| Case ID |
df8ec5ff-b8bd-4a43-ac9e-83adcbcf53b5 |
| Body |
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| Case Number |
IT REFERENCE No. 5 OF 1961 |
| Decision Date |
Aug 28, 1961 |
| Hearing Date |
|
| Decision |
The court upheld the Tribunal's decision regarding the computation of profits on sales to the Government of India, affirming that the profits were correctly calculated under the provisions of rule 33 of the Indian Income-tax Rules. It was determined that the profits on sales to the Government of India, amounting to Rs. 7,36,156, were properly fixed. The court further concluded that the Tribunal's assessment regarding the other disputed sales was also accurate. The court ruled that no part of the profits from various sales accrued in British India, as the contracts and completions occurred outside this jurisdiction. The decision clarified the conditions under which profits could be considered to have accrued in British India, emphasizing the need for clear and separate accounts to support any claims of lower profit margins on government sales. |
| Summary |
This case revolves around Hukumchand Mills Ltd. and the income tax assessments made by the Commissioner of Income Tax regarding profits from sales to the Government of India. The primary legal consideration was whether the profits from these sales were correctly determined under the Income Tax Act, specifically rule 33, which governs the computation of profits for tax purposes. The court examined the factual background, including the nature of the sales, the role of intermediaries, and the jurisdictional implications of the transactions. The ruling underscored the importance of maintaining accurate and detailed financial records to substantiate claims about profit margins and tax liabilities. The court's decision not only affirmed the Tribunal's findings but also provided clarity on the criteria for determining the taxability of profits based on geographical jurisdiction, thus impacting future tax assessments and corporate accounting practices. |
| Court |
Bombay High Court
|
| Entities Involved |
Commissioner of INCOME TAX,
Hukumchand Mills Ltd.
|
| Judges |
Y.S. Tambe,
V.S. Desai
|
| Lawyers |
Mr. Palkhivala
|
| Petitioners |
Hukumchand Mills Ltd.
|
| Respondents |
Commissioner of INCOME TAX
|
| Citations |
1963 SLD 174 = (1963) 47 ITR 169
|
| Other Citations |
Income-tax Reference No. 56 of 1958 Hukam Chand Mills v CIT [1962] 44 ITR 411,
Income-tax Reference No. 5 of 1951 (Rajkumar Mills Ltd. v. Commissioner of Income-tax) decided on the 5th of September, 1956
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
66(4)
|