(2)(e) of the Income‑Tax Act for commissions received for storing foodgrains under the Rajasthan Foodgrains Order. The Assessing Office…

Jagdish Sugar Mills, a liquidated public company, was ordered to pay arrears of cane‑cess and its mills were attached and auctioned on 10 November 1955. The sale certificate under Rule 285‑M of the U.P. Zamindari Abolition and Land Reforms Rules was issued on 4 July 1956, after objections were resolved. The Income‑Tax …

The Bombay-based Burmah Trading Corporation held fifteen forest leases in Burma for timber extraction. After the Union of Burma nationalised the forest resources, the company surrendered its residuary rights and assets in exchange for 43,860 tons of teak logs, some in lieu of non‑duty paid logs and the rest as compensa…

The Radhasoami Satsang, a religious institution, had its income assessed as taxable for several years after an earlier period of exemption, prompting the assessee to challenge the assessments before the Income‑Tax Tribunal, which held that the income was exempt under sections 11 and 12 of the Income‑Tax Act, 1961. The …

The Managing Director of R.K.V. Motors & Timber Ltd withdrew sums which the Income Tax Officer treated as dividend under section 2(6A)(e) of the Income Tax Act, 1922. The dispute centered on whether "accumulated profits" for dividend liability includes the company's current year profits and whether tax and dividend pro…

Modi Industries Ltd. challenged the assessment officer’s order that interest on excess advance tax should be payable only up to the date of the original (first) assessment and only on the excess amount determined in that assessment. The Supreme Court examined the meaning of "regular assessment" in Section 214 of the In…

Poothundu Plantations Pvt Ltd was assessed under the Kerala Agricultural Income Tax Act. A later Agricultural Income Tax Officer, invoking section 36, rectified the assessment on the ground that the predecessor had misinterpreted section 12, relying on the Supreme Court’s interpretation of section 24 of the Indian Inco…

Mahalaxmi Sugar Mills Ltd., a sugar manufacturer in India, held shares in a Pakistani sugar company and earned substantial dividend income in the assessment years 1956-57 and 1957-58 while incurring large business losses in India. The company claimed that the dividend, which was not taxable in India under the India‑Pak…

The assessees, Kerala Estate Mooriad Chalapuram, claimed a deduction of Rs.33,747.09 as interest on a loan under section 5 of the Kerala Agricultural Income Tax Act, 1950, which was allowed. In the subsequent year, the creditor waived the interest, and the amount was credited to the assessees' revenue accounts. The ass…

The Union of India sued Rajeswari & Co. for a declaration that the sale of movable and immovable assets of Krishna Oil Mills and Industries Ltd. to Rajeswari & Co. was void under section 53 of the Transfer of Property Act, alleging that the transfer was intended to defeat the Union's tax claim. The company, which was l…

The Supreme Court considered whether, for assessment year 1962-63 and later, the actual cost of service line assets acquired before the previous year must be recomputed under Section 43(6) of the Income‑Tax Act, 1961. The appellants, several electric supply companies, argued that the actual cost determined under the ea…

Somasundram Chetir & Co., a cloth merchant, incurred losses of Rs.2,04,746 and Rs.17,000 in the assessment years 1960-61 and 1961-62 which the Assessing Officer treated as losses from speculative transactions, allowing set‑off only against speculative profits. The Tribunal held that the losses arose from hedging contra…

The appellant, a managing agent, was entitled under a company resolution dated 20 July 1949 to receive an extra remuneration of Rs 15,000 per annum. Shareholders sued to enjoin the payment, claiming the resolution illegal; the trial court decreed in their favour but the High Court reversed, upholding the resolution. Th…

Balaji Steel Re‑rolling Mills, a partnership engaged in manufacturing hot re‑rolled products, challenged an order of the Commissioner of Central Excise and Customs that fixed its production capacity and duty liability. The matter was remanded by the Appellate Tribunal, but on a later appeal the Tribunal dismissed the a…

Shriyans Prasad Jain, a former officer of Dalmia Cement & Paper Marketing Co., was paid Rs 7 lakhs on termination of his services and claimed the sum was compensation for loss of employment, exempt under section 7 of the Income‑Tax Act, 1922. The assessment tribunal, High Court and the Supreme Court initially held the …

The respondent, a member of a Hindu Undivided Family (HUF), claimed that a partition agreement dated 3 July 1958 and a subsequent civil court decree had dissolved the HUF, so that the family could not be taxed as a HUF for assessment years 1967-68, 1968-69 and 1969-70. The Income Tax Officer rejected the claim, holding…

Biswabani Pvt. Ltd. occupied Kalpana Theatre under a registered lease (1948‑53) and later under a consent decree that attempted to create a fresh five‑year lease starting March 1955. The fresh lease was not registered, rendering it void under the Transfer of Property Act. After the five‑year period expired in February …

The assessee, Karam Chand Thapar & others, acted as a del credere agent for coal collieries and as an agent for coal purchasers. It claimed "under‑charges" from collieries for freight overcharges on under‑loaded wagons, received the amounts before any purchaser claim, and paid purchasers when they demanded reimbursemen…

The Commissioner of Income Tax appealed against a High Court order that allowed M/s Mother India Refrigeration Industries to set off unabsorbed business losses before deducting the current year's depreciation for the assessment years 1951-52 and 1952-53. The issue was whether, under the Income Tax Acts of 1922 and 1961…

Shah Sadiq & Sons, a partnership firm registered under the Income Tax Act, incurred speculation losses of Rs 60,054 in AY 1960‑61 and Rs 6,839 in AY 1961‑62 and claimed to set them off against a profit of Rs 58,102 in AY 1962‑63. The Income‑Tax Officer rejected the claim, holding that, for a registered firm, losses cou…

Kalyanji Mavji & Co., a coal mining firm, owned several collieries, one of which (South Samia Colliery) was requisitioned by the military from 1942 to 1955. During the occupation the firm paid surface rent, royalty and watch‑ward salaries, which were allowed as business expenses. After the colliery was derequisitioned,…

Carew & Co. Ltd., an Indian resident company, earned income from business in India, a manufacturing business in Pakistan and incurred a loss from agricultural property in Pakistan for the assessment year 1956-57. The Income‑Tax Officer allowed a set‑off of the agricultural loss against the Pakistani manufacturing profi…

The assessee firm claimed a cash loan of Rs 50,000 from a Calcutta company and claimed interest deductions for several years. The Income‑Tax Officer (ITO) in Azamgarh, after receiving a specific letter from the ITO in Calcutta stating that the Calcutta company was merely a name‑lender and had not advanced any money, fo…

The assessee, T.G. Lakshmaiah Setty & Sons, a dealer in groundnut oil and cotton seeds, was assessed under the Andhra Pradesh General Sales Tax Act, 1957 for the years 1967‑68, 1970‑71 and 1971‑72 on cotton lint at 3% as an unclassified good. Relying on Alimchand Topandas Oil Mills, they argued that cotton lint should …

The appellant, Commissioner of Excess Profit Tax, Kanpur, challenged the High Court's order allowing the assessee, Kalyan Mal Phool Chand, to set off deficiencies of profit for the periods 28 Oct 1940‑31 Mar 1941 and 23 Nov 1942‑31 Mar 1943 against profits of the chargeable accounting period 1 Apr 1943‑31 Mar 1944 unde…

Virmani Industries Pvt. Ltd. manufactured soap and oil in AY 1956-57, incurred depreciation exceeding its profits and left a balance of unabsorbed depreciation. After a ten‑year hiatus during which it earned only property income, it resumed business in AY 1965-66 manufacturing steel pipes, using some of the old machine…

The Chinchwad New Township Municipal Council passed a resolution exempting octroi on initially imported plant and machinery for a "new industrial undertaking" and clarified that a new industry is not one formed by splitting up or reconstructing an existing business. Century Enka Ltd. set up a second unit to manufacture…

Mahadeo Prasad Bais, as Karta of a Hindu Undivided Family, was assessed as a HUF up to AY 1948‑49 and thereafter filed individual returns claiming total or partial partition. The Tribunal and the High Court later accepted a partial partition, making certain family income assessable to him individually. The original ass…

The State of Maharashtra appointed Justice B. Lentin as a one‑man Commission of Inquiry to investigate the death of 14 patients at J.J. Hospital. The Commission found the appellant, Dr. Baliram Waman Hiray, gave contradictory evidence and issued a show‑cause notice for perjury under s.193 IPC read with s.340 CrPC, dire…

The partners of a Hindu Undivided Family (HUF) formed a partnership firm after a partial partition of the family business, which was run on borrowed capital. The firm took over the HUF's assets and a debit balance of Rs.1,75,310, which was transferred to the partners' personal accounts. The firm claimed that the intere…

R.K. Deo, the former Raja of Jeypore, claimed a deduction of Rs 6,69,766, the income‑tax liability on his forest income, while computing his net wealth under the Wealth Tax Act, 1957 for the assessment years 1962‑63 to 1965‑66. The liability had been affirmed by the Supreme Court in 1958, a fresh demand notice was issu…

The Hindu Undivided Family (HUF) Kalloomal Tapeshwari Prasad derived income from various sources and claimed that a partial oral partition in 1963 had divided eighteen immovable properties among ten coparceners, who then maintained separate accounts. The Income‑Tax Officer rejected the claim, holding that the propertie…

Maya Rani, the assessee for assessment year 1961-62, failed to file her income‑tax return by the due date of 28 September 1961 and eventually filed it on 3 May 1962, after the Income Tax Act, 1961 had come into force on 1 April 1962. The Income Tax Officer imposed a penalty of Rs 4,060 under section 27(1)(a) of the 196…

The appellant, a marine engineer employed abroad, claimed "not ordinarily resident" status for AY 1982‑83 under s.6(6)(a) of the Income Tax Act, 1961 to exclude his foreign income under s.5(1)(c). The Assessing Officer rejected the claim, holding that the appellant had been resident in India for more than 730 days in t…

The U.P. State Industrial Development Corporation, a state undertaking, underwrites shares of companies and, when the public does not subscribe, purchases the shares itself, receiving underwriting commission and brokerage. It adjusts the commission against the cost of those shares, treating it as a reduction in share c…

The Andhra Pradesh State Electricity Board was required under the Emergency Risks (Factories) Insurance Act, 1962 to insure its distribution and transmission lines against war‑risk damage. The Director of the Emergency Risks Insurance Scheme fixed a balance premium of Rs 47,59,109, which the Board contested on four gro…

Bhagwan Dass Jain, an assessee under the Income‑Tax Act, 1961, challenged the inclusion of a notional amount under section 23(2) for his self‑occupied house, arguing that no real income was derived and that the levy was in substance a tax on the building falling under Entry 49 of List II, which Parliament could not imp…

The appellant, the Commissioner of Income‑Tax, challenged the deduction claimed by Associated Electrical Industries (India) Private Limited for contributions to a pension and life‑assurance plan for its employees. The contributions were paid in earlier years when the company retained control over the funds, but the pla…

Nirmal Trading Co., a dealer in paper products, incurred a loss of Rs.1,03,688 from a series of sale‑purchase transactions that were settled only by the exchange of delivery orders and cheque payments, with no evidence of actual delivery of goods. The Revenue argued that these were "speculative transactions" under Expl…

Jute Investment Co. Ltd., a trader in gunny bags, entered into four purchase and four sale contracts with the same party, settling the transactions by transferring pucca delivery orders without any physical delivery of the bags, resulting in a loss of Rs. 2.25 lakh which it claimed as an ordinary business loss. The Inc…

Reliance Jute & Industries Ltd. claimed that an unabsorbed business loss of Rs 15,50,189 from the assessment year 1950‑51 could be carried forward and set off against its business income for the assessment year 1960‑61. The Income‑Tax Officer rejected the claim, citing the 1957 amendment to section 24(2)(iii) of the In…

Waterfall Estates Ltd., a public limited company engaged in tea and coffee estates, incurred a managing agency commission. Until AY 1963-64 it allocated head‑office expenses, including the commission, proportionally among wholly taxable, partially taxable and wholly exempt income. From AY 1964-65 it treated all activit…

The assessee, T.I. & M. Sales Ltd., was assessed as a representative assessee for ten non‑resident companies and the Revenue claimed a "business connection" under Section 9 of the Income‑Tax Act, 1961, making the Indian company an agent under Section 163(1)(b). The assessee contended that no such connection existed, re…

The appellant, a Hindu Undivided Family (HUF), was assessed for several years on the ground that remuneration and commission received by its Karta, K.S. Subbiah Pillai, were income of the HUF. The Madras High Court held the amounts were assessable to the HUF, while the Andhra Pradesh High Court had decided otherwise. T…

The U.P. Cooperative Federation Ltd., an apex cooperative society, received interest of Rs.9,000 on a cash security of Rs.2 lakh furnished to a cooperative sugar factory under an agency agreement, and interest of Rs.51,295 on loans advanced to its member societies for sugar distribution. The Revenue challenged the soci…

The appellant, who owned a cinema theatre converted from a former ginning factory, incurred large expenditures in 1960‑61 for new machinery, furniture, sanitary and electrical fittings, and extensive structural repairs. The assessee claimed a deduction under Section 10(2)(v) of the Income Tax Act, 1922, arguing the out…

The assessee, Poonjabhai Varmalidas, had written off certain debts as bad under Section 10(2)(xi) of the Income Tax Act, 1922 in 1959‑60. His business ceased before the amounts were later recovered in the assessment years 1964‑65, 1965‑66 and 1967‑68, after the 1961 Act had repealed the 1922 Act. The Revenue taxed the …

The appellant, a Norwegian shipping company, was assessed for AY 1958‑59 on the basis of separate Indian‑trade accounts. The Income Tax Officer, following Central Board instructions issued under Rule 33 and Section 5(8) of the Income Tax Act, disallowed depreciation on eight ships that had been in the fleet for more th…

The Supreme Court examined whether the tax authorities could choose to assess tax on either the trustees or the beneficiaries of a discretionary trust when the trust's income was distributed and actually received by the beneficiaries during the accounting year. The respondent, a beneficiary of six discretionary trusts,…

Mahalakshmi Sugar Mills Ltd., a sugar manufacturer, claimed deductions for interest paid on arrears of sugarcane cess under the U.P. Sugarcane Cess Act, 1956, in its income‑tax returns for the assessment years 1959‑60, 1960‑61 and 1961‑62. The Income‑Tax Officer disallowed the claims, but the Appellate Assistant Commis…

The appellant, a liquidator of Mahamudabad Properties Ltd., owned a building at 3 Gun Foundry Road that had been released by the Government in December 1960 in a dilapidated condition. In its 1962-63 return it claimed an annual value of Rs.1,23,672, a vacancy remission, and deductions for insurance premium and municipa…

The dispute arose in Biological E. Ltd. after the death of its promoter, when the widow (respondent No.1) and her three daughters were appointed directors. The widow challenged the validity of board meetings held on 9‑4‑2013, 10‑4‑2013 and 11‑4‑2013, the appointment of her daughters as directors and the continuance of …

The Indian Oil Corporation, a UK‑incorporated company with its principal place of business in India, claimed large deductions for London management expenses incurred by its parent company, Burmah Oil Co. Ltd., in its income‑tax returns for the years 1957‑58 to 1959‑60. The Assessing Officer, relying on a 1963‑64 audito…

Piara Singh, a gold smuggler, was caught crossing the India‑Pakistan border in 1958 and Rs 65,500 in currency notes used to purchase gold abroad were confiscated by customs. He claimed that the confiscated amount was a loss incurred in his smuggling business and sought a deduction under section 10(1) of the Income‑Tax …

The Hindu Undivided Family (M.C. Jain) leased its premises to Jain Glass Works Ltd for an annual rent of Rs 21,000, of which Rs 10,000 was contractually payable directly to a college run by a charitable trust. The Court held that this arrangement is merely a self‑imposed application of income and does not divert the re…

The appellants, members of a Hindu Undivided Family (HUF), contended that no valid assessment order had been issued for the HUF for assessment year 1955-56 because the order was unsigned, and that they never received statutory notices. The Income Tax Officer proceeded under Section 147(a) and later under Sections 148 a…

The Commissioner of Income Tax appealed against the tax benefit claimed by East West Import & Export Ltd. under Section 23A(1) of the Income Tax Act, 1922, which required that shares carrying at least 25% of voting power be freely transferable throughout the previous year. The company had removed transfer restrictions …

The respondent, Biju Patnaik, was assessed for the year 1957-58 but allegedly failed to disclose a Rs.15 lakh capital gain from the sale of his mining business. The Income Tax Officer, after obtaining approval, issued a notice under sections 147(a) and 148 of the Income Tax Act, 1961 to reopen the assessment, alleging …

The Supreme Court examined whether the Central Board of Direct Taxes' Circular No. 789, issued under Section 119 of the Income‑Tax Act, was ultra vires the Act and whether the Indo‑Mauritius Double Taxation Avoidance Convention (DTAC), notified under Section 90, could override inconsistent provisions of the Income‑Tax …

The respondent, Arunagiri Chettriar, retired from a partnership firm in 1963 and later the firm was dissolved. The Income Tax Officer issued a notice that the respondent was jointly and severally liable for tax arrears of the firm for assessment years 1962-63 and 1963-64, arguing that liability attaches to any partner …

The assessee, Ahmed Ibrahim Sahigra Dhoraji, possessed concealed income of Rs 7 lakhs earned between 1957‑58 and 1964‑65. He made a voluntary disclosure under Section 68 of the Finance Act 1965 and paid tax at the prescribed rate. He claimed that the tax paid could be deducted as a "debt owed" under Section 2(m) of the…

The Andhra Pradesh State Road Transport Corporation (APSRTC), a statutory corporation created under the Road Transport Corporation Act, 1950, claimed exemption from income tax for the assessment years 1960-61, 1961-62 and 1962-63 under section 4(3)(i) of the Income‑Tax Act, 1922 and section 11 of the Income‑Tax Act, 19…

The Hindu Undivided Family (HUF) beneficially owned shares in a private limited company, though the shares were registered in the name of its Karta. The company advanced loans to three business concerns owned by the HUF, and the Income‑Tax Officer treated those loans as "deemed dividend" under section 2(6A)(e) of the I…

The Supreme Court examined writ petitions filed by Tata Tea Ltd. and other tea companies challenging amendments made by the West Bengal and Kerala legislatures that sought to tax the entire income from the sale of tea grown and manufactured by the assessees. The petitioners argued that only 60% of such income could be …

The appellant, a Hindu Undivided Family, owned agricultural land that it developed into building sites and leased on 99‑year terms, receiving a premium (salami) for each lease. The Income‑Tax Officer, the Appellate Assistant Commissioner and the Income‑Tax Appellate Tribunal held that the premiums were chargeable to ca…

A larger Hindu undivided family (HUF) was partitioned in 1945, after which a smaller HUF (the assessee) filed voluntary returns for assessment years 1946‑47 to 1949‑50. The Revenue sought to assess the assessee under Section 34 of the Income‑Tax Act, 1922, invoking the second proviso to Section 34(3) after the four‑yea…

Associated Stone Industries (Kotah) Ltd., a quarrying company, paid royalty to the Maharao of Kotah under a lease that stipulated a minimum payment of Rs.1,50,000 and additional amounts in lieu of income‑tax, super‑tax and excess‑profits tax. After the merger of Kotah into Rajasthan, the Income‑Tax Officer disallowed t…

The partnership firm Keshavji Ravji & Co. paid interest to its partners on their capital credits and also received interest from the same partners on borrowings during the assessment year 1975-76. The Assessing Officer disallowed the interest paid to partners without setting off the interest received, leading to a high…

The appellant‑Commissioner of Income Tax appealed against the Calcutta High Court’s decision that the assessment of Manoharlal Gupta & Co. as an unregistered firm for AY 1961‑62 was improper. The firm had been assessed by one Income‑Tax Officer (ITO‑C) while a partner, Manoharlal Gupta, had earlier been assessed by ano…

The Jute Corporation of India Ltd. was assessed for income tax for AY 1974-75 and later claimed a deduction of Rs.11,54,995 for its liability to Purchase Tax, an issue not raised before the Income Tax Officer. While hearing its appeal before the Appellate Assistant Commissioner, the corporation was allowed to raise thi…

Associated Cement Companies Ltd. entered into a tripartite agreement to supply water, electricity and concrete a road in Shahabad, receiving a promise that its properties would not be included within municipal limits for fifteen years. The company spent Rs.2,09,459 on laying water pipelines, which under the agreement b…

The appellants, a Hindu Undivided Family (HUF) of four members, filed a suit for partition in 1954, with a final decree in 1961. The Wealth Tax Officer assessed the family for assessment years 1958-59, 1959-60 and 1960-61, treating it as an undivided family of four members because no physical partition by metes and bou…

The Supreme Court examined whether the surplus lands owned by Shree Sitaram Mills formed part of the "assets in relation to the textile undertaking" under sub‑section (2) of section 3 of the Textile Undertakings (Taking Over of Management) Act, 1983. The mill, a sick textile undertaking, had been disposing of surplus l…

The Supreme Court considered appeals by the Commissioner of Income‑Tax against shareholders of the liquidated Tinnevelly Motor Service Company who had received dividends from the liquidator. The revenue argued that amounts assessed under Section 41(2) of the Income‑Tax Act, 1961 – representing excess on the written‑dow…

The plaintiff sought recovery of a sum and, during trial, obtained court summons for the Income Tax Department to produce assessment records of the defendants for years 1964-65 to 1971-72. The Department produced the records in sealed covers, claiming privilege under the then‑applicable Section 137 of the Income Tax Ac…

Maharana Mills, a textile manufacturer in Saurashtra, challenged assessments for 1957-60 on the ground that the Central Government’s 1956 Explanation added to the 1950 Removal of Difficulties Order was ultra vires and that depreciation should be computed only on the basis of the actual depreciation actually allowed und…

The appellants, non‑resident ship owners, had tax assessed on their shipping earnings under Section 172(4) of the Income Tax Act, 1961 and paid the tax. They later exercised their right under Section 172(7) to obtain a regular assessment, which showed that the tax previously paid was in excess. The Income Tax Appellate…

The assessees Chhathu Ram and others were assessed under the Indian Income Tax Act, 1922 for the year 1942-43, which included cash credits that were also taxed under the Excess Profits Tax Act. While appeals against the inclusion of these cash credits were pending, the assessees applied for and obtained a settlement un…

British India Corp Ltd entered into an agreement with Charles Walker & Co. to obtain technical know‑how, use certain trademarks and receive specialised tanning processes. Paragraph 7 of that agreement required the company to appoint Textile & General Supplies, a nominee of Charles Walker, as its distributor in India an…

The assessee, a partnership firm dealing in shares, bought all equity shares of a company in 1945 and treated those shares as stock-in-trade for tax purposes. When the company was liquidated, the liquidator distributed a surplus to the shareholders, and the assessee received Rs. 32,25,550. The Income Tax Officer includ…

The appellant complained to the Lokayukta that three government officials had caused a loss of Rs.4 crore to the State of Madhya Pradesh by purchasing land at inflated prices. The Lokayukta police investigated, exonerated the officials and filed a closure report under Section 169 of the Cr.P.C. before the Special Judge…

The deceased A.G. Merchant died in 1959 and the accountable persons filed estate duty returns, resulting in an assessment on 26 February 1960 under the Estate Duty Act, 1953. The Estate Duty (Amendment) Act, 1958 repealed sections 56‑65 and introduced a new Section 59, effective 1 July 1960, to allow reassessment of pr…

All India Tea and Trading Co. Ltd. received Rs. 1,24,638 as compensation when its agricultural land in Assam was requisitioned under the Assam Land (Requisition and Acquisition) Act, 1948 and allotted to refugees who continued to cultivate it. The company claimed the compensation was agricultural income and therefore e…