While the arrears of the State have priority over private debts owed to ordinary or unsecured creditors, this priority does not extend over secured creditors (subject to statutory exception). The fact that the tax arrears are recoverable as arrears of land revenue makes no difference to this principle of common law.
An allotment of shares is a “creation” of shares and not a “transfer” of shares. There is a vital difference between the two. An “allotment” is the creation of shares by appropriation out of the unappropriated share capital to a particular person. A share is a chose in action. A chose in action implies existence of some person entitled to the rights in action in-contradistinction from rights in possession. There is a difference between issue of a share to a subscriber and the purchase of a share from an existing shareholder. The first case is that of creation whereas the second case is that of transfer of chose in action. An allotment is not a transfer and does not attract s. 4(1)(a) of the Gift-tax Act.
The word `production’ or `produce’ when used in juxtaposition with the word `manufacture’ takes in bringing into existence new goods by a process, which may or may not amount to manufacture. It also takes in all the byproducts, intermediate products and residual products, which emerge in the course of manufacture of goods. The conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounts to manufacture/production for purposes of ss. 32AB, 80HH and 80I.
While merely because in some cases revenue has not preferred an appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher court when divergent views are expressed by the different High Courts, this is NOT SO in a case where the fact situation in all the assessment years is the same. Where the fact situation is the same, the revenue cannot prefer an appeal if they have not done so in the other cases.
As the undertaking was transferred as a going concern and there was no evidence on record to show that the compensation had been arrived at on an item-wise allocation of the various assets of the undertaking and there was no “cost of acquisition” of the undertaking, capital gains was not chargeable.
Where the assessee entered into an agreement for transfer of its industrial undertaking under which the buyer agreed to pay it interest on the unpaid consideration w.e.f 1.3.1977 and subsequently on 30.6.1978 the parties agreed to defer the date of commencement of interest to 1.7.1979 and the question arose whether the interest foregone by the assessee could be assessed for the AYs 1979-80 and 1980-81 under the accrual system of accounting, HELD:
The object behind enactment of s. 271 (1) (c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue and they create the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability unlike the matter of prosecution under Section 276C.
While circulars and instructions issued by the Board are binding on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of the SC or the High Court.
Levy of interest is for compensating the revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. This principle should also be applied for determining whether any hardship had been caused or not. A genuine hardship means a genuine difficulty. It cannot be concluded that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.
Provision for bad and doubtful debts cannot be added to the “book profits” for purposes of section 115JA because they merely represent the dimunition in the value of an asset and are not a provision for an unascertained liability.