Analysis, Income Tax

Per Incuriam Cases – IV

In this edition of per incuriam cases, we have cases with issues ranging from dismissal of complaint due to undisclosed amount not being high enough, to deduction of marriage expenses in  for unmarried daughter and ending with the Bombay High Court deciding an issue against the assessee in three sentences.

Does rejection of complaint due to reduction of quantum of assessment prevents an offence from being made under section 276C or section 277 of the Income Tax Act?

Per incuriam case

Prem Kumar Keshri vs. State of Bihar and Ors. – (1996) 2 PLJR 766

The Court held that an offence cannot be made out under section 276C or section 277 on the basis of estimates in the assessment order. Reliance was given on the fact that the CIT had disallowed a significant addition on the basis of which the complaint was made and such disallowance, according to the Court, rendered the complaint useless.

Held Per Incuriam in

Natha Singh Chhabra Alias Natha Singh vs. State of Bihar and Anr. – (1999) 153 CTR 480

The Court observed that reducing the quantum of assessment does not take away the principle of prosecution of assessees who are evading tax, relying on the decision of the  Division Bench of the Patna High Court in Indian Builders and the decision of the Supreme Court in Uttam Chand. Consideration has to be given to suppression of real income and filing of false returns. The amount of undisclosed income has little relevance.

Whether a reasonable provision for marriage of unmarried daughter can be allowed as a deductible debt, for the purpose of estate duty leviable on the estate of a deceased Hindu under the Estate Duty Act?

Per incuriam case

Controller of Estate Duty vs. Dr. B. Kamalamma – (1984) 148 ITR 434 (Mad)

The Court held, after referring to both Estate Duty Act and Hindu Law, that the marriage expenses of unmarried daughter is deductible when calculating estate duty. A daughter’s right to maintenance and expenses for marriage is independent of the provisions of the Estate Duty Act and the obligation of a Hindu father to marry his daughter does not end with payment of money or kinds but with the actual marriage.

Held Per Incuriam in

Smt. K. N. Sita vs. Controller of Estate Duty – (1999) 239 ITR 108 (Mad)

The Court observed that the claim for deduction of reasonable expenses for marriage of unmarried daughter has to be read within the provisions of Estate Duty Act and textual Hindu Law has no bearing in these matters. The Act provides for such deduction only if a charge is created against the estate.

The bench in Dr. B. Kamalamma was not aware of the judgements on which this Court relied while stating the above observations.

Whether assessee is eligible for investment allowance in respect of additional expenses due to fluctuations in rate of exchange under section 32A of the Income Tax Act?

Per incuriam case

Khatau Makanji Spinning and Weaving Co. Ltd. vs. Commissioner of Income Tax – (1996) 222 ITR 472 (Bom)

The Court provided no reason whatsoever to reject the contention of the assessee. In response to assessee’s argument that they are entitled to investment allowance under section 32A in respect of additional costs of the imported assets which has taken place because of the fluctuation in the rate of exchange in the year subsequent to the year of acquisition, this is what the Court had to say-

We have heard the learned counsel for the assessee. We have perused s. 32A. We do not find anything there which may support the above contention of the learned counsel for the assessee.

Held Per Incuriam in

Associated Bearing Co. Ltd. vs. Commissioner of Income Tax – (2006) 286 ITR 341 (Bom)

The Court pointed out that the bench in Khatau Makanji gave no reason for deciding the above issue in favour of the Revenue.  This bench observed that Supreme Court decisions have superseded the Bombay High Court judgement in Khatau Makanji on this issue. The Court answered the above question in favour of the assessee.

…being inconsistent with the earlier decisions of this Court and of the Supreme Court is erroneous and cannot be used by the Revenue to deprive the assessee of the benefit of investment allowance on the increased loan liability consequent upon the depreciation of the Indian currency in the foreign exchange market. 

If you liked this post, you should check out Per Incuriam Cases – V

(Written by Ankit Sinha, Product Manager @ Riverus)

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