The loss for 1945 was correctly computed under rule 2(b), and that loss of Rs 18,960, alone was available to be carried forward in assessing the income of 1946. No doubt section 24 allowed the loss of more than one year to be carried forward ; but in this case " factually " there were assessable profits in 1943 and 1944, which meant there was no loss to be carried forward to 1945, to be set off against the assessable income of that year.
No portion of the sale proceeds realised by the assessee company in 1955 was assessable to tax as income deemed under the second proviso to section 10(2)(vii), to be profits of any business of the assessee.
The only penalty which can be imposed upon an assessee is one under section 28(1)(a) of the Act.
There was wilful suppression by the assessee of the particulars of his income within the meaning of section 28(1)(C) of the Income-tax Act. the penalty imposed under section 28(1)(C) of the Income-tax Act is legally valid
The Tribunal itself proceeded in an unreasonable manner to make an estimate which as mentioned above was quite unjustified and based on no material. We are unable to hold that the so-called finding given by the Tribunal was a finding of fact at all. It is purely an arbitrary guess based on no material whatsoever.
The determination of the amount of tax payable on the total income of a non-resident assessee, the income from a particular source which is not taxable is no doubt taken into account by its inclusion in the total world income. But that is not an "assessment" of income, profits and gains of that particular source. The determination of the tax payable is with regard to the tax payable on the total income and not on the income, profits and gains from any particular source.
The principle to be followed is that if an act can be of only one nature it may not be done at all, but if it is done it is necessarily of that nature and it is not open to the parties to it to say that they have done an act of a different nature. Even if they ostensibly call it an act of a different nature, the law will regard it as of the real nature. This may be called the doctrine of substance.
The argument at first sight is no doubt plausible but is hardly consistent with the principle on which the exclusion is based. The total of such net profits is profits which arise from within ; and though part of it is not immediately divisible, the members as a whole are entitled to the benefits thereof. The position was exactly similar in the other fund cases to which reference has been made in which the entire net profits were held immune from tax.
In the circumstances the assessee cannot be said to be in the wrong in not claiming the adjustment of the loss in the assessment for the year 1945-46. It may be noticed that the ascertained liability fixed by the arbitrators could not be known to the assessee at all during the accounting period relevant to 1945-46 assessment and no debit entry in respect of Rs 14,994, which is the item in dispute, could possible by made in the accounts of that period.
Once the principle is settled that only that portion of the profits and gains derived from the industrial undertaking is eligible for the exemption to the maximum limit provided in the section, the procedure adopted is in conformity with the section. What the assessee demanded of the Department was that the entire sum of Rs 1,95,979 (that is the total profits of Rs 4,44,462 minus the unabsorbed depreciation of Rs 2,48,483), being less than six per cent. of the capital employed in the industrial undertaking should be exempted from tax.
The firm may have had deposits with other banks, or it may have had other liquid assets or it may have some arrangements with other banks to allow its overdrafts and it would, therefore, be highly unsafe to judge the ability of the firm to discharge its liability merely from the state of the cash balance in its coffers on a particular day. The amount of cash balance in hands is, in the case of a banking concern, not a sure indication of the capacity of the firm to meet its liabilities.
The purposes of calculation of income-tax they could be considered to be expenses incurred in the accounting year on the basis of the regularly employed method of the assessee's accounting on the basis of which income, profits and gains are required to be computed under section 13 of the Income-tax Act.
The amount has been paid to the assessee as compensation under the statutory rules for the deprivation of the income of the owner and in lieu of what otherwise he would have got from the lands. It does not represent the income derived by the owner of land by reason of his own cultivation or the receipt of rent from a tenant who carries on agricultural operations.
The assessee company was entitled to retain for itself only the commission which was paid at the rate of four annas per barcha. The brokerage charges had to be passed on to the brokers through whom the transactions were entered into. The amount of "difference" money paid had similarly to be passed on to the trading parties entitled thereto. . It is not even suggested that any part of the brokerage charges or " difference money " could be retained by the assessee company for itself. These amounts have not been treated as income of the company by the income tax authorities.
The expenditure incurred on building the new chimney was held to be capital expenditure. That case, however, has no similarity to the case before us. In that case the old chimney but the entire furnace was a new one and at a different place. This was, therefore, clearly a new asset and an addition to the other capital assets owned by the company.
An order of assessment cannot be revised by the Commissioner, if an appeal has been preferred against that order to the Tribunal. That remains unaffected by the scope of the appeal preferred to the Tribunal, whether it is restricted by the assessee of his own choice or whether it is restricted by the Tribunal.
The assessee's case is that he, a specilised surgeon, undertook a study tour in advanced countries, so as to bring his already expert knowledge in line with modern developments in his branch of surgery. It was not a study tour undertaken specifically with reference to or in connection with any particular professional engagement or engagements of his, undertaken by him in the course of his carrying on of his profession in India, By undertaking this tour, he hoped to perfect his surgical knowledge to stand him in good stead on his return to his native country in the competitive field that he had to face. The mental equipment obtained by the tour is, therefore, of a general and enduring nature and benefit of such tour is expected to be far- reaching and not merely confined to a short span.
The finding could not possibly be recorded merely as an inference from the fact that the assessee family could not explain how the persons in whose names the deposits appeared came to have those amounts. Mere relationship of those persons to the assessee family is no reason for assuming that the deposits belonged to the family and not to those persons. The onus lay on the Department to establish as a fact that the persons in whose names the deposits were made were not the real owners of the money but that they belonged to the assessee family. Learned counsel for the Department has not been able to point out any material on which such a finding could be sustained.
The appellant has reflected the true state of his finances and given a truthful picture of the profit and loss in his business by entering the bullion and silver at cost when he withdrew them for a purely non-business purpose and utilised them in a transaction which brought him neither income nor profit nor gain.
The business of the assessee consisted in purchasing groundnut, expelling oil there from and selling oil and cake as the resultant products of the manufacture. The business accordingly included also the disposal of the products of the factory. There is clear evidence on record that during the relevant accounting year the assessee had a stock of oil and groundnut, which he sold. The sales were, no doubt, not of a large volume, but the fact remains that he did effect such sales. It would accordingly show that the assessee was still carrying on its business.