| Case ID |
f721d058-721b-44a3-bd4f-35d118730d88 |
| Body |
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| Case Number |
SPECIAL C.A. No. 69 OF 1962 |
| Decision Date |
Jul 30, 1962 |
| Hearing Date |
|
| Decision |
The petition was dismissed, affirming the constitutionality of sections 2(6A)(e) and 12(1B) of the Income Tax Act, 1922, which deemed certain loans taken by shareholders from controlled companies as dividends for tax purposes. The court held that the provisions were enacted to prevent tax evasion and were within the legislative competence of Parliament. The combined effect of these provisions brought three kinds of payments to tax in the hands of shareholders of controlled companies, emphasizing the need to curb evasion through loans disguised as dividends. The court found no violation of Article 14 or Article 19(1)(g) of the Constitution, as the provisions applied uniformly and did not prohibit borrowing. The judgment reiterated that the law aims to prevent tax avoidance tactics used by shareholders of controlled companies. |
| Summary |
In the landmark case of Navnitlal C. Javeri v. K.K. Sen, the Bombay High Court addressed the constitutionality of specific provisions within the Income Tax Act, 1922. The case revolved around sections 2(6A)(e) and 12(1B), which deemed loans taken by shareholders from controlled companies as dividends for tax purposes. This legislative measure was introduced to combat tax evasion strategies employed by shareholders who would otherwise avoid tax obligations by taking loans instead of receiving dividends. The court concluded that these provisions were valid and necessary to ensure equitable taxation and prevent circumvention of tax liabilities. The ruling emphasized the importance of legislative authority to enact measures against tax avoidance while maintaining the constitutional rights of individuals. This case is pivotal for understanding the intersection of taxation law and constitutional rights, particularly regarding measures aimed at curbing tax evasion. Key terms include 'Income Tax Act', 'tax evasion', 'dividend', 'legislative competence', and 'constitutional rights'. |
| Court |
Bombay High Court
|
| Entities Involved |
Not available
|
| Judges |
Navnitlal C. Javeri,
Y.S. Tambe,
V.S. Desai
|
| Lawyers |
M.M. Gharekhan,
Ashok H. Desai,
G.N. Joshi,
R.J. Joshi
|
| Petitioners |
Navnitlal C. Javeri
|
| Respondents |
K.K. Sen, Appellate Assistant Commissioner of INCOME TAX
|
| Citations |
1963 SLD 261 = (1963) 48 ITR 451
|
| Other Citations |
K.T. Moopie Nair v. State of Kerala [1961] 3 SCR 77,
J.N. Duggan v. CIT [1952] 21 ITR 458 (Bom.),
Navinchandra Mafatlal v. CIT [1954] 26 ITR 758 (SC),
Sardar Baldev Singh v. CIT [1960] 40 ITR 605 (SC),
K.M.S. Lakshmana Aiyar v. Additional ITO [1960] 40 ITR 469 (Mad.),
S. Kumaraswami v. ITO [1961] 43 ITR 423 (Mad.)
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
12(1B)
|